> On May 6, 2009, at 11:59 AM, Michael Pollak wrote:
>
>> You don't think there's any chance a substantial part of it will be
>> raising the tax base of FICA so rich people pay more? That was one
>> of Obama's campaign points; it would be in the direction of less
>> suckiness; and the first thing that Steny said in that Note excerpt
>> was "more revenues."
>>
>> As for higher retirement age, some of that would simply be adjusting
>> accounting to reality, no?
>
> We'll see. Steny was making a list of possibilities. Of course,
> soaking Steve Schwarzman is always an option. But do you really think
> that raising the FICA ceiling significantly is going to get through
> Congress? And do you really think that bringing up the whole topic of
> SS reform is anything but red meat for the austerity crowd? This
> invokes some version of Matthew Dowd's law - that if you argue against
> us and you're using our language, then we're still on top.
Yeah. Here's the point: Once you accept the premise that "something should be done" to increase SS's finances, there are only three ways to do it: (1) making the rich pay through higher taxes; (2) making everyone else pay through cutting benefits and raising the retirement age; and (3) weakening the program by effectively means-testing it (by cutting benefits only for the "rich").
Michael, you seem to be holding out the hope that Obama/Dems will dig in their heels and insist on focusing solely on (1). That's hugely implausible. The minute Obama says he's willing to talk to the GOP about SS, the first thing they'll say is: We won't even talk about (1) until you put (2) and (3) on the table. What do you think his response will be? All of Obama's rhetoric is about finding common ground and meeting half-way and we're all in this together. Do you think he'll say, no, it's my way or the highway, tax hikes and nothing else or forget about it?
The most optimistic scenario is that he's counting on the whole deal to collapse in advance, because he's expecting the GOP to automatically refuse any deal that includes any tax hikes at all. That way he'll get the centrist credit for going to bat for austerity, but without having to pull the trigger.
SA