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Michael Janay
Citizen
Username: Childprotect
Post Number: 1570
Registered: 1-2003
| | Posted on Monday, February 14, 2005 - 12:05 pm: | 
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You Don't Need To Read This Bush's Lips
By ARTHUR B. LAFFER
February 14, 2005; WSJ Page A18
When "W" ran for president in 2000, I voted for him but not enthusiastically. I had voted for Bill Clinton in the prior two presidential elections, but with Al Gore as the Democratic candidate in 2000 the choice was easy for me even if I wasn't all that excited about George Bush.
I am now flabbergasted by the performance of Bush 43.
George W. Bush could well turn out to be the best president in recent history. His inaugural address and his State of the Union speech were as good as any I've ever heard. He has also shown unbelievable steadfastness of purpose during his first term and now has put forth an agenda for his second term that would lock in the gains of the supply-side revolution for generations to come. And, I might add, he's done it all with little pretense and no scandal (keep your fingers crossed).
* * *
On the proactive side of public policy, President Bush's proposal for private accounts for Social Security is the first time ever we've tried to associate effort with reward in this program. Taking steps to reduce the unfunded liability of the Social Security program, both Ronald Reagan and Bill Clinton reduced Social Security benefits by subjecting them to income taxes -- 50% of benefits following the 1986 tax act and then 85% of benefits after the 1993 tax act. In addition, Reagan's Blue Ribbon Commission on Social Security, chaired by Alan Greenspan, extended the age of retirement. Mr. Clinton took the additional pro-growth step of removing the "retirement test" for receipt of Social Security benefits, thereby lowering taxes on the working elderly. But President Bush's proposal is so much better than any of these changes.
The key to the president's proposal has been totally overlooked but is really quite simple yet unimaginably powerful. Today if a participant in Social Security increases his work (and income) just enough so that the employee and employer have to pay one extra dollar in FICA (payroll) taxes, the present value of the future benefits resulting from his extra work would effectively be zero dollars. Today in America there is virtually no association between an individual's extra contribution to Social Security and future benefits accruing to that individual. The entire payroll tax on the margin is a wedge driven between effort and reward by the full amount of the payroll tax.
By allowing four percentage points of the employee's FICA tax to go to private retirement accounts, as President Bush has proposed, a full 20 cents of each dollar in taxes would yield a direct benefit to the individual worker on the margin. This is a huge move in the right direction. Now we have only 80 cents left to go.
On other fronts, President Bush has also avoided making major fiscal-policy mistakes. Mr. Bush's feet are often held to the fire when it comes to deficits. As far as I'm concerned, however, this is a "red herring," pure and simple. But that isn't the way most politicians think. When faced with looming deficits, the usual response has been to compromise and agree to "revenue enhancers." Not this Bush.
President Clinton, along with his Congress, reduced federal government spending from almost 23% of GDP to a little over 19% of GDP. He left office with the federal budget in surplus. But more importantly, Mr. Clinton provided Mr. Bush with the fiscal flexibility to do what was right. The decline in asset values that began in March of 2000, the economic slowdown and the 9/11 attacks on America were not President Bush's fault -- or even indirect consequences of his actions. And yet they led to a recession, a huge shortfall in federal tax revenues and an urgent need for additional spending on national security. Clearly President Bush should not have raised taxes on the last three people working, and he didn't. The right thing to do was to cut tax rates and increase defense spending, which is exactly what he did. The ensuing deficits that have resulted are from correct policy decisions.
Because of President Clinton, President Bush's budget deficits can easily be absorbed by the U.S. economy. If budget deficits were to remain at today's level of $412 billion per year for the next decade (not my recommendation, of course) and normal growth were 5% per annum, the national debt as a share of GDP in 2015 would be four percentage points lower than it was in 1993. And, 1993 was the beginning of an enormously prosperous period of U.S. history. From his speeches and his budget, President Bush clearly understands that this isn't good enough. He has proposed significant reductions in the growth rate of non-defense spending, which will bring these debt-to-GDP numbers way down. Without the need to cajole Congress into tax cuts or defense spending increases, he'll get what he wants.
* * *
From the standpoint of seeing the big picture, President Bush is unique among politicians in that he truly comprehends that the U.S. today is the single best performing economy ever to have existed and that only by pushing pro-growth reforms will it retain its vigor.
The 10-year T-note yield is at 4% and inflation is nowhere to be found. Productivity is high and unemployment, at 5.2%, is low and falling. Tax rates on capital are at the lowest levels in my lifetime and markets are more transparent than they ever have been.
To make sure these trends don't stop, President Bush is proposing: (i) making his 2001 and 2003 tax cuts permanent; (ii) taking the second step towards the elimination of the double taxation of corporate capital; (iii) accelerating to the present and making permanent the abolition of the federal death tax; (iv) consolidating a hodgepodge of tax-free savings accounts into one lifetime savings account; and (v) moving aggressively on tort reform. The only item I couldn't find in the laundry list of "to-dos" was the amelioration or elimination of the alternative minimum tax. Let's hope that was excluded simply due to someone's (perhaps my) oversight.
And, as if that's not enough, President Bush now wants a capstone for the second half of his second term in office to be fundamental tax reform of a flat tax nature. Supply-side pro-growth economics couldn't ask for a better champion -- nor could any American.
Mr. Laffer is founder and chairman of Laffer Associates
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Dave
Moderator
Username: Dave
Post Number: 5277
Registered: 4-1998
| | Posted on Monday, February 14, 2005 - 12:13 pm: |
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MAJOR SCOOP! Man writing for the Wall Street Journal likes Bush. I'm running out to buy a copy to sell on eBay.  |
tjohn
Citizen
Username: Tjohn
Post Number: 2922
Registered: 12-2001
| | Posted on Monday, February 14, 2005 - 12:17 pm: |
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"On the proactive side of public policy, President Bush's proposal for private accounts for Social Security is the first time ever we've tried to associate effort with reward in this program."
How is effort determined? By the amount contributed or the number of months of contributions during the working years. If it is the latter, then it can be fair. If it is the former, then hard-working people who happen to have low-paying jobs stand to get screwed. |
joeltfk
Citizen
Username: Joeltfk
Post Number: 108
Registered: 8-2001
| | Posted on Monday, February 14, 2005 - 12:49 pm: |
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"And, I might add, he's done it all with little pretense and no scandal (keep your fingers crossed)."
Oh, there's that whole "misrepresented truth thing to start an unjustified war in which 1000s of Americans are dying," but that's not so important now that rich people are getting richer.
My fingers are calloused from all the crossing and uncrossing.
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notehead
Supporter
Username: Notehead
Post Number: 2039
Registered: 5-2001
| | Posted on Monday, February 14, 2005 - 1:20 pm: |
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Laffer also says that corporate responsibility is irresponsible.
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Dr. Winston O'Boogie
Citizen
Username: Casey
Post Number: 1072
Registered: 8-2003
| | Posted on Monday, February 14, 2005 - 1:22 pm: |
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Tipoff that someone is a partisan hack:
Uses the term "death tax" in place of estate tax. |
Robert Livingston
Citizen
Username: Rob_livingston
Post Number: 847
Registered: 7-2004
| | Posted on Monday, February 14, 2005 - 1:26 pm: |
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Makes you wonder how much he is being paid by the administration. Twice as much as from the WSJ? |
cjc
Citizen
Username: Cjc
Post Number: 3122
Registered: 8-2003
| | Posted on Monday, February 14, 2005 - 1:32 pm: |
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I think he's making less than Krugman got from Enron. |
Mustt_mustt
Citizen
Username: Mustt_mustt
Post Number: 271
Registered: 8-2003
| | Posted on Monday, February 14, 2005 - 2:43 pm: |
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February 14, 2005
www.counterpunch.org
Close Encounters of the Worst Kind
When Bush Came to My Neighborhood
By DAVE LINDORFF
I had a close encounter with the president last week-at least as close as someone of my political leanings and lacking James Guckert's press pass can hope to get. It felt a little like a Leni Riefensthal moment, scripted to the last detail.
The Man was coming to my neighborhood--the Montgomery County Community College gym just a few miles down the road from my house--to take his Social Security wrecking campaign to the people.
I had just covered a press conference by local activists protesting his planned divide-and-conquer strategy of offering private investment funds for the still young and foolish, and decided to swing by the college to see what was happening there. Along the way, which turned out to be the route the president's motorcade was to take an hour or so later from the Willow Grove Naval Air Station to the college, the security was astonishing. Every police and emergency vehicle in the county seemed to have converged on this stretch of highway. Every driveway and intersection sported a vehicle blocking access. Bridges over the roadway each had what appeared to be a Secret Service SUV parked nearby, lights flashing.
This is clearly a popular fellow, this George W. Bush.
At the campus, I found a parking space near the gym and started walking towards a long line of people stretching back from the door.
At the end of the line were a cop car, one local police officer in uniform, and several very large young men in sports jackets. The cop looked diminutive and inconsequential next to them, and he wasn't doing anything. The young men were clearly in charge.
I approached them and they looked at me-dressed in jeans and bearded-skeptically, I thought.
"Do you have a ticket?" one of the big guys asked, unsmilingly.
"No. Where do I get one?" I replied.
"You can't. It's too late." Now there was a smile.
"Where did you get them, before it was too late?" I asked him.
"Senator Santorum," he said, referring to Pennsylvania's junior and extremely right wing senator, Rick Santorum, who is up for re-election next year.
"How would I have known that?" I asked. "I don't recall reading any announcements in the media about how to get tickets for the president's visit."
"I don't know," the young man said. Now the smile had become a smirk.
"Pretty strange way for a president of all the people to behave, don't you think?" I asked. "I mean, don't presidents want to have people come to their speaking engagements?"
This time I got no answer.
"So who are you guys?" I asked them. "You don't look like Secret Service."
"We're from the Republican Party," one of them answered.
"The president's having the Republican Party handle security for his visit?" I think I sounded a little incredulous. I was. This was, after all, not a campaign appearance; the campaign ended back in early November. This was the president of the United States making a visit to my neighborhood, wasn't it? So what is the deal here? Saving money on security by having Republican goons do the security, like Hells Angels at a Dead event?
I revealed myself as a member of the press at that point, mentioning In These Times, a publication that had once issued me an identity card. They looked suspicious.
"The White House press officers are arriving with the president," I was told. "You can talk with them then about getting to cover the event."
I didn't have time for that, and was pretty sure I wouldn't have had any luck on such short notice anyhow, especially with no assignment letter in hand, and wearing a "No War in Iraq" T-Shirt under my parka.
The following day, the local media were full of stories about how the president, speaking to a full room of local residents, had warned about Social Security going "bankrupt" and about how those of us now over the age of 55 had "nothing to worry about" regarding our retirement.
There wasn't a word about how the adulating audience in that hall had been hand-selected by the office of one of the Senate's most hard Right members. My guess is that most of the people sent to cover the event didn't even think to ask how the crowd had been assembled.
No doubt the same thing was repeated across the country at the various venues where the president went to "sell" his "reform" program for Social Security.
Little wonder then that he's being allowed to get away with presenting this plan to wreck the system as its opposite-a plan to save it.
He only presents it to people who ideologically oppose Social Security, or who are too ill informed to know what he's up to.
There is something sick going on in this country, when the president has to be so hermetically sealed off from dissent, and when the media is so ready to help to protect him, and the rest of us, from reality.
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notehead
Supporter
Username: Notehead
Post Number: 2042
Registered: 5-2001
| | Posted on Monday, February 14, 2005 - 2:45 pm: |
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In '99, Krugman was paid $37,500 by Enron to serve on a panel that offered their executives briefings on economic and political issues. That was before he joined the Times.
I would not be surprised to learn that Laffer got more than that from the administration for the article above, but I am not aware of any proof that such a transaction took place. |
Robert Livingston
Citizen
Username: Rob_livingston
Post Number: 852
Registered: 7-2004
| | Posted on Monday, February 14, 2005 - 2:49 pm: |
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Creeping fascism.
Bush is following the rules of Nazi party governance almost word for word.
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ffof
Citizen
Username: Ffof
Post Number: 3350
Registered: 5-2001
| | Posted on Monday, February 14, 2005 - 3:16 pm: |
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No mention of the environment in Laffer's letter. |
Tom Reingold
Supporter
Username: Noglider
Post Number: 5484
Registered: 1-2003
| | Posted on Monday, February 14, 2005 - 5:38 pm: |
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Laffer is clearly shocked, shocked, I tell you, to learn that benefits don't increase proportionally to income. Funny, neither do contributions, beyond about $88,000. How would he structure it? If SS is supposed to be a safety net, does he think benefits should be in proportion to income, without limits? If so, let the contributions be proportional as well, with no caps.
Having read the article, I'm the laugher, for just a moment. |
Debby
Citizen
Username: Debby
Post Number: 1671
Registered: 5-2001
| | Posted on Monday, February 14, 2005 - 8:30 pm: |
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Tom, you make an excellent point!
Although he claims the FICA structure is a disincentive for hard work and increased productivity, actually the reverse should be true: a worker who is near the FICA threshold should be doubly inspired as their marginal earnings are worth 107.65% ! |
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