William A. Alexander – 4/19/05

This page was last updated on April 21, 2005.

Private accounts a bust; William A. Alexander; Beaver County Times; April 19, 2005.

Mr. Alexander’s letter of March 2^nd also advocated tax increases to “save” Socialist Security.

Below is a detailed critique of the letter.

“Santorum, Hart, the Shrub and the GOP say they are open to suggestions for a solution to the Social Security shortfall of $4 trillion over 75 years.”

[RWC] You know you’re in for an intelligent read when the author refers to the President as “the Shrub.”

“Below are some suggestions. The numbers are from the Social Security Department’s analyst reports and the Congressional Office of Management and Budget reports.”

[RWC] I didn’t verify the figures cited below by Mr. Alexander.

“1. Renewing the inheritance tax on estates of more than $3.5 million (or $7 million for a couple) would tax less than 1 percent of all estates. Estimated to collect about $300 billion per decade, or $2.25 trillion over 75 years - about 56 percent of the shortfall.”

[RWC] The death tax is socialist BS. Remember, the person who built the estate has already paid income taxes on his wealth. Why should he have to pay again to pass his estate to his heirs? The death tax is all about government wealth redistribution. It’s the moral equivalent of rummaging through a dead man’s pants and stealing his cash.

“2. Eliminate the present cap on deductions at $90,000. This would collect an additional $4.68 trillion over 75 years. The additional higher payments that would be made to those who made over $90,000 a year would reduce the above dollars collected by about $920 billion still covering 93 percent of the shortfall or $3.72 trillion.”

[RWC] The max taxed earnings cap increases every year by law. In any case, this is another example of wealth redistribution.

Here’s another point. We’ve been increasing the Socialist Security tax rate – and the max taxed earnings cap – since its 1935 inception and Socialist Security is still insolvent. Why on Earth should anyone believe another tax increase will do what 70 years of tax increases have not done?

“3. Change payment escalation from wage increases to price increases. This would cover the shortfall, but seniors’ payments would not keep up with the country’s improved quality of life. The payments would be about 40 percent less than if calculated by wage increases at the end of the 75-year period and would devastate millions of seniors who depend solely or primarily on their Social Security to live.”

[RWC] This is BS. The current wage-correlated formula results in benefit increases that exceed cost of living increases. Changing to price correlation would keep a person’s buying power constant regardless of inflation.

Finally, anyone who depends solely or primarily on Socialist Security completely wasted his working life.

“4. Increase the retirement age gradually to 70 by 2065 reflecting longer life expectancy. This would cover 36 percent of the shortfall.”

[RWC] This is a combination of a tax increase and benefit cut. It’s a tax increase because you’d be paying Socialist Security taxes longer. It’s a benefit cut because you’d receive benefits for a shorter period of time.

“5. Bush’s private accounts do not decrease the Social Security shortfall and increases the deficit by about $7 trillion in the first 20 years and continue to increase the deficit after that. What a solution!”

[RWC] Unless you’re a flaming socialist, I don’t understand why anyone opposes personal accounts. It’s true personal accounts don’t address Socialist Security solvency, but don’t believe for one minute this is what drives opponents of personal accounts. Why on Earth would anyone oppose allowing workers the option of controlling what happens to a part of their Socialist Security taxes? Why don’t some people want to provide a means for poorer workers to provide an inheritance – even a small one – to their families?

When Mr. Alexander refers to “Bush’s private accounts,” perhaps he can explain why Democrats thought they were OK when Democrats proposed them during the Clinton administration but oppose them now. Perhaps Mr. Alexander can explain why a Democrat’s Democrat, the late Sen. Daniel Patrick Moynihan (D-NY), favored personal accounts.

If you believe most opponents to personal accounts care one whit about any deficit issues, I have a bridge to sell you. If they did, they would propose spending cuts instead of tax increases.

“Possibly Santorum, Hart, the Shrub and the GOP should consider a combination of the above instead of only private accounts. All solutions do not have to be gifts to the rich and powerful.”

[RWC] President Bush et al have always said personal accounts were only a part of the solution, not the entire solution. See the report by the bi-partisan President’s Commission to Strengthen Social Security.

Which solutions are “gifts to the rich and powerful?”

Permanently repealing the death tax can’t be a gift “to the rich and powerful” because the person earned his wealth and paid taxes on it.

Personal accounts can’t be a gift “to the rich and powerful” because they primarily benefit low-income wage earners who may not otherwise have the ability to provide an inheritance for his family.