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Posted at 2:12 PM ET, 12/ 2/2010

A time to govern

By Ruth Marcus

New Hampshire Republican Judd Gregg could reel off a list of problems with the debt-reduction blueprint produced by the president's fiscal responsibility commission -- beginning with the fact that, as Gregg sees it, the plan doesn't do nearly enough to reduce the debt: By 2020, in the unlikely event that all the recommendations are enacted, the debt would still stand at an unhealthy share of gross domestic product, between 60 percent and 70 percent.

But Gregg, the ranking -- and, in a few weeks, departing -- member of the Senate Budget Committee, announced that he will vote in favor of the plan for a simple, and patriotic, reason. "In the end, today, we've reached a point where it's time to govern," he told his fellow commission members Wednesday. "It's that simple. We either as a nation govern or we risk losing our greatness, and this is a template for beginning that governance."

Bravo! Governing means compromising. The art of the possible is rarely a masterpiece. Sometimes principles require opposition, but in the current climate, rigid adherence to dogma too often takes precedence over the need to forge admittedly imperfect solutions. In both parties, there are too few Greggs, and too many of them -- Gregg himself, along with GOP colleagues Robert Bennett of Utah and George Voinovich of Ohio -- are leaving public office.

Could the deficit commission be a moment for more lawmakers to summon their inner Greggs? The cynic in me is doubtful. The knee-jerk Republican reflex is to oppose any tax increase, for any reason -- even though increased revenue must be part of any deficit-reduction package. The Democratic instinct, equally strong, is to oppose any cuts to Social Security. The lessons of the 2010 election are chastening to the politician flirting with compromise or even fraternization.

And yet: Watching the proceedings, I spied green shoots of hope. There was Illinois Sen. Dick Durbin, a liberal Democrat and assistant majority leader, taking the plunge on raising the Social Security retirement age.

"I'm going to say something now that is heretical on the left, and they won't like me for saying it, but what you have suggested in increasing the Social Security retirement age is acceptable to me," Durbin said. "To raise it one year over 40 years is hardly radical. To raise it two years over 65 years is not radical. And providing, as you have for two things, those in manual labor who need to retire at an earlier age because they're worn out and can't continue working, and to provide extra help for those older people on Social Security who need a helping hand more than others. These things are sensible, and we've got to accept sensible alternatives to move forward on the left and on the right."

There was Oklahoma Sen. Tom Coburn, about as conservative as Republicans come, who said, "I have heartaches with tons of it. But I know we have to go forward. ... And so my questions really come down is, will we come together and put something out, even though probably 50 percent of it I'm not happy with, as a down payment to make a statement that says this problem is so real, Tom Coburn can't have what he wants? And I can't." On Thursday, Coburn and fellow-Republican Sen. Mike Crapo of Idaho both announced they would vote for the plan.

I'm -- gulp -- with Coburn. I have heartache, too, no doubt with the 50 percent that Coburn likes. The spending cuts are too draconian; an aging society will require more spending than the plan envisions. The tax plan is a major step in the right direction but does not raise enough revenue; I'd go for a value-added tax as well. I worry about whether more stimulus is needed in the short term -- the payroll tax holiday proposed by the Bipartisan Policy Center is worth exploring -- and about the potentially negative impact on the economy of cutting too much spending too soon. I worry about the ultimate impact on Social Security recipients -- not the poorest but those in the middle.

But the question on the merits of the plan is: Compared to what? The status quo is not simply unacceptable, it is dangerous. As commission member Alice Rivlin pointed out, protecting the poor and the vulnerable includes worrying about "what happens to them if we have another economic catastrophe." And this is why Gregg's bottom line -- that, in the end, it's time to govern -- resonates so powerfully.

By Ruth Marcus  | December 2, 2010; 2:12 PM ET
Categories:  Marcus  
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Lets make all the proposed spending cuts ASAP.

The tax increases though are DANGEROUS at this time. Best to DEFER them to better economic times.

A tax INCREASE now risks an already fragile recovery. Business confidence is low and just recovering. Investor and Small Business confidence is better but still fragile.

Tax increases NOW risk a double-dip that hurts everyone.

I recognize the desire to have the rich pay more... but please HOLD off !

Posted by: pvilso24 | December 2, 2010 2:50 PM | Report abuse

The penultimate paragraph belies the rest of the article. Too much in spending cuts, not enough taxes. While she would explore a payroll tax holiday, she advocates a new VAT tax to be added to the mix. She worries that more stimulus spending is needed, and worries that the economy will be hurt is government doesn't spend enough.

A knee-jerk reflex? You bet.

Posted by: kitchendragon50 | December 2, 2010 2:53 PM | Report abuse

Why does 'compromising' always look like screwing the middle class? I agree with many of the cuts but you DO NOT take away benefits from the middle class and at the same time extend tax cuts worth $700 billion to the rich. Restoring us to 1990 levels would go a long way to reducing the debt but instead lawmakers want to PERMANENTLY up the age on SS, PERMANENTLY take away benefits and TEMPORARILY extend tax cuts to the very rich...and things will balance out HOW? There's a saying I can't write in the comments but it's putting in one hand and taking out with the other...

Posted by: Mego1 | December 2, 2010 3:02 PM | Report abuse

The rich man cries, and the poor man is supposed to feel sorry for him. How come when the rich man is asked to raise the mininmum wage by 5 cents, he cries poverty and threatens loss of jobs, but the little guy is supposed to tolerate losing income, inflation, and loss of rights? "And justice for all", REALLY???

Posted by: barrysal | December 2, 2010 3:43 PM | Report abuse

@pvilso24: Here is the thing.

Allowing the Bush tax cuts to expire is NOT a tax increase.

It is the scheduled expiration date of "Temporary" tax cuts for the ultra rich. When the Bush-era Congress passed these temporary cuts, they justified them to the American public by pointing to CBO analysis showing they would not add to the deficit.

Of course, that analysis depended on them expiring when they were supposed to, in 2011. But the radical Republicans were counting on this very thing occurring - the scheduled expiration of a so-called temporary measure being re-branded a "tax increase."

Devious little weasels, they are.

Posted by: wrybread | December 2, 2010 4:22 PM | Report abuse

There is a basic principle at stake here that most people seem to be missing. Social Security is not a part of the general budget of the United States. It is a stand alone entity that has never received a dime from the general revenue fund. A special payroll tax (F.I.C.A.)is assessed against American workers to fund Social Security benefits. Because of a hefty hike in the payroll tax in 1983 to prepare for the retirement of the baby boomers,Social Security has run budget surpluses for the past 30 years which amount to a cummulative total of approximately $2.5 trillion. This is enough to fund full Social Security benefits until 2037 if the money had been saved and invested as was the intent of the 1983 legislation. Social Security's financial house is in order, and, if the law had been followed with regard to the 1983 legislation, Social Security would be totally solvent for another 27 years without any action. Since when has the United States government been dealing with potential crises a quarter-century before there is a problem.

If you had been financially irresponsible in managing your household finances, and were having difficulty finding enough things to cut to bring the budget into balance, would it be fair to tell your next door neighbor, who has been very responsible with his money, that you want to make some cuts in his budget because you cannot find enough potential cuts in your own budget? Absolutely not. And it is totally unfair to cut Social Security which is very solvent in order to balance a budget of which it is not a part.

The Social Security program is financed by a very regressive payroll tax that hits working families very hard and allows the super rich to escape payment of the tax on most of their income because of the cap on earnings subject to the tax. Yet the lost revenue resulting from the big income-tax cuts during the administration of President George W. Bush was largely made up with the surplus Social Security revenue. This represents a wealth transfer from the poor and middle class to the super rich. The baby boomers have already prepaid the cost of their own benefits. Is it fair now to tell them that we are going to cut their benefits because the tax cuts for the super rich turned out to be unaffordable?
Allen W. Smith, Ph.D.
Professor of Economics, Emeritus
Eastern Illinois University
Phone: 1-800-840-6812


Posted by: ironwoodas | December 2, 2010 5:12 PM | Report abuse

Gregg, Simpson and Bowles are not acting like adults, they are simply using the make-up issue of the deficit to promote their real aganda of lowering taxes on the rich and increasing them on the middle class. Than's just politics-as-usual for the Republicans and Clinton-"Democtrats." America's debt descreased steadily from the end of WWII until the ealy 1980's when the idiotic "trickle-down, supply-side economic fad took over. Despite it's utter failure, irresponsible people like Gregg, and the others insist that we keep doing the same thing that has been failing for 30 years. The real adult in the room will be the first to suggest that we return to the tax and economic policies of the post-WWII era.

Posted by: mcstowy | December 2, 2010 5:16 PM | Report abuse

In order to better help readers understand how much is at stake in the Social Security debate, I hope I will be allowed to post one of my op-ed articles in three parts. Thanks for allowing me to do this.

Social Security: A Decade of Deceit
Allen W. Smith

During the 2000 presidential election campaign, everyone seemed to know that the trust fund was being looted. It became a major campaign issue, and there was a lot of media coverage. Al Gore promised to end the looting and put the Social Security surplus money in a lockbox if he were elected president. Not to be outdone by Gore, George W. Bush acknowledged that the Social Security money was being misused, and he promised to end the looting, if he was elected president. Even Senator John McCain acknowledged the looting during a Senate speech on March 21, 2000. McCain said, “…both parties must stop raiding the Trust Funds to waste retirement dollars on more government spending. We must face up to our responsibilities, not as Republicans or Democrats, but as elected representatives of the American people with a common obligation to protect their interests.” Since both Gore and Bush were acknowledging the looting and promising to end the practice, it appeared that, no matter who became the next president, the era of the looting of Social Security would soon come to an end,

In addition to promising many times during the campaign that he would not raid the Social Security trust fund, George W. Bush made additional pledges after he was sworn in as President. In his first State of the Union address, delivered on February 27, 2001, Bush said, “To make sure the retirement savings of America’s seniors are not diverted in any other program, my budget protects all $2.6 trillion of the Social Security surplus for Social Security, and for Social Security alone.” Four days later in his national radio address to the American people, Bush said, “We’re going to keep the promise of Social Security and keep the government from raiding the Social Security surplus.”

Once Bush became president, he reneged on his promise to protect Social Security, and he spent all of the approximately $1.5 trillion in surplus revenue that came in during his eight years in the White House. But the American people have not been widely informed about Bush’s breach of promise. It is understandable that, with the 911 terrorist attacks, two wars, and many other major news stories, the looting of Social Security would be pushed to the back burner. However, with the current economic problems, and proposals to cut Social Security benefits, in the news today, the story of the awful truth about the Social Security trust fund should be front and center, but it is not. Although I have been screaming from the rooftops for the past decade in an effort to expose the Social Security scam, my efforts have not been welcomed by the news media, by the AARP and the NCPSSM, or by the United States government.

Posted by: ironwoodas | December 2, 2010 5:20 PM | Report abuse


I thought I would get the message out when my book, “The Looting of Social Security,” was published by a New York publisher in 2004, but that book became the victim of foul play. I dared to publicly challenge Federal Reserve Chairman, Alan Greenspan, on national TV, when I appeared on CNBC on February 26, 2004. I held a copy of the book in front of the camera and said, “Alan Greenspan should be ashamed of himself for what he is not telling the American people.” Several weeks later my book was censored and removed from the market by someone, some organization, or possibly some government official.

With such a major effort to keep the public from finding out about the looting, I was dumbfounded when President Bush openly admitted it in February 2005. Bush’s campaign to partially privatize Social Security was not going well, so his advisors apparently decided that they needed more ammunition with which to convince the public that Social Security was in trouble. On Wednesday February 9, 2005, President Bush openly admitted that surplus Social Security revenue, generated by the payroll tax, is spent on other government programs. President Bush’s exact words, as quoted in the official White House Press Office’s news release, were:

“Some in our country think that Social Security is a trust fund—in other words, there’s a pile of money being accumulated. That’s just simply not true. The money—payroll taxes—going into Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust.”

On the following day, during a speech in Pennsylvania, President Bush said,

“Now one of the myths about Social Security is there’s a pile of money sitting there accumulating …That’s not the way the system works. Every dime that goes in from payroll taxes is spent. It’s spent on retirees, and if there’s excess, it’s spent on government programs. The only thing that Social Security has is a pile of IOUs from one part of government to the next.”

This was a clear admission by the President of The United States that all Social Security surplus money had been spent and that the Bush administration was continuing to spend Social Security money each and every day. The president was verifying everything I had been saying for the past four years. I expected that the president’s acknowledgment would make the Social Security trust fund fraud the leading news story the following day, but it was barely covered by the media.

Posted by: ironwoodas | December 2, 2010 5:54 PM | Report abuse

"I'm -- gulp -- with Coburn. I have heartache, too, no doubt with the 50 percent that Coburn likes."

Bravo, Ruth! If all sides take a gulp and go to work, we can get out of this mess.

BTW Here's a thought about taxing the rich. Many people, including those who did this well made visualization:
fixate on the monster income disparities of the top 1 percent. They think increasing taxes on those over 250K/yr can fix the deficit without extreme cost cutting. But, they miss the aggregate sum across the field of all tax payers.

The video should better depict the vastness in area of the field of incomes between 50K and 250K. If you think of it as a huge lawn of leaves you have to rake, you will get the most leaves from this area, even though each square foot is not that deep. The spikes at the top .1 % are remarkable, like leaves blown up against a fence, but if you add them up, you will not begin to approach the trillions that the large field has.

Increasing taxes dramatically on the highest earners has historically not budged the revenue to GDP ratio (see Hauser's Law). The money to sustain a large government is not there. It is better to be friendly to the large capital pools - to invite investment and activity; and to spread the tax burden, albeit lightly, into the larger field of taxpayers. It may seem counterintuitive to many, but that is where the money really is.

Posted by: jdwill07 | December 2, 2010 7:02 PM | Report abuse

Here are a couple of other ideas for deficit reduction:

-End tax cuts for the rich (we can clearly no longer afford this *entitlement* programs)
-Get out of Iraq and Afghanistan (responsibly), ratify START, cut back on defense spending (again responsibly) and (for republicans)avoid the urge to start a third was with Iran

..probably saved $3 trillion right there- get on it!

Posted by: staussfamily | December 2, 2010 9:13 PM | Report abuse

I guess the middle class regressive payroll tax is now going to be used to pay for poverty programs and the super wealthy dont have to contribute to the cause.

The wealthy like you, would like the payroll tax to pay for food stamps and for Supplemental Social Security and for housing vouchers, then your income taxes can be reduced.

How nice for you.

Posted by: cautious | December 3, 2010 6:24 AM | Report abuse

I'm saddened that so many hardeded Republicans and Democrats - 6 - voted against Simpson-Bowles. Regardless of what one's ultimate solution is, and Ryan and Schakowsky both put forward plans, Simpson-Bowles is better than the status quo. So we don't get Ryan's conservative plan or Schakowsky's liberal plan right away. Who cares? Simpson-Bowles is better than the status quo. Let's alter the status quo baseline, and then argue Ryan v. Schakowsky from there. Ryan, Henslaring, Camp, Baucus, Henry, and Schakowsky have abdicated their patriotic duty to govern responsibility. They are a disgrace.

Posted by: Dellis2010 | December 3, 2010 11:36 AM | Report abuse

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