Thursday, January 20, 2005

SocSec and Taxes

Noam Scheiber over at TNR's &c took a long and thoughtful look at my posts on the possible "bait and switch" strategy underway within the GOP, from Social Security "reform" to tax "reform," and said he was unpersuaded. He makes some very good points, among them the totemic importance of private retirement accounts to the Bush "legacy," and to the conservative movement's agenda of fundamentally wounding the New Deal safety net as quickly as possible.

But I am in turn unpersuaded by the suggestion that conservatives ever, for a moment, stop thinking about their Prime Directive: reshaping federal taxation so that income from work rather than wealth bears the primary burden of financing government. Aside from the Jonathan Chait piece I cited earlier, you should take a look, if you haven't already, at Nick Confessore's offering in the New York Times Magazine last weekend, which lays it all out: conservatives are determined to shield all investment and inheritance income from taxation, and are willing to consider a variety of avenues to achieve that goal. Moreover, the Bush administration will without any question offer some sort of tax-cut measure this year, just as it has done for the last four years.

My specific concern, which I probably didn't articulate that well in earlier posts, is that Republicans, if they are thwarted on Social Security, will exploit legitimate Democratic interest in private retirement savings accounts outside the SocSec system to propose something superficially similar but actually very different: big, general-purpose personal savings accounts available to high earners as a means of sheltering investment income from taxation altogether.

I don't think Democrats should declare victory on Social Security and then move on to other matters. And for the record, I am agnostic as to whether Republicans are consciously planning a switch from Social Security to taxes in the immediate future. All I'm suggesting is that their likely defeat on Social Security could logically lead GOPers in the direction of another attack on progressive taxation, in a way that will initially be confusing to people who might generally favor new tax breaks for personal retirement savings. And Democrats need to start thinking about that. After all, we should be able to walk and chew gum at the same time.
-- Posted at 2:37 PM | Link to this post | Email this post

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