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February 23, 2005

Offering a Deal on Social Security

Josh has led the charge against even discussing a deal on Social Security (backed by Atrios and Matt), specifically rejecting taking Lindsay Graham up on discussing bringing in new payroll tax revenues generated by raising or even eliminating the payroll tax cap.

The argument against talking about a deal is reasonable as short-term politics: when your opposition is stumbling, let them fall on their feet.

But that does buy the idea that there's nothing wrong with Social Security that needs fixing. No, there is no funding crisis, but the reality is that social security is fundamentally a regressive tax. Yes, over the lifetime of a worker, it's a progressive program, but the politics of TODAY is that young workers see a massive chunk of their paycheck taken out for the system, even as wealthy workers pay far less of their paycheck to support our seniors. This has been a problem for decades and progressives never took proactive action to improve the situation. Which opened the door for this rightwing attack in the first place.

An alternative vision: So here's the approach we need. We know that House Republicans won't agree to elminating the payroll tax cap, so there is no danger that proposing it as a reform will be met with any real negotiation on the issue. But we can slam the conservatives for supporting such a regressive policy.

And since progressives don't believe there is a crisis, we don't think there needs to be any new revenue raised TODAY, so any rise in revenue from eliminating the payroll tax cap should be matched with an overall cut in payroll tax rates paid by average workers-- probably equivalent to saving them 2-3% of their income.

Yes, Dems should be proposing a TAX CUT! You want wedge politics, you've got it.

Many progressives have pushed for raising the cap to cut payroll taxes over the years (see here), and we should not abandon pushing the idea just as national attention is on social security. Progressives are not going to revive their national fortunes by only playing defense and defending the status quo. They need to play political jujitsu to take ideas put on the national agenda by Bush and use that debate as a vehicle for selling a vision of better, more progressive alternatives. Otherwise, we may win a few rearguard fights, but we won't move forward in building broader support for the changes WE want.

Dealing with Future Problems: And here's the pitch on social security in the future. If it runs into problems decades from now, the payroll tax can be restored to its present level and any potential funding crisis is eliminated.

But in the meantime, if workers want to invest the payroll tax cut in their IRAs, more power to them. Leave it to the GOP to argue that it's more important to create some cockamanie privatization bureaucracy than to cut taxes for working families.

Update: A lot of the commentators miss my point. If we make the "offer" above, there won't be a deal. The GOP doesn't really want to cut the tax burden of social security and they sure don't want a fairer tax system. Folks think we should play it safe and just let Bush and the GOP fail in their attack on social security and let the issue die away. I think that reflects the fundamental play-it-safe strategies keeping progressives out of power. We don't control the public agenda, so we can't raise the issue "later" when Bush abandons the issue, but we can take advantage of him raising the issue to push a counter-proposal that highlights the hypocrisy of the rightwing and their defense of an unfair, regressive tax system.

Raising the social security cap is overwhelmingly popular; combining it with a cut in payroll taxes for working families is therefore an election-winning program for progressives. For us to run away from it as a proposal and play it safe just reflects how petrified the left has become over discussing tax issues.

Posted by Nathan at February 23, 2005 08:13 AM