Soft privatization

Max Sawicky sawicky at epinet.org
Tue Aug 11 07:18:08 PDT 1998



>Max Sawicky wrote:
>
>[snip]
>
>> Cutting the military budget is the last war.
>> The priority now, I would suggest, is preventing
>> the segregation of Social Security trust fund
>> surpluses into a separate fund. This will mean
>> that instead of looking forward to $1.5 trillion
>> of budget surpluses over the next ten years, we
>> will see little or no surpluses in the so-called
>> "on-budget deficit", and hence will need
>> to get political support for tax increases if we
>> are to have any expansion of public spending.
>
>This is news to me. Is somebody pushing to get Social Security out of the
"unified" budget?

Are they ever. One scheme would dedicate all Trust Fund surpluses to the purchase of stocks and bonds. These purchases would be "scored" as outlays, making the money unavailable for other purposes. Then the non-social security budget (called "Federal Funds") could not borrow the surpluses as easily, if at all. It would "raise the deficit," under the new implied definition. For all practical purposes, this would extract Social Security from the unified budget.

The Democrats basic strategy this fall for retaking the House is shaping up as an attack on the R's for threatening to use the Trust Fund surplus for tax cuts. By so doing, they will institutionalize a new definition of "the" deficit: the actual Federal deficit (in cash-flow terms) minus the Social Security trust fund surplus. This converts a projected unified budget surplus of $1.5 trillion over the coming decade to an 'on-budget' surplus of $168 billion, with the latter not available for another five years, at least.

As I said before, under this basic logic there will never be a 'regular budget' surplus available for spending. The surplus will be continuously redefined to prevent any expansion of the public sector (and any tax cuts, incidentally).

The triumph of the "deflation lobby" will be sealed for the next fifty years. I may have to revert to raving Trotskyism.

MBS



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