Most mature observers of American government know that the United States is facing a looming entitlement crisis. Social Security and Medicare account for nearly 60% of the federal budget and the cost of each is spiraling out of control. The cost of Medicare escalates with the rising cost of health care in general and the recently passed health insurance reform, while expanding coverage, does not address health care costs in any meaningful way. Both programs face a demographic crisis. Baby boomers are retiring and there is a dwindling number of workers paying in to the system to cover the new retirees. The dirty little secret in Washington is that the current system is unsustainable.
In a previous post (http://freemarkets-freeminds-freesociety.blogspot.com/2010/04/end-it-dont-mend-it.html), I outlined a case for eliminating Social Security, on both moral and economic grounds. Although no plan for the elimination of the program should affect current retirees or those nearing retirement who have planned on Social Security, I understand that the argument I presented is not politically practical. Current retirees will always fear that the changes will affect them; demagoguery about individuals losing their retirement nest egg in private, stock-based, accounts is too easy; and a straight retirement welfare program for the working poor, which is what I think should replace Social Security, is unpopular because people who have been paying in to the program want their money back. For these reasons, Social Security has long been known as the "third rail," of American politics. Touch it, and you die. Barry Goldwater campaigned on Social Security reform in 1964 and lost. Paul Tsongas suffered a similar fate in the 1992 Democratic Presidential primary, losing to Bill Clinton when he raised issues of Social Security solvency and declared, "there is no Santa Claus." President Reagan had to appoint a commission to give elected officials political coverage to make some necessary changes in the 1980's that bought the last couple of decades of solvency.
However, an increasing number of Americans, having watched the Greek welfare state collapse, seem to have noticed the writing on the wall and there are signs that maybe the old political rules about Social Security are changing. Although President Bush did not accomplish Social Security reform and faced bitter opposition and demagoguery, he did win two elections (2000 and 2004) despite campaigning on the issue. Congressman Paul Ryan (R-WI), the ranking member on the House Budget committee, has been at the forefront of discussing the looming entitlement crisis and has proposed a road map for reform (http://www.roadmap.republicans.budget.house.gov/). Despite the predictable demagogic attacks on this plan, Congressman Ryan's reelection in 2010 is considered safe. More interestingly, at least three candidates for Senate - Marco Rubio (R-FL), Rand Paul (R-KY), and Pat Toomey (R-PA) - have endorsed specific reforms to Social Security on the campaign trail. All have addressed the question on Fox News Sunday. On March 28, 2010, Speaker Rubio endorsed Congressman Ryan's road map, including the possibility that retirement ages may need to be raised or cost-of-living adjustments decreased to keep the program solvent. On October 3, 2010, Dr. Paul similarly endorsed the notion that retirement ages may need to be raised. Earlier today (October 24, 2010), Mr. Toomey discussed the demographic challenges to Social Security and allowing younger workers to opt out and in to private or partially private retirement accounts, with regulations about the amount of risk (ratio of stocks to less volatile investments) the portfolio can have based on the proximity of the account holder to retirement. All three of these candidates are currently leading in their races. In the latest polls, Mr. Toomey leads Democrat Congressman Joe Sestak 46% to 43%. Dr. Paul leads over Kentucky Attorney General Jack Conway (D) 48% to 43%. Stunningly, in Florida (a state full of retirees), Speaker Rubio has opened up a commanding lead in the three way race with former Governor Charlie Crist (I) and Congressman Kendrick Meek (D): Rubio 41%, Crist 26%, and Meek 20%! (see Real Clear Politics for the latest polls: http://www.realclearpolitics.com/epolls/latest_polls/senate/)
The election of Congressmen and Senators who are unafraid to at least discuss Social Security reform and willing to go on record advocating specific changes in the midst of an election campaign (and in the case of Dr. Paul and Mr. Toomey, in tight races) would represent a huge step forward for the possibility of desperately needed entitlement reform. The only questions that remain are: 1) can these brave souls stand up to the demagoguery and the organized special-interest attacks to bring the rest of their party (and the President) along? and 2) can Republicans, who created new entitlements and doubled the national debt under George W. Bush really be trusted to do this?
Sunday, October 24, 2010
Sunday, October 17, 2010
Personal Reflections on the 2010 Maryland Gubernatorial Campaign
My apologies to out of state readers, but as this is a mid-term election, all races are local. I hope the following has enough connection to national issues and national trends to be of interest to the general reader - Publius
My church participates in an organization called P.A.T.H., which stands for People Acting Together in Howard County. It is an interdenominational, faith-based, community advocacy organization that seeks to provide a voice for the needy in Howard County (Maryland). My impression is that it is fairly non-partisan and certainly its recently accomplished policy goals have been, in my view, fairly non-controversial. The first is the establishment of the Healthy Howard program (http://www.healthyhowardplan.org), a privately run county government initiative to provide health care to the uninsured in Howard County and the second is legislation to help mobile home owners if the land they are renting is sold (http://www.path-iaf.org/media/20100617.pdf). So, when they announced at my church that P.A.T.H. was looking for people to attend a candidates forum last Thursday (October 14, 2010), which the current Maryland Governor, Martin O'Malley (D) had already agreed to attend and which his challenger, former Maryland Governor Bob Ehrlich (R) had been invited to attend (but had not yet confirmed) and that was billed as a non-partisan event and a chance to see the candidates unscripted, I jumped at the chance, even though I had not previously been active in P.A.T.H.
In reality the event was not unscripted (candidates were given the issues to be discussed and the questions to be asked ahead of time) and hardly non-partisan. Although technically not a partisan event, it turns out that P.A.T.H. is part of the Maryland I.A.F. (Industrial Areas Foundation), which also includes A.I.M. (Action In Montgomery County) and B.U.I.L.D. (Baltimoreans United In Leadership Development). The MD-I.A.F. is a chapter of the national I.A.F., a Chicago based entity for community organizing with a very leftist agenda (their website has a link to an article in The Nation about how the Democrats are not far enough to the left: http://www.industrialareasfoundation.org/). Far from being an open forum for voters to hear from the candidates, the event was a politically charged gathering at which Gov. O'Malley was welcomed as a hero and which Gov. Ehrlich, wisely, chose not to attend, opting instead to meet with MD-I.A.F. leadership privately the next day. The purpose of the meeting was to advance the following agenda, crafted by MD-I.A.F.:
1) Jobs: The Maryland I.A.F. stated that putting Maryland back to work was its number 1 priority and it's solution was to ask the next Maryland Governor to organize the National Governor's Association to call on President Obama to create a New Deal style public works program.
2) Move our Money to Create Jobs and Stop Usury: MD-I.A.F. called on the next Governor to move state assets from, "usurious large banks," to community banks that, "do not charge [interest rates] above Maryland's state usury laws." They also called for the creation of a Maryland state bank.
3) Fully Fund Education: In 2002, the Maryland General Assembly passed what is known as the Thornton legislation, which mandates increases in state spending on education, but does not provide a funding source for these increases. The MD-I.A.F. called on the next Governor to keep these commitments and invest a minimum of $250 million each year for school construction.
4) In-state tuition rates for all Maryland high-school graduates: regardless of immigration status
5) Affordable Health-Care: MD-I.A.F. called on the next Governor to work under the auspices of the federal Affordable Care Act to create a non-profit health insurance co-op in Maryland to provide affordable health insurance who currently do not have insurance, cannot afford insurance, and will be forced to buy insurance under the new federal law. It turns out that those covered under the Healthy Howard program in my county do not count under the new federal law because they still haven't bought health insurance, even though they have access the health care...
Governor O'Malley, of course, agreed to this agenda almost without reservation: although he did prudently stop short of promising something he couldn't deliver (a federal public works program or being able to move the National Association of Governors on an issue) and said he needed to study how the federal health care legislation affects Maryland and Marylanders before figuring out how to proceed on that issue. I do not know how Governor Ehrlich responded to these issues in his private meeting the following day. I do know that both candidates are committed to fully funding the Thornton education legislation and merely differ on how they would pay for it.
Both of Maryland's gubernatorial candidates for 2010 agree on the education position, and I will concede that it is the job of the next Governor to figure out how to implement the federal health care legislation in the state, assuming it survives court challenges and attempts at repeal (although it is ironic that the upshot of the Affordable Care Act is to mandate that impoverished Marylanders purchase health insurance that they cannot afford...). The rest of the agenda, however, is quite leftist and much of it is divorced from economic reality.
The in-state tuition proposal is a difficult issue. It ignores the salient fact that tuition is cheaper for state residents because they, or their families, subsidize the state colleges and universities by paying taxes. It's a break on tuition for those that pay taxes in the state, not for those who don't. On the other hand, it is hard to oppose creating opportunity for those who have risked a lot to come to this country to work hard and build a better life for themselves. Former Arkansas Governor Mike Huckabee (R) made a compelling case in 2008 Presidential debate defending his signing of similar legislation in Arkansas, when he said he was not about to hold children (the students) responsible for the sins of their parents (that came to the U.S. illegally) because, "we're a better country than that."
However, it is clear that the Maryland-I.A.F. doesn't understand interest rates. As a Maryland tax payer, I certainly want the state to keep its money wherever it can get the highest rate of return, regardless of whether that bank charges high interest rates for loans or credit cards. The Maryland-I.A.F. is particularly incensed by credit cards that charge more than 10% interest (which, I think, is pretty much ALL of them), but this ignores the fact that one pays no interest at all if you don't keep a balance. The purpose of the high interest rate is twofold: first to make a profit for the bank or credit card company and secondly to be high enough to encourage you to actually, eventually, pay the bill. A rate that is set artificially low may not allow banks to profitably provide this service or may encourage reckless spending by providing too easy credit. Didn't we learn this lesson when artificially low interest rates fueled a housing bubble? Interest rates are better set by market forces than by fiat. An interest rate is nothing more than the price of borrowing money and it should be based on the length of the loan, the risk of the borrower, and the availability of capital. Interest rates should rise when savings rates are low to encourage saving and send a signal that there is little capital available for lending (thereby making loans riskier) and fall when the banks are flush with cash, signaling that there is plenty of capital available to borrow. An artificially low interest rate sends signals that there is capital available to borrow, when there isn't. Credit card interest rates are much higher than other loans because they are short term borrowing at higher risk. To set such rates artificially low by fiat would introduce entirely too much risk that would ultimately prove detrimental to the bank and to the credit card holder. And create a state bank? I suppose we should do that because the Federal Reserve has worked out so well...
Maryland I.A.F.'s jobs agenda is laughable. Ignoring the fact that the New Deal was an abysmal failure at putting Americans back to work (unemployment never fell below 13% before World War II and there was a double-dip in 1937 despite the WPA), Maryland-I.A.F.'s answer to joblessness in Maryland is to ask the federal government for money that it doesn't have. This position blissfully ignores the implications of increasing federal spending. If such spending isn't funded by a higher tax burden, then the federal government will have to either print the money or borrow it. Printing, of course, would devalue the dollar further and robs all of us of wealth as each dollar in our savings account suddenly becomes worth less. Borrowing increases the federal debt. Each year, a percentage of the federal budget is money to pay interest on the national debts (to the holders of that debt). In 2009, that amounted to 5% of the federal budget, but as the debt rises, so too will that number to the point were it becomes large enough that money isn't available to spend on other things, such as defense or social security, or education. If we continue on the current spending course, we can either collapse, like Greece, as investors start viewing holding U.S. debt as a bad risk, or reach a point at which it becomes impossible for the government to fund its most basic services. Either way, we pass a huge economic burden to future generations. The proposal also ignores the real issues with regard to job creation in Maryland. Governor O'Malley has worked to create a vibrant biotechnology community in Maryland, offering incentives for biotech companies to complement the academic resources at University of Maryland, Johns Hopkins University, and the National Institutes of Health in Bethesda; for which he was named, "BIO Governor of the Year," in 2010 (http://www.governor.maryland.gov/pressreleases/100503.asp). However, other than biotechnology, Maryland has not been a business friendly state. Many potential jobs were denied from Maryland's Eastern Shore when Walmart decided to cancel it's plans to build a big facility there after the Maryland legislature, controlled by Gov. O'Malley's party, passed a bill that essentially targeted only Walmart with fines for not providing enough health benefits for employees. Gov. O'Malley increased the Maryland state sales tax by 20% (from 5% to 6%). Not only does this create an unfriendly retail environment in Maryland, but it is a regressive tax that is hardest on middle class and lower income Marylanders (although at least state sales tax in Maryland exempts groceries). The business climate in Maryland is so unfriendly that when Tim Kaine (D) was Governor in Virginia, he ran commercials encouraging businesses to come there (http://www.youtube.com/user/VirginiaEconomicDev), and he's in the same party as Governor O'Malley! Repealing the sales tax increase, easing regulations, offering tax incentives for businesses other than biotech could all help ease the pain of recession for Marylanders and create private sector job growth in Maryland, and all make more sense than federal make-work projects that the federal government can ill afford.
Maryland-I.A.F. is, of course, entitled to have and promote its agenda. I just wish I had understood that this was to be an agenda driven event, rather than an open forum for voters to assess the candidates, before I ended up at what was essentially an O'Malley pep rally to promote an agenda that I, for the most part, disagree with.
My church participates in an organization called P.A.T.H., which stands for People Acting Together in Howard County. It is an interdenominational, faith-based, community advocacy organization that seeks to provide a voice for the needy in Howard County (Maryland). My impression is that it is fairly non-partisan and certainly its recently accomplished policy goals have been, in my view, fairly non-controversial. The first is the establishment of the Healthy Howard program (http://www.healthyhowardplan.org), a privately run county government initiative to provide health care to the uninsured in Howard County and the second is legislation to help mobile home owners if the land they are renting is sold (http://www.path-iaf.org/media/20100617.pdf). So, when they announced at my church that P.A.T.H. was looking for people to attend a candidates forum last Thursday (October 14, 2010), which the current Maryland Governor, Martin O'Malley (D) had already agreed to attend and which his challenger, former Maryland Governor Bob Ehrlich (R) had been invited to attend (but had not yet confirmed) and that was billed as a non-partisan event and a chance to see the candidates unscripted, I jumped at the chance, even though I had not previously been active in P.A.T.H.
In reality the event was not unscripted (candidates were given the issues to be discussed and the questions to be asked ahead of time) and hardly non-partisan. Although technically not a partisan event, it turns out that P.A.T.H. is part of the Maryland I.A.F. (Industrial Areas Foundation), which also includes A.I.M. (Action In Montgomery County) and B.U.I.L.D. (Baltimoreans United In Leadership Development). The MD-I.A.F. is a chapter of the national I.A.F., a Chicago based entity for community organizing with a very leftist agenda (their website has a link to an article in The Nation about how the Democrats are not far enough to the left: http://www.industrialareasfoundation.org/). Far from being an open forum for voters to hear from the candidates, the event was a politically charged gathering at which Gov. O'Malley was welcomed as a hero and which Gov. Ehrlich, wisely, chose not to attend, opting instead to meet with MD-I.A.F. leadership privately the next day. The purpose of the meeting was to advance the following agenda, crafted by MD-I.A.F.:
1) Jobs: The Maryland I.A.F. stated that putting Maryland back to work was its number 1 priority and it's solution was to ask the next Maryland Governor to organize the National Governor's Association to call on President Obama to create a New Deal style public works program.
2) Move our Money to Create Jobs and Stop Usury: MD-I.A.F. called on the next Governor to move state assets from, "usurious large banks," to community banks that, "do not charge [interest rates] above Maryland's state usury laws." They also called for the creation of a Maryland state bank.
3) Fully Fund Education: In 2002, the Maryland General Assembly passed what is known as the Thornton legislation, which mandates increases in state spending on education, but does not provide a funding source for these increases. The MD-I.A.F. called on the next Governor to keep these commitments and invest a minimum of $250 million each year for school construction.
4) In-state tuition rates for all Maryland high-school graduates: regardless of immigration status
5) Affordable Health-Care: MD-I.A.F. called on the next Governor to work under the auspices of the federal Affordable Care Act to create a non-profit health insurance co-op in Maryland to provide affordable health insurance who currently do not have insurance, cannot afford insurance, and will be forced to buy insurance under the new federal law. It turns out that those covered under the Healthy Howard program in my county do not count under the new federal law because they still haven't bought health insurance, even though they have access the health care...
Governor O'Malley, of course, agreed to this agenda almost without reservation: although he did prudently stop short of promising something he couldn't deliver (a federal public works program or being able to move the National Association of Governors on an issue) and said he needed to study how the federal health care legislation affects Maryland and Marylanders before figuring out how to proceed on that issue. I do not know how Governor Ehrlich responded to these issues in his private meeting the following day. I do know that both candidates are committed to fully funding the Thornton education legislation and merely differ on how they would pay for it.
Both of Maryland's gubernatorial candidates for 2010 agree on the education position, and I will concede that it is the job of the next Governor to figure out how to implement the federal health care legislation in the state, assuming it survives court challenges and attempts at repeal (although it is ironic that the upshot of the Affordable Care Act is to mandate that impoverished Marylanders purchase health insurance that they cannot afford...). The rest of the agenda, however, is quite leftist and much of it is divorced from economic reality.
The in-state tuition proposal is a difficult issue. It ignores the salient fact that tuition is cheaper for state residents because they, or their families, subsidize the state colleges and universities by paying taxes. It's a break on tuition for those that pay taxes in the state, not for those who don't. On the other hand, it is hard to oppose creating opportunity for those who have risked a lot to come to this country to work hard and build a better life for themselves. Former Arkansas Governor Mike Huckabee (R) made a compelling case in 2008 Presidential debate defending his signing of similar legislation in Arkansas, when he said he was not about to hold children (the students) responsible for the sins of their parents (that came to the U.S. illegally) because, "we're a better country than that."
However, it is clear that the Maryland-I.A.F. doesn't understand interest rates. As a Maryland tax payer, I certainly want the state to keep its money wherever it can get the highest rate of return, regardless of whether that bank charges high interest rates for loans or credit cards. The Maryland-I.A.F. is particularly incensed by credit cards that charge more than 10% interest (which, I think, is pretty much ALL of them), but this ignores the fact that one pays no interest at all if you don't keep a balance. The purpose of the high interest rate is twofold: first to make a profit for the bank or credit card company and secondly to be high enough to encourage you to actually, eventually, pay the bill. A rate that is set artificially low may not allow banks to profitably provide this service or may encourage reckless spending by providing too easy credit. Didn't we learn this lesson when artificially low interest rates fueled a housing bubble? Interest rates are better set by market forces than by fiat. An interest rate is nothing more than the price of borrowing money and it should be based on the length of the loan, the risk of the borrower, and the availability of capital. Interest rates should rise when savings rates are low to encourage saving and send a signal that there is little capital available for lending (thereby making loans riskier) and fall when the banks are flush with cash, signaling that there is plenty of capital available to borrow. An artificially low interest rate sends signals that there is capital available to borrow, when there isn't. Credit card interest rates are much higher than other loans because they are short term borrowing at higher risk. To set such rates artificially low by fiat would introduce entirely too much risk that would ultimately prove detrimental to the bank and to the credit card holder. And create a state bank? I suppose we should do that because the Federal Reserve has worked out so well...
Maryland I.A.F.'s jobs agenda is laughable. Ignoring the fact that the New Deal was an abysmal failure at putting Americans back to work (unemployment never fell below 13% before World War II and there was a double-dip in 1937 despite the WPA), Maryland-I.A.F.'s answer to joblessness in Maryland is to ask the federal government for money that it doesn't have. This position blissfully ignores the implications of increasing federal spending. If such spending isn't funded by a higher tax burden, then the federal government will have to either print the money or borrow it. Printing, of course, would devalue the dollar further and robs all of us of wealth as each dollar in our savings account suddenly becomes worth less. Borrowing increases the federal debt. Each year, a percentage of the federal budget is money to pay interest on the national debts (to the holders of that debt). In 2009, that amounted to 5% of the federal budget, but as the debt rises, so too will that number to the point were it becomes large enough that money isn't available to spend on other things, such as defense or social security, or education. If we continue on the current spending course, we can either collapse, like Greece, as investors start viewing holding U.S. debt as a bad risk, or reach a point at which it becomes impossible for the government to fund its most basic services. Either way, we pass a huge economic burden to future generations. The proposal also ignores the real issues with regard to job creation in Maryland. Governor O'Malley has worked to create a vibrant biotechnology community in Maryland, offering incentives for biotech companies to complement the academic resources at University of Maryland, Johns Hopkins University, and the National Institutes of Health in Bethesda; for which he was named, "BIO Governor of the Year," in 2010 (http://www.governor.maryland.gov/pressreleases/100503.asp). However, other than biotechnology, Maryland has not been a business friendly state. Many potential jobs were denied from Maryland's Eastern Shore when Walmart decided to cancel it's plans to build a big facility there after the Maryland legislature, controlled by Gov. O'Malley's party, passed a bill that essentially targeted only Walmart with fines for not providing enough health benefits for employees. Gov. O'Malley increased the Maryland state sales tax by 20% (from 5% to 6%). Not only does this create an unfriendly retail environment in Maryland, but it is a regressive tax that is hardest on middle class and lower income Marylanders (although at least state sales tax in Maryland exempts groceries). The business climate in Maryland is so unfriendly that when Tim Kaine (D) was Governor in Virginia, he ran commercials encouraging businesses to come there (http://www.youtube.com/user/VirginiaEconomicDev), and he's in the same party as Governor O'Malley! Repealing the sales tax increase, easing regulations, offering tax incentives for businesses other than biotech could all help ease the pain of recession for Marylanders and create private sector job growth in Maryland, and all make more sense than federal make-work projects that the federal government can ill afford.
Maryland-I.A.F. is, of course, entitled to have and promote its agenda. I just wish I had understood that this was to be an agenda driven event, rather than an open forum for voters to assess the candidates, before I ended up at what was essentially an O'Malley pep rally to promote an agenda that I, for the most part, disagree with.
Sunday, September 26, 2010
The Needle in the Haystack
In a follow-up to a previous post on airport security measures (http://freemarkets-freeminds-freesociety.blogspot.com/2010/01/find-terrorist.html), I'd like to share another anecdote:
Three weeks ago, my wife and I met a friend and his nine year-old son in St. Louis to go to a Cardinals game. My friend has taken his son to several different major league baseball parks and buys him one of those small souvenir bats at every ball park. Our flights home left at about the same time, so we all went to the airport together. Because it was only a weekend trip, none of us had checked bags. As our carry-on bags are being x-rayed, the TSA agent decides that the long cylindrical object in my friend's bag (the souvenir bat) could be a weapon and can't go on the plane. My friend is told he must go check that bag before coming through security. His son passed through and waited for him with my wife and I.
After several minutes, he returned with the bag. They did an open bag search just before checking it (a different TSA agent) and found nothing suspicious. They found nothing, because the bat was in his son's bag and after x-raying the bags, the TSA agent picked up the wrong one for him to check and handed the bag with the "suspicious object" back to his son and let him through the security checkpoint!
The story is absurd on two levels. First, the notion that a nine year-old boy can't take a small souvenir bat in a carry on bag is absurd (and would be eliminated by screening for terrorists instead of for weapons). Secondly, even if the object in question had been a weapon, the TSA agent subsequently handed the bag with the "weapon" back to be carried through security and pulled the wrong bag to be checked. If you thought the TSA was making you safer, think again.
Three weeks ago, my wife and I met a friend and his nine year-old son in St. Louis to go to a Cardinals game. My friend has taken his son to several different major league baseball parks and buys him one of those small souvenir bats at every ball park. Our flights home left at about the same time, so we all went to the airport together. Because it was only a weekend trip, none of us had checked bags. As our carry-on bags are being x-rayed, the TSA agent decides that the long cylindrical object in my friend's bag (the souvenir bat) could be a weapon and can't go on the plane. My friend is told he must go check that bag before coming through security. His son passed through and waited for him with my wife and I.
After several minutes, he returned with the bag. They did an open bag search just before checking it (a different TSA agent) and found nothing suspicious. They found nothing, because the bat was in his son's bag and after x-raying the bags, the TSA agent picked up the wrong one for him to check and handed the bag with the "suspicious object" back to his son and let him through the security checkpoint!
The story is absurd on two levels. First, the notion that a nine year-old boy can't take a small souvenir bat in a carry on bag is absurd (and would be eliminated by screening for terrorists instead of for weapons). Secondly, even if the object in question had been a weapon, the TSA agent subsequently handed the bag with the "weapon" back to be carried through security and pulled the wrong bag to be checked. If you thought the TSA was making you safer, think again.
Saturday, September 11, 2010
President Obama is Right, For Once.
Today is the ninth anniversary of the 9/11 attacks and the news is filled with the "controversy" of plans to build a mosque and Islamic center in Manhattan close to Ground Zero.
There should be no controversy here. The land in question is privately owned. The first amendment protects the right of citizens of all faiths to worship freely. The Muslims planning to build this mosque are exercising one of the most fundamental human rights, a right that our nation cherishes and our Constitution protects. No one should be trying to interfere with their plans and no level of government has the authority to.
It is understandable that some, particularly those that lost loved ones on that black day nine years ago, are upset. It is easy to understand how a mosque close to the site where thousands lost their lives at the hands of Muslims that claimed to carry out Allah's will open old wounds. However, it is critically important that we overlook these concerns and uphold our cherished principle of religious freedom, lest we sink to the level of intolerance of those that perpetrated this attack and sacrifice some of the liberty we ask our brave soldiers to defend. On March 5, 1770, British troops opened fire on unarmed Americans in Boston. Whether they were provoked or not (and they probably were) is beside the point. Americans were outraged. Yet, these British soldiers were successfully defended by no less an American Patriot than John Adams. From the dawn of our nation we have shown that we cherish our principles of liberty more than our emotional desires. In that spirit, British soldiers who fired on Americans were given the trial and defense to which they were entitled. It should be no different with the building of this mosque, recognizing that the Muslims who will worship there had nothing to do with the attacks nearby nine years ago. Al Qaida is no more representative of Islam than the I.R.A. is of Catholicism....
President Obama is right to defend the Constitutionally protected right of free worship of the Muslims building this mosque. He is right to say that the 1st amendment means, "if you can build a church there, if you can build a synagogue there, if you can build a Hindu temple there, then you can build a mosque..." Mr. Obama should be applauded for defending this Constitutional principle despite the unpopularity of doing so. He has alluded to the notion perhaps this site is not the best choice for a mosque nor where he would choose to build a mosque because of the passions it inflames. However, he is right to largely avoid statements of whether or not he thinks a mosque should be built there or not. It is frankly irrelevant what the President or anyone else thinks should be done.
Finally, there is no moral equivalence between the building of this mosque and Terry Jones' plan to publicly burn copies of the Koran (which may or may not happen today?). Granted that the copies of the Koran are privately owned and the 1st amendment protects Mr. Jones freedom of speech and expression in burning them, however this act is far more deliberately offensive than the building of a house of worship to the same God of Abraham worshiped by Christians and Jews. Mr. Jones plan may be protected, but it is simply spiteful and shallow. In a nation that protects religious freedom, it matters not that Mr. Jones is fervently convinced that the Koran is "full of lies." As Mr. Jefferson wrote in the Virginia Statute for Religious Freedom [1777], "...to restrain the propagation of principles on the supposition of their ill tendency is a grave and dangerous fallacy, which at once destroys all religious liberty.... Truth is great and will triumph if left to herself."
Christians secure in their faith have nothing to fear from the Koran and Americans have nothing to fear from a mosque in Manhattan. We have everything to fear from becoming a nation that would seek to block the building of a house of worship of any particular faith.
There should be no controversy here. The land in question is privately owned. The first amendment protects the right of citizens of all faiths to worship freely. The Muslims planning to build this mosque are exercising one of the most fundamental human rights, a right that our nation cherishes and our Constitution protects. No one should be trying to interfere with their plans and no level of government has the authority to.
It is understandable that some, particularly those that lost loved ones on that black day nine years ago, are upset. It is easy to understand how a mosque close to the site where thousands lost their lives at the hands of Muslims that claimed to carry out Allah's will open old wounds. However, it is critically important that we overlook these concerns and uphold our cherished principle of religious freedom, lest we sink to the level of intolerance of those that perpetrated this attack and sacrifice some of the liberty we ask our brave soldiers to defend. On March 5, 1770, British troops opened fire on unarmed Americans in Boston. Whether they were provoked or not (and they probably were) is beside the point. Americans were outraged. Yet, these British soldiers were successfully defended by no less an American Patriot than John Adams. From the dawn of our nation we have shown that we cherish our principles of liberty more than our emotional desires. In that spirit, British soldiers who fired on Americans were given the trial and defense to which they were entitled. It should be no different with the building of this mosque, recognizing that the Muslims who will worship there had nothing to do with the attacks nearby nine years ago. Al Qaida is no more representative of Islam than the I.R.A. is of Catholicism....
President Obama is right to defend the Constitutionally protected right of free worship of the Muslims building this mosque. He is right to say that the 1st amendment means, "if you can build a church there, if you can build a synagogue there, if you can build a Hindu temple there, then you can build a mosque..." Mr. Obama should be applauded for defending this Constitutional principle despite the unpopularity of doing so. He has alluded to the notion perhaps this site is not the best choice for a mosque nor where he would choose to build a mosque because of the passions it inflames. However, he is right to largely avoid statements of whether or not he thinks a mosque should be built there or not. It is frankly irrelevant what the President or anyone else thinks should be done.
Finally, there is no moral equivalence between the building of this mosque and Terry Jones' plan to publicly burn copies of the Koran (which may or may not happen today?). Granted that the copies of the Koran are privately owned and the 1st amendment protects Mr. Jones freedom of speech and expression in burning them, however this act is far more deliberately offensive than the building of a house of worship to the same God of Abraham worshiped by Christians and Jews. Mr. Jones plan may be protected, but it is simply spiteful and shallow. In a nation that protects religious freedom, it matters not that Mr. Jones is fervently convinced that the Koran is "full of lies." As Mr. Jefferson wrote in the Virginia Statute for Religious Freedom [1777], "...to restrain the propagation of principles on the supposition of their ill tendency is a grave and dangerous fallacy, which at once destroys all religious liberty.... Truth is great and will triumph if left to herself."
Christians secure in their faith have nothing to fear from the Koran and Americans have nothing to fear from a mosque in Manhattan. We have everything to fear from becoming a nation that would seek to block the building of a house of worship of any particular faith.
Monday, May 24, 2010
Dangers of Perpetual War
Dialogue between Publius and his war hawk friend, Mithras. Mithras argued that the projection of American power abroad has nothing to do with limiting government power at home and poses no threat to American liberty. Mithras asserted that the projection of military might abroad was necessary to meet the threat of militant Islam and that he failed to see any logical contradiction between that and limiting government power domestically. Mithras also argued that limited government was not a desirable end in and of itself, but rather necessary only because human beings (and governments comprised of human beings) are corruptible, " If men were omniscient, not corruptible and innately good, I would want the biggest government possible." Publius responds:
“If men where omniscient, not corruptible and innately good, I would want the biggest government possible." Reminiscent of Plato and Orwell (FREEDOM IS SLAVERY, IGNORANCE IS STRENGTH). I would argue that such a government would still be immoral as it would have the power to subjugate an individual’s reason and an individual’s will to some other notion of the common good or the individual’s good. In fact, a government that is both omniscient and innately good would be required to do so whenever any individual acted, in accordance with his or her personal desires, in ways that may not be in his or her long term best interest (such as smoking a cigarette or eating a Big Mac, for example). A gilded cage is still a cage. Besides if men were innately beneficent, we wouldn’t need government for, as Mr. Jefferson put it, “It is to secure our rights that we resort to government at all.” (or as James Madison put it in Federalist 51, “If men were angels, no government would be necessary.”).
I agree that we need to maintain a strong national defense and reserve the right to take action when our interests and security our threatened. As much of a mess as it is now, I supported the invasion of Afghanistan to get those that attacked us (although we only partially succeeded in that objective and it is hard to see what our continued national security interest is there....). But, the Founding Fathers never envisioned this sort of global empire with military bases all over the world. Washington and Jefferson, on opposite ends of the political spectrum for most things, both eschewed entangling alliances.
Most of the Founders were distrustful of even having a standing army as in and of itself a threat to domestic liberty. Madison wrote in Federalist 46, “To these would be opposed a militia amounting to near half a million of citizens with arms in their hands, officered by men chosen from among themselves, fighting for their common liberties, and united and conducted by governments possessing their affections and confidence. It may well be doubted, whether a militia thus circumstanced could ever be conquered by such a proportion of regular troops.”
So while I agree with maintaining a strong defense and taking action when it is, regrettably, necessary; I think it is critically important to limit and narrow our projection of military power overseas to really what is absolutely necessary. But, the real question here is, is there a threat to our domestic liberty posed by remaining perpetually at war? If you have not read Orwell's wonderful novel (1984), please do so. If you have, I think you have missed the salient point: Oceania is kept perpetually at war in the novel as a way for the government to control the people (WAR IS PEACE). There are several indirect threats posed to our liberty by remaining perpetually at war. The government can manipulate public opinion by fear-mongering at election time (raising the terror threat level before elections) and corrals opposition into, "free speech zones," (http://freemarkets-freeminds-freesociety.blogspot.com/2009/12/newspeak-in-21st-century.html). But the more insidious threat to liberty and prosperity by perpetual war (or empire maintenance) is the fact that such overseas military adventurism is incredibly costly. It has to be paid for. It can only be paid for one of three ways: 1) taxation, and if you ask me Americans are taxed excessively as it is, 2) borrowing, and we are already the world's largest debtor nation, in danger of collapse, Greece-style or 3) printing money which inflates the currency and robs us all of wealth.
More direct threats stem from the fact that we accept, and our Constitution provides, expanded powers for government during time of war. President Lincoln went as far as suspending habeas corpus (without an act of Congress), sending federal troops to prevent the meeting of a state legislature in a state that had not yet seceded (Maryland), and imprisoning pro-Southern journalists without trial. FDR rounded up American citizens of Japanese descent into camps. Many, but not all, historians give President Lincoln a pass and argue that his actions were justified by the national emergency of secession. Most historians feel FDR may have gone too far in his treatment of Japanese-Americans. Regardless, however, these infringements on American domestic liberty were temporary because both the Civil War and World War II had definitive end points. In an open ended war, Americans will accept infringements on their liberty in the name of national security that will end up being permanent because the war will never be over. There will always be terrorists. Always.
In the current climate, we have accepted a number of infringements. We accept ever invasive airport screening, by a new federal police service (the Transportation Security Authority), that probably doesn't make us safer and failed horrendously on Christmas Day 2009 (http://freemarkets-freeminds-freesociety.blogspot.com/2010/01/find-terrorist.html). We have the PATRIOT Act (which has some good provisions and some ridiculous ones, like allowing the government to monitor what books people check out of the library), a carbon copy of Bill Clinton's 1995 anti-terrorism bill that Republicans opposed and defeated on the grounds that it threatened civil liberties. When the Bush administration began, illegally, listening to cell phone calls made overseas they simply admitted to it and President Bush said he did it because he would do anything to keep Americans safe. So, rather than be impeached or prosecuted, Congress simply said, "how would you like us to change the law to make it easier for you to spy on people?" and did so with the vote of then-Senator Obama (http://www.slate.com/id/2194254/pagenum/all/). You may argue all you want that you're not a foreign terrorist, so why should you care? The problem is, there is nothing to stop the U.S. Government from using such powers to investigate U.S. citizens. More disturbing is the tampering with the presumption of innocence that is currently in vogue in this perpetual war on terror. The U.S. Constitution mandates that no citizen should be deprived of, "life, liberty or property," without due process of law (Amendment 5) and yet we are now talking about further curtailing the Miranda rights of U.S. citizens charged with terrorism, solely based on the fact that they were charged (not that anything was proven) and preemptively stripping terror suspects that are U.S. citizens apprehended in the U.S. of their citizenship prior to trial to circumvent such due process! (http://www.google.com/hostednews/ap/article/ALeqM5jAz5HTbaFcgiGhmbogdxlE2QCDzQD9FJFQLO0). So what of cases of mistaken identity? What if your name or appearance is similar to the real perpetrator? Do you then preemptively lose your rights as an American citizen because the government thinks, but hasn't proven, it has the right person? If so, why should an American citizen that practices Islam, most of whom do so peacefully, have less rights than a practicing Christian, Jew, or atheist? What is to stop the definition of terrorist from expanding from jihadist, to right-wing militia, to opposition party? More chilling is that the Obama administration reserves the right to be judge, jury, and executioner for American citizens that it believes (again hasn't proven) are involved with terrorism (http://abcnews.go.com/Politics/license-kill-intelligence-chief-us-american-terrorist/story?id=9740491&page=1). Talk about circumventing the fifth amendment! Talk about the danger of a mistaken identity and a government that isn't required to meet a burden of proof before sentencing.
These are the threats to American liberty that have accrued over the last eight and a half years fighting a "war on terror." As the war goes on, there will be more. Since the war has no end in sight, I see no end in sight to the erosion of American liberty. Sure, our troops are, "over there" but the permanent war footing has ramifications for domestic policy at home. In October 2002, when Congressman Ron Paul (R-TX) introduced a resolution for Congress to actually declare war on Iraq, Congressman Ed Royce (R-CA) opposed the measure stating, "...we have got to contemplate that it [declaring war] is going to have the effect of transferring power, conferring power to the President and Attorney General and to the Pentagon that they cannot otherwise exercise. One of those powers is going to be the power to wiretap, notwithstanding what we do here in Congress, once there is a declaration of war, they are automatically going to be able to wiretap." He was right about the danger war poses to domestic liberty, but as we have seen, the Bush administration was already wiretapping and Congressman Royce was, in reality, arguing in favour of Congress abdicating power to the executive by not exercising its role in deciding when we do and do not go to war. How can you fail to see that fighting a war indefinitely threatens our liberty at home? Our liberty has been eroding for eight and a half years and will continue to erode for as long as we remain at war.
“If men where omniscient, not corruptible and innately good, I would want the biggest government possible." Reminiscent of Plato and Orwell (FREEDOM IS SLAVERY, IGNORANCE IS STRENGTH). I would argue that such a government would still be immoral as it would have the power to subjugate an individual’s reason and an individual’s will to some other notion of the common good or the individual’s good. In fact, a government that is both omniscient and innately good would be required to do so whenever any individual acted, in accordance with his or her personal desires, in ways that may not be in his or her long term best interest (such as smoking a cigarette or eating a Big Mac, for example). A gilded cage is still a cage. Besides if men were innately beneficent, we wouldn’t need government for, as Mr. Jefferson put it, “It is to secure our rights that we resort to government at all.” (or as James Madison put it in Federalist 51, “If men were angels, no government would be necessary.”).
I agree that we need to maintain a strong national defense and reserve the right to take action when our interests and security our threatened. As much of a mess as it is now, I supported the invasion of Afghanistan to get those that attacked us (although we only partially succeeded in that objective and it is hard to see what our continued national security interest is there....). But, the Founding Fathers never envisioned this sort of global empire with military bases all over the world. Washington and Jefferson, on opposite ends of the political spectrum for most things, both eschewed entangling alliances.
Most of the Founders were distrustful of even having a standing army as in and of itself a threat to domestic liberty. Madison wrote in Federalist 46, “To these would be opposed a militia amounting to near half a million of citizens with arms in their hands, officered by men chosen from among themselves, fighting for their common liberties, and united and conducted by governments possessing their affections and confidence. It may well be doubted, whether a militia thus circumstanced could ever be conquered by such a proportion of regular troops.”
So while I agree with maintaining a strong defense and taking action when it is, regrettably, necessary; I think it is critically important to limit and narrow our projection of military power overseas to really what is absolutely necessary. But, the real question here is, is there a threat to our domestic liberty posed by remaining perpetually at war? If you have not read Orwell's wonderful novel (1984), please do so. If you have, I think you have missed the salient point: Oceania is kept perpetually at war in the novel as a way for the government to control the people (WAR IS PEACE). There are several indirect threats posed to our liberty by remaining perpetually at war. The government can manipulate public opinion by fear-mongering at election time (raising the terror threat level before elections) and corrals opposition into, "free speech zones," (http://freemarkets-freeminds-freesociety.blogspot.com/2009/12/newspeak-in-21st-century.html). But the more insidious threat to liberty and prosperity by perpetual war (or empire maintenance) is the fact that such overseas military adventurism is incredibly costly. It has to be paid for. It can only be paid for one of three ways: 1) taxation, and if you ask me Americans are taxed excessively as it is, 2) borrowing, and we are already the world's largest debtor nation, in danger of collapse, Greece-style or 3) printing money which inflates the currency and robs us all of wealth.
More direct threats stem from the fact that we accept, and our Constitution provides, expanded powers for government during time of war. President Lincoln went as far as suspending habeas corpus (without an act of Congress), sending federal troops to prevent the meeting of a state legislature in a state that had not yet seceded (Maryland), and imprisoning pro-Southern journalists without trial. FDR rounded up American citizens of Japanese descent into camps. Many, but not all, historians give President Lincoln a pass and argue that his actions were justified by the national emergency of secession. Most historians feel FDR may have gone too far in his treatment of Japanese-Americans. Regardless, however, these infringements on American domestic liberty were temporary because both the Civil War and World War II had definitive end points. In an open ended war, Americans will accept infringements on their liberty in the name of national security that will end up being permanent because the war will never be over. There will always be terrorists. Always.
In the current climate, we have accepted a number of infringements. We accept ever invasive airport screening, by a new federal police service (the Transportation Security Authority), that probably doesn't make us safer and failed horrendously on Christmas Day 2009 (http://freemarkets-freeminds-freesociety.blogspot.com/2010/01/find-terrorist.html). We have the PATRIOT Act (which has some good provisions and some ridiculous ones, like allowing the government to monitor what books people check out of the library), a carbon copy of Bill Clinton's 1995 anti-terrorism bill that Republicans opposed and defeated on the grounds that it threatened civil liberties. When the Bush administration began, illegally, listening to cell phone calls made overseas they simply admitted to it and President Bush said he did it because he would do anything to keep Americans safe. So, rather than be impeached or prosecuted, Congress simply said, "how would you like us to change the law to make it easier for you to spy on people?" and did so with the vote of then-Senator Obama (http://www.slate.com/id/2194254/pagenum/all/). You may argue all you want that you're not a foreign terrorist, so why should you care? The problem is, there is nothing to stop the U.S. Government from using such powers to investigate U.S. citizens. More disturbing is the tampering with the presumption of innocence that is currently in vogue in this perpetual war on terror. The U.S. Constitution mandates that no citizen should be deprived of, "life, liberty or property," without due process of law (Amendment 5) and yet we are now talking about further curtailing the Miranda rights of U.S. citizens charged with terrorism, solely based on the fact that they were charged (not that anything was proven) and preemptively stripping terror suspects that are U.S. citizens apprehended in the U.S. of their citizenship prior to trial to circumvent such due process! (http://www.google.com/hostednews/ap/article/ALeqM5jAz5HTbaFcgiGhmbogdxlE2QCDzQD9FJFQLO0). So what of cases of mistaken identity? What if your name or appearance is similar to the real perpetrator? Do you then preemptively lose your rights as an American citizen because the government thinks, but hasn't proven, it has the right person? If so, why should an American citizen that practices Islam, most of whom do so peacefully, have less rights than a practicing Christian, Jew, or atheist? What is to stop the definition of terrorist from expanding from jihadist, to right-wing militia, to opposition party? More chilling is that the Obama administration reserves the right to be judge, jury, and executioner for American citizens that it believes (again hasn't proven) are involved with terrorism (http://abcnews.go.com/Politics/license-kill-intelligence-chief-us-american-terrorist/story?id=9740491&page=1). Talk about circumventing the fifth amendment! Talk about the danger of a mistaken identity and a government that isn't required to meet a burden of proof before sentencing.
These are the threats to American liberty that have accrued over the last eight and a half years fighting a "war on terror." As the war goes on, there will be more. Since the war has no end in sight, I see no end in sight to the erosion of American liberty. Sure, our troops are, "over there" but the permanent war footing has ramifications for domestic policy at home. In October 2002, when Congressman Ron Paul (R-TX) introduced a resolution for Congress to actually declare war on Iraq, Congressman Ed Royce (R-CA) opposed the measure stating, "...we have got to contemplate that it [declaring war] is going to have the effect of transferring power, conferring power to the President and Attorney General and to the Pentagon that they cannot otherwise exercise. One of those powers is going to be the power to wiretap, notwithstanding what we do here in Congress, once there is a declaration of war, they are automatically going to be able to wiretap." He was right about the danger war poses to domestic liberty, but as we have seen, the Bush administration was already wiretapping and Congressman Royce was, in reality, arguing in favour of Congress abdicating power to the executive by not exercising its role in deciding when we do and do not go to war. How can you fail to see that fighting a war indefinitely threatens our liberty at home? Our liberty has been eroding for eight and a half years and will continue to erode for as long as we remain at war.
Saturday, May 22, 2010
An Example of the Dumbing Down of American Politics
A friend sent me this link to Rand Paul's interview with Rachel Maddow after his primary victory in Kentucky: http://www.msnbc.msn.com/id/26315908//vp/37244354#37244354. This is, of course, the famous interview about Dr. Paul's comments on the Civil Rights Act of 1964.
Earlier, I had read a transcript of this interview (http://voices.washingtonpost.com/right-now/2010/05/rand_paul_telling_the_truth.html). I find it unfortunate that Dr. Paul may crucified for intellectual honesty. His argument is that private property is private and the owners of the property have the right to set the rules on their property - and if a business owner wants to put himself at a competitive disadvantage by turning away business to his competition because of his own bigotry, let him do it and let his business suffer for it. Goldwater made the same argument when he chose not to vote for the 1964 Civil Rights Act and it is not really wrong. It may offend our sensibilities, but it is not really wrong.
Both Paul and Goldwater were always quite clear in their opposition to such bigotry. Dr. Paul treats patients without regard to race, religion, or creed. Dr. Paul was also quite clear in the interview that such bigotry on public property is unacceptable and that he had no contention whatsoever with 90% of the Civil Rights Act. What he is arguing about is where the authority for government to control what happens on private property ends. In the era of abuses of eminent domain it remains a relevant question. Most of us would not draw the line where Dr. Paul drew it, I would not draw the line where Dr. Paul drew it, but it is important to realize that we draw that line on a slippery slope.
What I find disturbing is that Dr. Paul will be branded as a racist for making a philosphically cogent argument born, not out of bigotry, but out of a healthy respect for private ownership. Such is the dumb-downed nature of our politics. Chris Matthews had an interesting take on it (http://hardblogger.msnbc.msn.com/ ) pointing out that politics is often the realm of compromise between philosphical principle and pragmatism and successful politicians are often not the intellectually pure. Moreover, as a political neophyte, Dr. Paul has not come to terms with what his governing philosophy means in the context of established law. It is uncomfortable, perhaps, to watch him sort through these issues in the public arena when a more practiced pol would've already worked out why the 1964 Civil Rights Act is an, "exception to the rule," that should be protected. Dr. Paul did wrestle in the Maddow interview with the practicial issue of what does one do if you oppose one provision of a bill of which you mostly approve. As a Senator he'll face that dilemna a lot and although he couldn't seem to work it out during the interview on the Civil Rights Act, he did overnight and issued a statement opposing the repeal of the Civil Rights Act (http://blog.newsweek.com/blogs/thegaggle/archive/2010/05/20/rand-paul-comes-out-against-repealing-the-civil-rights-act.aspx ).
Earlier, I had read a transcript of this interview (http://voices.washingtonpost.com/right-now/2010/05/rand_paul_telling_the_truth.html). I find it unfortunate that Dr. Paul may crucified for intellectual honesty. His argument is that private property is private and the owners of the property have the right to set the rules on their property - and if a business owner wants to put himself at a competitive disadvantage by turning away business to his competition because of his own bigotry, let him do it and let his business suffer for it. Goldwater made the same argument when he chose not to vote for the 1964 Civil Rights Act and it is not really wrong. It may offend our sensibilities, but it is not really wrong.
Both Paul and Goldwater were always quite clear in their opposition to such bigotry. Dr. Paul treats patients without regard to race, religion, or creed. Dr. Paul was also quite clear in the interview that such bigotry on public property is unacceptable and that he had no contention whatsoever with 90% of the Civil Rights Act. What he is arguing about is where the authority for government to control what happens on private property ends. In the era of abuses of eminent domain it remains a relevant question. Most of us would not draw the line where Dr. Paul drew it, I would not draw the line where Dr. Paul drew it, but it is important to realize that we draw that line on a slippery slope.
What I find disturbing is that Dr. Paul will be branded as a racist for making a philosphically cogent argument born, not out of bigotry, but out of a healthy respect for private ownership. Such is the dumb-downed nature of our politics. Chris Matthews had an interesting take on it (http://hardblogger.msnbc.msn.
Friday, April 2, 2010
End It, Don't Mend It.
On Sunday, March 28, 2010, Florida State Governor Charlie Crist debated Speaker of the House Marco Rubio on Fox News Sunday. Both are running in a GOP primary for the U.S. Senate. One of the more interesting moments in the debate occurred when Chris Wallace explored differences in opinion between the 53-year-old Crist and the 39-year-old Rubio on Social Security. Governor Crist gave the standard answer of, “we have to preserve Social Security,” meaning no changes can be made in the program even though it is about to implode. However, with rare candor, Speaker Rubio endorsed the position that Social Security, as it exists, is not sustainable and that reform is necessary. In his discussion, Speaker Rubio included the possibility that retirement ages may need to be raised and/or cost of living adjustments decreased to make Social Security solvent. He endorsed Congressman Paul Ryan’s (R-WI), “road map” for Social Security reform, which also includes allowing younger workers to opt out of Social Security and in to personal retirement accounts. Congressman Ryan appeared the previous Thursday (March 26, 2010) on Fox Business Channel’s Stossel as part of a discussion about the growing threat of federal entitlements. Currently, spending on Medicare and Social Security account for 50% of the federal budget and that percentage will continue to rise if reforms (and cuts) are not made. Without serious alterations to the programs, the spending obligations will become unsustainable (and squeeze out federal spending for anything else). For too long, most Americans have viewed the federal debt as, “just a number,” but the debt crisis in Greece should remind us all that there is a breaking point. Arguing for the status quo and stating that these programs (Social Security and Medicare) have to be preserved for future generations, was a representative of the AARP (American Association of Retired Persons). Of course, maintaining the status quo essentially guarantees that these programs will not be there for future generations.
Like Speaker Rubio, Congressman Ryan (age 40) is also a member of Generation X. The generational divide on this issue is stunning, with the AARP and the grey-haired Governor Crist arguing for, “preservation,” of Social Security as it is and the younger generation that sees the proverbial writing on the wall and knowing that, without significant changes, the program is unsustainable. Speaker Rubio and Congressman Ryan argue for serious reforms to make Social Security solvent for future generations and these reforms would fundamentally change how we think about Social Security. Although Medicare faces larger looming short falls and represents a greater burden on future federal spending, it is harder to argue that some measure to provide health insurance for elderly persons who may be too high an insurance risk to obtain it privately. On the other hand, for most Americans, government help in retirement planning is both unnecessary and provides a lower return on the money, “invested,” than one could achieve investing the same sum on his or her own. Furthermore, the payment structure of Social Security is unsound economically and the funding source for Social Security is immoral. Speaker Rubio and Congressman Ryan have it wrong. Social Security should not be mended, it should be ended.
THE ECONOMIC CASE AGAINST SOCIAL SECURITY
When the Social Security Act was passed in 1935, the program was designed not to be a welfare program for those who could not afford to plan their own retirement, but rather as an entitlement for all Americans, regardless of means, to assist with their retirement. Ostensibly money is taken from your paycheck, which your employer matches (just like with your 401K), it is placed into some sort of trust fund, retirement account, or, as Vice President Gore might say, “lock box,” for you until you retire and receive benefits upon retirement. That sounds nice. It is a program for working Americans, not welfare. They benefits paid out to you in retirement are from the money you paid in while working. It is not a government give-away, but rather something the individual has earned.
Unfortunately, Social Security does not actually work that way. The revenue from Social Security taxes (both the employee payroll tax and the employer matching) go into a general fund. That fund is not invested or put into a savings account somewhere, but rather it is used to pay current retirees Social Security benefits. In other words, the money that is taken from you as a worker in the payroll tax is given to someone who is currently retired, not put away and saved for you. When there has been surplus in the Social Security revenues (more is taken in by the payroll tax than is needed to pay retiree benefits), that money has not been saved or invested to bolster the solvency of the program. Rather, it has been applied to the general revenue as a way of lowering the federal budget deficit (or to be spent on other things). In fact, of the years in the mid 1990’s when the federal budget was balanced or ran a surplus, there would have been a deficit in all of them except one had the Social Security surplus money not been applied to the general budget revenue.
Such a system can be sustained for as long as there are more workers than retirees. However, the number of retirees is increasing. The largest generation in the history of the United States, the baby boomers, is now hitting retirement age. Taxpayers are eligible for full retirement benefits at the age of 65 (now 67 for those born after 1960), but can collect reduced benefits as early as age 62. The average life expectancy in 1935, when the Social Security Act was passed, was 62. The average life expectancy is now 78. Not only are the ranks of the retirees about to swell with new retirees, but the current retirees are living longer. In 1935, many people did not live to collect Social Security and those that did only collected it for only a few years. Now most retirees collect Social Security for at least ten or fifteen years and some for as long as twenty. During the period of Social Security surpluses in the mid 1990’s, there were five workers for every retiree (and of course all of the baby boomers were in the work force then). That number is now three and shrinking. It is apparent why such a payment structure is economically unsustainable: since revenue from current workers is required to pay current benefits, the ability to pay promised benefits disappears as the number of workers per retiree dwindles (and this year, for the first time, Social Security is taking in less money than it is obligated to pay out). There is a term for taking money from one group and using it to pay profits or benefits to another group rather than investing it for the benefit of the person the money came from. It is called a Ponzi scheme. Bernie Madoff went to jail for doing exactly what the federal government is doing with your Social Security contributions.
THE MORAL CASE AGAINST SOCIAL SECURITY
Aside from the inherent immorality of a Ponzi scheme, Social Security is financed with an immoral revenue system. Social Security is a paid for by a payroll tax (yes, your employer matches what you pay, but who really believes this does not come out of what you could be making?). The payroll tax is a flat tax of 7%. It is interesting that the political left was adamantly opposed to a payroll tax holiday as an economic stimulus and yet equally adamantly opposes a similar tax for the federal income tax. You cannot have a flat income tax rate, they argue. It is unfair and regressive. It is a greater burden to those that have less and those that make more should share a larger percentage of their income with the public (pay a higher tax rate) because that still leaves them with plenty. Yet, this is exactly how we pay for Social Security. The billionaire pays the payroll tax on his own earnings at the same flat rate as the person making $20,000 per year. However, the Social Security tax is even less fair than a flat income tax. One could argue a flat income tax is fair because everyone pays the same proportion of his or her income. But the payroll tax is only levied on wages and salary. Income from investments (interest earnings, stock dividends, etc.) is completely exempt from the payroll tax. It is not a true flat tax, but rather it is the Steve Forbes flat tax (Forbes ran for President in 1996 on the flat tax and was accused of serving his own interest as a wealthy person because his flat tax also exempted income from investments and applied only to wages and salary). So, the hypothetical wage earner making $20,000 pays 7% of his entire income in Social Security tax, whereas someone who makes $50,000 in salary and another $50,000 from investment income pays only 3.5% of his or her earnings in Social Security tax. This further shifts the burden of the tax to poorer individuals. Furthermore, the payroll tax is only levied on the first $109,000 of salary. This means someone who has a salary of $1 million per year pays only about 0.7% of his or her income in Social Security tax (and considerably less if that person has other investment income). Social Security is paid for by an unfair, regressive tax, which is far more burdensome to those of low and middle incomes than it is to the wealthy.
Ostensibly, Social Security exists to help those who have limited means have more security in their retirement. However, when the program was created there was concern that the public might not support another program of welfare for the impoverished and therefore it was created as an entitlement for everyone, to insure everyone’s retirement security. For this reason, it was sold as a retirement account that you pay into and reap benefits from latter as if your money was being invested for you or kept for you. As noted above, this is not the case. However, to maintain this charade, Social Security benefit payments are proportional to the amount one pays in while working. Therefore, the benefit payments are higher for people who made more money while working and lower for those who had lower incomes. Anyone making $109,000 per year (provided that all of the initial $109,000 is wage earning) or more receives maximum benefit payments in retirement, but the person making $20,000 per year will get a much smaller Social Security cheque. Furthermore, the wealthy can and will, on average, retire at an earlier age and therefore collect Social Security for longer. A lower income person may not be able to afford to retire at the age of 65, may have to work for longer, and therefore will not start collecting his or her Social Security until later.
Putting the tax and benefits structures together, what we have is a tax that is born mostly by those of lower incomes to pay benefits that go in greater proportion to those of higher incomes. The Social Security entitlement represents an immoral transfer of wealth from the working poor to the more affluent.
CONCLUSION
Social Security has often been called the, “third rail,” of American politics and the suggestion that is should be reformed, changed, or abolished is often the death knell for a political candidate’s campaign (i.e. Barry Goldwater, Paul Tsongas). However, on close inspection, the program is unjustifiable. It is a Ponzi scheme that is about to become insolvent and represents a transfer of wealth from the poor to the affluent. Furthermore, it does not even represent a good investment. One could do as well with a savings account or purchasing a life insurance policy. One could do better, easily, with a modest investment portfolio. Despite recent volatility in the stock market, it represents a sound strategy for long term (decade or multi-decade) investments that can be converted to safer investments closer to retirement age. If workers could invest the 7% of their income taken in the payroll tax, they could have a much higher return on their investment (particularly if they also got paid the 7% of their income their employer matches in the payroll tax). Finally, there is simply no justification for the federal government to aid in providing retirement benefits for people who have the means to plan for their own retirement.
There are a number of proposals, opposed by demagogues committed to maintaining the unsustainable status quo in a cynical (and usually successful) ploy to garner votes in the short-term, to restore the solvency of Social Security and make it sustainable. These include ideas like raising the retirement age (to match the increase in life expectancy), means testing benefits (which would minimize the transfer of money to the wealthy), raising the amount of income that is taxed by the payroll tax, and reducing benefits (such as reducing the amount of inflation-triggered cost of living adjustments). Any or all of these might improve some of the problems identified above, but none of them change the fundamentally immoral nature of the program, or guarantee it will remain solvent in the long-term, as it will remain a Ponzi scheme.
Social Security should not be tweaked or mended. It should be eliminated. A welfare program to assist with the retirement needs of the working poor and a separate program of federal disability insurance can rise from its ashes, but these should be paid for from the general tax revenue and remain on budget, not paid for by some sort of trust fund chimera. Social Security commitments to current retirees and individuals nearing retirement (say 55 and older) should be kept, but younger workers with the means to save should be made to plan for their own retirement. The program should be replaced with personal retirement accounts that each individual owns. His or her own investments, grown over time, will then provide for his or her retirement. If there are concerns that such a strategy is “too risky,” or, “people won’t do it,” then contributions to such accounts could be mandatory and the federal government could regulate the accounts, setting standards for safer investment strategies (although, personally, I would favour allowing more individual freedom). There are better ways to assist Americans with retirement planning than this unworkable relic of the New Deal.
Like Speaker Rubio, Congressman Ryan (age 40) is also a member of Generation X. The generational divide on this issue is stunning, with the AARP and the grey-haired Governor Crist arguing for, “preservation,” of Social Security as it is and the younger generation that sees the proverbial writing on the wall and knowing that, without significant changes, the program is unsustainable. Speaker Rubio and Congressman Ryan argue for serious reforms to make Social Security solvent for future generations and these reforms would fundamentally change how we think about Social Security. Although Medicare faces larger looming short falls and represents a greater burden on future federal spending, it is harder to argue that some measure to provide health insurance for elderly persons who may be too high an insurance risk to obtain it privately. On the other hand, for most Americans, government help in retirement planning is both unnecessary and provides a lower return on the money, “invested,” than one could achieve investing the same sum on his or her own. Furthermore, the payment structure of Social Security is unsound economically and the funding source for Social Security is immoral. Speaker Rubio and Congressman Ryan have it wrong. Social Security should not be mended, it should be ended.
THE ECONOMIC CASE AGAINST SOCIAL SECURITY
When the Social Security Act was passed in 1935, the program was designed not to be a welfare program for those who could not afford to plan their own retirement, but rather as an entitlement for all Americans, regardless of means, to assist with their retirement. Ostensibly money is taken from your paycheck, which your employer matches (just like with your 401K), it is placed into some sort of trust fund, retirement account, or, as Vice President Gore might say, “lock box,” for you until you retire and receive benefits upon retirement. That sounds nice. It is a program for working Americans, not welfare. They benefits paid out to you in retirement are from the money you paid in while working. It is not a government give-away, but rather something the individual has earned.
Unfortunately, Social Security does not actually work that way. The revenue from Social Security taxes (both the employee payroll tax and the employer matching) go into a general fund. That fund is not invested or put into a savings account somewhere, but rather it is used to pay current retirees Social Security benefits. In other words, the money that is taken from you as a worker in the payroll tax is given to someone who is currently retired, not put away and saved for you. When there has been surplus in the Social Security revenues (more is taken in by the payroll tax than is needed to pay retiree benefits), that money has not been saved or invested to bolster the solvency of the program. Rather, it has been applied to the general revenue as a way of lowering the federal budget deficit (or to be spent on other things). In fact, of the years in the mid 1990’s when the federal budget was balanced or ran a surplus, there would have been a deficit in all of them except one had the Social Security surplus money not been applied to the general budget revenue.
Such a system can be sustained for as long as there are more workers than retirees. However, the number of retirees is increasing. The largest generation in the history of the United States, the baby boomers, is now hitting retirement age. Taxpayers are eligible for full retirement benefits at the age of 65 (now 67 for those born after 1960), but can collect reduced benefits as early as age 62. The average life expectancy in 1935, when the Social Security Act was passed, was 62. The average life expectancy is now 78. Not only are the ranks of the retirees about to swell with new retirees, but the current retirees are living longer. In 1935, many people did not live to collect Social Security and those that did only collected it for only a few years. Now most retirees collect Social Security for at least ten or fifteen years and some for as long as twenty. During the period of Social Security surpluses in the mid 1990’s, there were five workers for every retiree (and of course all of the baby boomers were in the work force then). That number is now three and shrinking. It is apparent why such a payment structure is economically unsustainable: since revenue from current workers is required to pay current benefits, the ability to pay promised benefits disappears as the number of workers per retiree dwindles (and this year, for the first time, Social Security is taking in less money than it is obligated to pay out). There is a term for taking money from one group and using it to pay profits or benefits to another group rather than investing it for the benefit of the person the money came from. It is called a Ponzi scheme. Bernie Madoff went to jail for doing exactly what the federal government is doing with your Social Security contributions.
THE MORAL CASE AGAINST SOCIAL SECURITY
Aside from the inherent immorality of a Ponzi scheme, Social Security is financed with an immoral revenue system. Social Security is a paid for by a payroll tax (yes, your employer matches what you pay, but who really believes this does not come out of what you could be making?). The payroll tax is a flat tax of 7%. It is interesting that the political left was adamantly opposed to a payroll tax holiday as an economic stimulus and yet equally adamantly opposes a similar tax for the federal income tax. You cannot have a flat income tax rate, they argue. It is unfair and regressive. It is a greater burden to those that have less and those that make more should share a larger percentage of their income with the public (pay a higher tax rate) because that still leaves them with plenty. Yet, this is exactly how we pay for Social Security. The billionaire pays the payroll tax on his own earnings at the same flat rate as the person making $20,000 per year. However, the Social Security tax is even less fair than a flat income tax. One could argue a flat income tax is fair because everyone pays the same proportion of his or her income. But the payroll tax is only levied on wages and salary. Income from investments (interest earnings, stock dividends, etc.) is completely exempt from the payroll tax. It is not a true flat tax, but rather it is the Steve Forbes flat tax (Forbes ran for President in 1996 on the flat tax and was accused of serving his own interest as a wealthy person because his flat tax also exempted income from investments and applied only to wages and salary). So, the hypothetical wage earner making $20,000 pays 7% of his entire income in Social Security tax, whereas someone who makes $50,000 in salary and another $50,000 from investment income pays only 3.5% of his or her earnings in Social Security tax. This further shifts the burden of the tax to poorer individuals. Furthermore, the payroll tax is only levied on the first $109,000 of salary. This means someone who has a salary of $1 million per year pays only about 0.7% of his or her income in Social Security tax (and considerably less if that person has other investment income). Social Security is paid for by an unfair, regressive tax, which is far more burdensome to those of low and middle incomes than it is to the wealthy.
Ostensibly, Social Security exists to help those who have limited means have more security in their retirement. However, when the program was created there was concern that the public might not support another program of welfare for the impoverished and therefore it was created as an entitlement for everyone, to insure everyone’s retirement security. For this reason, it was sold as a retirement account that you pay into and reap benefits from latter as if your money was being invested for you or kept for you. As noted above, this is not the case. However, to maintain this charade, Social Security benefit payments are proportional to the amount one pays in while working. Therefore, the benefit payments are higher for people who made more money while working and lower for those who had lower incomes. Anyone making $109,000 per year (provided that all of the initial $109,000 is wage earning) or more receives maximum benefit payments in retirement, but the person making $20,000 per year will get a much smaller Social Security cheque. Furthermore, the wealthy can and will, on average, retire at an earlier age and therefore collect Social Security for longer. A lower income person may not be able to afford to retire at the age of 65, may have to work for longer, and therefore will not start collecting his or her Social Security until later.
Putting the tax and benefits structures together, what we have is a tax that is born mostly by those of lower incomes to pay benefits that go in greater proportion to those of higher incomes. The Social Security entitlement represents an immoral transfer of wealth from the working poor to the more affluent.
CONCLUSION
Social Security has often been called the, “third rail,” of American politics and the suggestion that is should be reformed, changed, or abolished is often the death knell for a political candidate’s campaign (i.e. Barry Goldwater, Paul Tsongas). However, on close inspection, the program is unjustifiable. It is a Ponzi scheme that is about to become insolvent and represents a transfer of wealth from the poor to the affluent. Furthermore, it does not even represent a good investment. One could do as well with a savings account or purchasing a life insurance policy. One could do better, easily, with a modest investment portfolio. Despite recent volatility in the stock market, it represents a sound strategy for long term (decade or multi-decade) investments that can be converted to safer investments closer to retirement age. If workers could invest the 7% of their income taken in the payroll tax, they could have a much higher return on their investment (particularly if they also got paid the 7% of their income their employer matches in the payroll tax). Finally, there is simply no justification for the federal government to aid in providing retirement benefits for people who have the means to plan for their own retirement.
There are a number of proposals, opposed by demagogues committed to maintaining the unsustainable status quo in a cynical (and usually successful) ploy to garner votes in the short-term, to restore the solvency of Social Security and make it sustainable. These include ideas like raising the retirement age (to match the increase in life expectancy), means testing benefits (which would minimize the transfer of money to the wealthy), raising the amount of income that is taxed by the payroll tax, and reducing benefits (such as reducing the amount of inflation-triggered cost of living adjustments). Any or all of these might improve some of the problems identified above, but none of them change the fundamentally immoral nature of the program, or guarantee it will remain solvent in the long-term, as it will remain a Ponzi scheme.
Social Security should not be tweaked or mended. It should be eliminated. A welfare program to assist with the retirement needs of the working poor and a separate program of federal disability insurance can rise from its ashes, but these should be paid for from the general tax revenue and remain on budget, not paid for by some sort of trust fund chimera. Social Security commitments to current retirees and individuals nearing retirement (say 55 and older) should be kept, but younger workers with the means to save should be made to plan for their own retirement. The program should be replaced with personal retirement accounts that each individual owns. His or her own investments, grown over time, will then provide for his or her retirement. If there are concerns that such a strategy is “too risky,” or, “people won’t do it,” then contributions to such accounts could be mandatory and the federal government could regulate the accounts, setting standards for safer investment strategies (although, personally, I would favour allowing more individual freedom). There are better ways to assist Americans with retirement planning than this unworkable relic of the New Deal.
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