George Bush got re-elected on the strength of two issues: the “War on Terrorism” and “Moral Values.” That’s what motivated a decisive share of the electorate to come out and vote. So, isn’t it a bit surprising that the two pillars of his agenda for the next term are tax reform and social security reform? If I were a Bush supporter (which I’m not), I would be scratching my head about now.
Of course, Bush has discussed both initiatves before. It should be no surprise that he favors overhauling the tax system and putting a portion of social security tax revenues into private accounts. But these were hardly focal points of his campaign. Even though Bush pushed through massive tax cuts in his first term, these were targeted changes like lowering brackets and eliminating the estate tax. What he’s talking about now is more profound — an overhaul of the income tax system itself.
Bush is going to spend his political capital somewhere, and I’d much rather see it on these economic issues than on something like judicial nominations or environmental policy.
Yes, I’m worried about what could happen on both tax reform and social security. In both cases, the changes Bush will propose are very likely to increase inequality in America, place some Americans in a deparate economic position, and give a massive windfall to the wealthy. On the other hand, Bush is right that both systems need reform.
The complexity of the current tax system benefits those able to take advantage of loopholes and shelters. (People like the young George W. Bush, whose failed oil drilling company was basically a tax shelter for its investors). A flatter tax isn’t inherently bad for the poor and middle class — it all depends on the level of the tax and at what income level it kicks in. Furthermore, most Americans are already paying a big chunk of their taxes in the form of a regressive flat tax — it’s called payroll taxes. Social security and medicare contributions are much less progressive than income taxes, and they make up a large portion of the tax burden for everyone except the wealth. So, although things could get much worse, they aren’t exactly great right now.
On social security, the current system is doomed. Bush’s deficits have made the problem worse, but at bottom it’s simple demographics. My generation just isn’t big enough to pay off all the baby boomer retirees, let alone have anything left for itself in 30 years. Heck, a survey ten years ago found that more young people believe in UFOs than expect social security to be around when they retire. Better to face reality and fight over what to do, than to pretend everything is hunky-dory.
I’m worried that for Bush, these are just the start of his plans for the next four years. He may think he has political capital to tackle both issues and still push hard for activist right-wing judges, a Constitutional amendment banning gay marriage, drilling in the Arctic National Wildlife Refuge, and who knows what mischief in Iraq. If he’s wrong, though, we might see the second Bush term do much less damage than I feared.