The Newest Deal: Brutal Honesty in Politics

Politico.com reports that Senator Robert Menendez, chairman of the Democratic Senatorial Campaign Committee has advice for fellow Democrats running for reelection.

Does he want them to promise to resurrect government run health care?  NO!

Does he advise them to promote other programs from the President’s agenda, including:

  • big tax increases on small businesses?
  • Cap and trade, an artificial energy shortage imposed by government regulation, coupled with a new energy tax?
  • new laws that will coerce employers and their employees into union contracts they don’t want?

NO!

Mr. Menendez advises Democrats to try to stir up conflict between Republican candidates and tea party activists.  He urges Democrats to force Republican candidates to publicly answer what he believes will be divisive questions. Here’s an example,

Do you think programs like Social Security and Medicare represent socialism and should never have been created in the first place?

The honest answer is obvious.  Of course they should never have been created.  Not because they “represent socialism,” but because they exceed the authority granted to Congress under the Constitution, because they have proven to be financially unworkable, and because they will cause a lot of misery in the future.

Social Security was sold to the voters of the 1930s with a lie that it was a retirement savings program and there would be a “trust fund.”  Today, most Americans realize there never was any savings, and the trust fund is and always was an accounting fiction.

In reality, Social Security is a payroll tax that collects cash from wage earners and small business owners and immediately pays it out to retirees.  Since 1984 the payroll tax has collected more than was needed to pay retirees.  According to the continuing political lie, the surplus was “borrowed,” from the “trust fund,” and spent on other government expenses.   The so-called trust fund now consists entirely of IOUs, signifying the fiction that the government owes itself about $4.4 Trillion.  Beginning in 2014 payroll tax revenue will be less than benefit payouts and Congress will have to choose either benefit cuts or tax increases because the “trust fund” is worthless.

When the payroll tax began in 1937 it was 2% of the first $3,000 in wages, half paid by the employer and half paid by the employee.  Voters tolerated the new tax because it was small and the promises were big.  Adjusted for inflation, $3,000 would be about $45,000 today.  At 2%, today’s Social Security payroll tax on $45,000 would be $450 each on employer and employee, for the whole year.

But after a dozen tax rate increases, the tax on a $45,000 salary is now $2,800 each, on employer and employee.  By the way, $2,800 dos not include the additional payroll taxes that were added to fund Medicare and SSI.  Those add-ons raise the total to $3,442 each on employer and employee.  Even after all those increases the current tax rate is not nearly enough to fund baby boomer retirement benefits.  Government has done nothing to prepare for the boomers even though the benefits have been promised and scheduled for 50 – 64 years.

Republican candidates should demonstrate honesty by openly stating what most voters already know, that Social Security is looming train wreck.   There will be no clever, painless, political adjustment that keeps everyone happy.  The only responsible course of action is to gradually phase out this dishonest program.  A phase-out will entail a lot of pain, but it has to be done.  Social Security is simply unsustainable.

Mendenez and the Democrats seem to think voters will, as they did in the past, turn against a candidate who is honest about the looming, painful, Social Security/Medicare crisis.  But in 2010 we’ve embarked on a new era when voters are loath to trust Utopian promises from the Left, including the usual promise to sustain Social Security without causing any pain, except maybe to “the rich.”  Voters in Massachusetts elected Scott Brown who vowed, unconditionally, to kill ObamaCare even though the President and the Democrats had promised it would improve medical care and lower costs for everyone.

If the Republicans nominate strong honest candidates, 2010 will be remembered as the beginning of a new era when brutal honesty became the winning political strategy in America

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