Both Democrats and Republicans are engaged in a political demolition derby over Social Security, Medicare and Medicaid. President Biden proposes stiff tax increases to “save” them. Republicans propose to cut benefits to “save” the first two.
Both are reminiscent of the Vietnam era Army major who said “It became necessary to destroy the town to save it.” Social Security and Medicare (which I spent a lifetime sustaining through my payroll taxes and which now sustain the elderly me) indeed are unsustainable as now situated.
There is a way of saving them without raising taxes or cutting benefits. How? Get our economic growth rate up to around 4% as under Reagan and Clinton. And, we know how!
It can even be bipartisan! In the '80s, the U.S. Senate voted 97-3 (Sen. Joe Biden voting aye) to drop the top income tax rate from 50% to 28%. The boom was on!
Republicans believe it only morally justified to subsidize big businesses and the already wealthy. Facepalm!
Memo to my fellow Republicans: neither Social Security nor Medicare are “entitlements.” That’s a subtle slur, implying an unearned benefit, a subsidy.
Social insurance is not an “entitlement.” It’s social insurance, a program wherein we pay premiums in return for benefits. It’s neither anti-liberty nor anti-conservative.
Per no less than F.A. Hayek, a revered figure among libertarians, unflinchingly stating in his magnum opus, that libertarian bible, The Road to Serfdom (The Definitive Edition, edited by Bruce Caldwell, University of Chicago Press, 2007, pp 148-149):
“There is no reason why in a society which has reached the general level of wealth which ours has attained (Editor’s note: far less than that of America today) the first kind of security should not be guaranteed to all without endangering general freedom. ... [T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. ... Nor is there any reason why the state should not assist the individual in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.
“Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance — where, in short, we deal with genuinely insurable risks — the case for the state’s helping to organize a comprehensive system of social insurance is very strong. … [T]here is no incompatibility in principle between the state’s providing greater security in this way and the preservation of individual freedom.”
Prosperity works! Even the left-leaning Urban Institute — although skeptical about America’s ability to sustain such growth — admits that robust growth would sustain Social Security for a long time.
In Richard W. Johnson and Karen Smith’s February 2016 white paper, “Can Economic growth really fix Social Security?”:
“But let’s say we could somehow turbocharge worker productivity enough to achieve average real economic growth of 3.4 percent a year indefinitely … instead of the 2.1 percent long-term rate that the Social Security trustees assume. This is optimistic, but it did happen between 1995 and 2005 (albeit when the labor force was growing more rapidly than today). …
“Crunching the numbers with DYNASIM, Urban Institute’s projection tool, we find that such economic growth would in fact significantly improve Social Security’s long-run balance sheet, pushing back by three decades the date when the system could no longer pay full benefits, from 2035 to 2064.”
Imagine what 4% growth would do!
And hey, Pilgrim! The People’s Republic of China, America’s great rival, averaged 9% real economic annual growth rate for over 30 years, from 1989 to 2022, under policies implemented under the greatest supply-side leader of all, Chairman Deng “To get rich is glorious” Xiaoping, aided by the guidance of the late, great, Robert Mundell who, with Dr. Arthur Laffer, designed the policies that led to sizzling growth under Reagan and Clinton.
Who here believes that America cannot grow even half as fast as China? As Joe Biden would say: Malarkey! Yes we can!
C’mon man! President Biden loudly vaunts the economic growth he believes possible and believes his policies will conjure. OK, I, one of the last living original Voodoo Economists, have some different notions as to how to go about it.
The good and hard political argument we deserve is not whether we can reboot America’s economic growth rate. Of course we can!
It’s about how!
Hey, Donks and Pachyderms! Lay off the kayfabe (ritualized performative violence). Let’s compete over who has the better plan to produce the kind of sizzling equitable prosperity that will promote the general welfare together with the blessings of liberty, sustaining Social Security, Medicare and richly funding Medicaid!
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply-Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $94T. Read Ralph Benko's reports — More Here.
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