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February 16, 2005
Don't listen to every argument in favor of privatization
This one, for example, doesn't cut it.
While Social Security reform cannot and must not include tax increases, there is an opportunity to increase economic growth and government revenues by cutting effective marginal tax rates. This is why there must be no “phase-ins” and no “caps” on the 4% of wages that workers should be able to put in their Personal Social Security Accounts. With Personal Accounts with no “phase-ins” and no “caps”, Social Security Reform will act as a 4 percentage-point cut in marginal tax rates on everyone making less than $90,000 per year. This would give a significant boost to economic growth and, over time, Federal revenues.
Anyone selling privatization as a means to growth is selling snake oil. If you want to sell it on other grounds, like participating in a growing economy or being a member of the "ownership society," that's one thing. And I'm sympathetic to privatization for a number of those reasons. But holding up Social Security privatization along with a Laffer curve and saying that it will "give a significant boost to economic growth and, over time, Federal revenues" is raising expectations a little higher than I'm comfortable with.
[Note: I was born and raised a Minnesotan with a gift for understatement. You are free to interpret the last sentence in light of that fact.]
Thanks to PGL at Angry Bear for the link.
Posted by William Polley at February 16, 2005 12:23 AM
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Comments
You should take the time to ping that post with a trackback. Some of their readers do venture to other blogs (and some their writers do, too).
I had different problems with their analysis -- chiefly that it's overly simplistic and ignores how Clinton's 1993 tax increase led to higher tax revenues; you can read my reaction here:
http://www.samueljohnson.com/blog/archives/0502b.html#16a
Posted by: Frank at February 16, 2005 12:18 PM
Good post. But note - the mission of the Club for Growth is to sell snake oil.
Posted by: pgl at February 16, 2005 01:12 PM