WUI (Writing under the influence)

My recent post (the relevant part is at the end) on the GroveNet mailing list was forwarded to John Schrag, the new editor of Forest Grove News-Time and the author of the article in question. Amazingly, he agreed that the article may have been one-sided and that the letters to the editor on the subject of social security were also one-sided. So he invited me to reword my post and send it as a letter. First, I apologized for less than flattering words directed at the paper but explained that this wasn't the first time News-Times seemed to agree with one side of a controversy. I also agreed to write a letter. Lastly, I expressed a wish for a "token conservative" that every major paper seems to have nowadays who would write from time to time on the behalf of the silent majority in our town.

John Schrag mentioned in passing my compliant in his column last week summarizing his first 30 days as the editor.

Similarly, as an on-line critic noted on grovenet last week, too many of our stories rely on a single source and fail to seek out opposing points of view. I agree.

Not only did he agree, he asked me to write a column instead of just a letter on the social security debate. And I did. It was published today. There is no electronic version so I post it here in its entirety.

The only thing they have left is fear itself

“This is a classic case of a solution in search of a problem.” This is what Congressman Wu has said about President Bush’s proposal to allow younger workers to divert some of their payroll taxes into voluntary personal accounts. Indeed, the Democrat flatly rejects that the social security program is in crisis and in need of a major overhaul.

It is very disingenuous of the Congressman to say this about the program that, after running deficits for 7 straight years between 1975 and 1981, had to be resurrected from near bankruptcy in 1983. Each time social security ran into trouble it was “fixed” by raising taxes. Changes may have been incremental but the program today is far from the retirement insurance system FDR created 70 years ago when only the first $3,000 was taxed at the rate of 2%.

Wu says that any problem (I didn't think there was a problem) can be fixed by making workers more productive. Supposedly, higher productivity would result in higher wages. The higher the wages the more money would go to the social security program.

There is one fundamental flaw with this reasoning. As the Congressman very well knows, social security benefits are indexed to wages so if the wages go up so will the benefits. So to pump more money into the ailing program, Democrats would have to raise the cap ($90,000) or the rate (12.4%) or both, resulting, yet again, in higher taxes. But how much more can we tax our incomes before the social security program brings down the whole economy?

The answer already exists. Germany, where a social security program was introduced by Otto von Bismarck in 1889, is today in dire economical straits. It has the highest unemployment (12.5%) since the 1930s and its economy will be lucky not to shrink this year. With already high taxes, high unemployment and stagnant economy, German government struggles to maintain the promises of its numerous welfare programs. But Congressman Wu hopes that following the same policies in the US will bring different results. As Albert Einstein once famously said, it is insanity.

When all other arguments fail, Congressman Wu resorts to Democrats’ favorite persuasion technique: can’t reason with them, scare them. By painting dramatic pictures of retirees losing their money on the stock market just when they need it for their retirement, Wu prefers to keep his constituents frightened and ignorant so they blindly keep on voting for the misguided policies he advocates. No wonder almost every day I encounter seemingly intelligent people who have no clue how safe long-term investing is if one follows a few simple rules (hint: ENRON employees didn't follow those rules.)

Social Security will have to be reformed without raising taxes. The reform should include indexing benefits to inflation. Younger workers should have the option of investing part of their payroll taxes in personal accounts so they can take more responsibility for their retirements.

So why would Congressman Wu oppose this and many other President Bush’s policies? Tax cuts (for the rich) have helped the economy recover from almost uninterruptible stream of adversities. Aggressive foreign policy is bringing freedom to the Middle East and security to the US. But it is the idea of ownership society -- educated people breaking the shackles of dependency on the government with financial freedom to live their own lives -- what Congressman Wu and other Democrats fear the most. They are stuck obsessing about past, blinded by partisan zeal. The party of New Deal has become the party of No Deal.

News-Times changed my title to "Fear on Social Security is party line for Democrats."