Thursday, December 02, 2004

Economics 101 Review

Decmber 2, 2004

The Republicans' newest pet project is to overhaul Social Security. The basic plan is simple: replace the current system, under which today's tax payers fund the benefits of today's seniors, with one in which, in addition to the current system, a portion of each person's taxes would go into a personal retirement account, owned by a private corporation. Of course, doing this without increasing the costs or cutting current benefits, as the Republicans promise to do, is a mathematical impossibility. However, the GOP touts privatization, which has to generate profit in addition to all this extra money, as a miracle solution.

And this whole time we're still borrowing more from Social Security funding. As ridiculous as it was to hear Al Gore bang away with the phrase "lock box" in 2000, it was a good idea. America is sinking itself deeper and deeper into debt and further devaluing a currency that is already losing ground against the Euro every day. This is a bad idea!

Bush should know this is a bad idea. He made a policy of hiring top-notch economists for the Commerce Department, but he routinely ignored their advice. Now, with a second term coming on, Bush is seeking replacements for all but one of the nation's five top economic posts (he likes his budget director). He'd hoped to catch some high-profile experts to help sell his tax code "simplification" and Social Security reform, but according to a recent Washington Post article, top-notch economists are no longer biting.

And who can blame them? Many of them have been routinely ignored for two years, expected to be White House cheerleaders. MIT economist James Poterba declined to chair the Council of Economic Advisers, and Stanford's John Cogan, who worked for Bush senior, has turned down a place on Dubya's Social Security reform squad. No one wants a position without influence.

The mistakes Bush made in his first term are coming back to bite him in the hindquarters, but I doubt he will learn from them. For all his talk of relying on "a good team" to make informed decisions, he shows every sign of simply clamping down even harder on dissent within the administration to present the image of unity.

Mr. Hargis wrote some things last week that were ridiculous. In fact, there were so many of them that were so ridiculous, I just didn't have room to cover it here, so I have posted an open letter to him at for those who care to read. You can also expect two or three updates on that site over the break.

Everyone have a happy holiday season, and I'll be back next semester! Write to if you've got something to say.


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