Boy, am I not convinced by my Slate colleague Jacob Weisberg’s claim that the current heavily-covered debate about “raiding” the Social Security “lockbox” isn’t mainly hollow posturing (largely undertaken by Democrats).
Weisberg acknowledges that spending $9 billion of this year’s $163 billion or so Social Security surplus “poses no danger to programs.” But the larger point is that it poses no danger of a return to deficits either. Spending the $9 billion of the trust fund still leaves the government running a surplus (entirely from Social Security) of about $153 billion, according to Congressional Budget Office estimates. Weisberg charges: “If … Bush brings back structural deficits and expands the national debt, the country will be in a poor position to address the huge costs of the baby boomers’ retirement.” That’s true. But the current budget doesn’t bring back structural deficits, or expand the national debt even temporarily. It pays down the debt, to the tune of $153 billion. Sure, $162 billion would be even better. But $9 billion more or $9 billion less is not a big deal, as long as we keep reducing the debt by tens and hundreds of billions a year (so we can run it back up again, if necessary, to pay for the baby-boomers’ retirement).
Weisberg characterizes Bush’s budget director Mitch Daniels as a “debt happy” throwback to the Reagan era–but the Reagan-era “deficits” constituted a real increase in the government’s debt. This year’s budget skirmishing isn’t like that in the Reagan era, because the “deficit” line everybody’s now scared of crossing is a different line–it’s a line that would still leave the huge cushion of the Social Security surplus. Thanks to Bill Clinton’s successful “Save Social Security First” gambit, the entire budget debate under his successor is taking place five giant steps in the direction of fiscal responsibility. Comparisons to the Reagan era are unfair.
What about the long run? Weisberg admits that the CBO numbers “indicate there isn’t much of a problem,” in that they predict the government will soon resume saving all the Social Security surplus and then some. But Weisberg argues that the CBO used overoptimistic assumptions about the economy–and that Bush has some spending plans of his own (mainly in education and defense). The really big education increases, though, are mainly proposed by the Democrats. Bush isn’t exactly a big spender in other areas.
Is it really true that if you use more realistic economic and spending assumptions the charts show that we’ll eat right through the CBO’s Social Security cushion, so that the national debt actually starts increasing rather than vanishing? I’m skeptical. Numbers please! Using “economic conditions typical of the last thirty years” probably stacks the deck in favor of excessive pessimism. The U.S. economy went into the soup (in rate-of-growth terms) around 1973 and didn’t reemerge until about 1995. Few economists expect us to go into the soup quite like that again.
Every now and then I find myself in a library reading microfilmed newspapers with clippings of old budget debates. Often, the stories seem trivial in retrospect–filled with charges and countercharges that in the long run added up to not much. Stories about the current budget debate seem destined to turn into that kind of clipping. Pending further education, I just don’t see what the fuss is about.
What’s happened, it seems to me, is basically this: Bush cut taxes in part to force a minor budget crunch (as Washington tries to avoid dipping into the Social Security “lockbox”) and ensure some anti-spending pressure. He wanted to go right up to the “lockbox” line. Yes, it will be a squeeze to get the spending everyone wants without going over the line. Something will have to give. But the line is now in a much better place–on the sunny side of the Social Security surplus–than it was in previous years.
And something will give! Either defense increases will be checked by a few billion or big education increases will be checked or a little bit of both will happen and maybe the “lockbox” line will be breached a bit. Yawn! It’s normal boring budget jockeying, not Reaganite structural irresponsibility, or even the consequential trajectory-altering budget deals of Bush Sr..in 1990 or Clinton in 1993.
And if we Democrats regain power and want to spend to create a universal health care system or to fix Social Security, we can repeal some of Bush’s out-year tax cuts. Fortunately for us, those cuts benefit mainly the rich–if Bush had given the money back to the middle class (as responsible liberals such as E.J. Dionne urged) we’d probably have no chance of getting it back!
It’s all going according to plan …
Click here for Jacob Weisberg’s response.