September 11, 2010

BIG RHETORIC, SMALL DIFFERENCES:

Voters' Choice, in Sharp Relief (GERALD F. SEIB, 9/11/10, WSJ)

[T]hese bright young men—Mr. Obama is 49, Mr. Ryan 40—have become the opposite poles of economic debate in the current congressional campaign.

Mr. Obama describes an America where the middle class has been squeezed by tax cuts for the wealthy that have left education, research and infrastructure investments under-funded, undermining job creation even as unfettered market forces helped push wealth away from Middle America and toward the top.

Mr. Ryan, ranking Republican on the House Budget Committee, describes an America where the middle class finds its aspirations snuffed out by job-killing tax rates and the massive burden of health and Social Security programs that need to be transformed with market forces and eased into the private sector.

Republicans caricature the Obama view as a nanny-state philosophy that strangles growth. Democrats caricature the Ryan view as a Darwinian philosophy in which the social safety net is shredded.

Either way, the words of these two refute the notion that elections don't offer real choices.


America the Progressive: The U.S. Social Security program is already among the most progressive in the world. Both liberal and conservative reformers would make it more so. (Andrew G. Biggs, September 11, 2010, The American)
Prospective Social Security reformers on both the Left and the Right commonly argue that a reformed Social Security program should be more progressive than the current system. The two sides differ, of course, on how to accomplish this. Yet it is an open question whether it should happen at all.

Most on the Left argue for increasing the cap on wages subject to payroll taxes, which is currently $106,800. Some argue for simply raising the cap, often to around $170,000, while others argue for eliminating it outright. Either option would increase marginal tax rates for affected individuals by over 10 percentage points. President Obama has his own plan for taxing high earners: he would apply a payroll surtax of 2 percent to 4 percent on earnings above $250,000, with no additional benefits paid in return. While less economically harmful than plans to lift the “tax max,” Obama’s proposal would fix only around 15 percent of the long-term deficit, meaning more pain in the future.

The Right would also make high earners pay most reform costs, only through lower benefits rather than higher taxes. President Bush’s plans for “progressive indexing” of future retirement benefits protected the bottom third of earners from any benefit changes but made significant reductions versus scheduled benefits for high earners.

Posted by Orrin Judd at September 11, 2010 7:22 AM
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