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BUSH RENTS CONSERVATIVE THINK TANKS FOR PERSONAL GAIN.

--by Doris in Des Moines, 5/15/00

Is there anything more entertaining than post-modern politics? The most popular Democrat in the primaries was the Republican John McCain, even when he kept patiently explaining to everybody that he's a party loyalist, not a populist. The supposedly populist Reform Party kicked out its only successful maverick independent, Jesse Ventura, and allowed itself to officiate in the marriage between that offbeat economic producerist-cum-sexual puritan Pat Buchanan and that equally offbeat fire-breathing Marxist-cum-psychological huckster Lenora Fulani. Al Gore seems to enjoy trying to pick up Better-Dead-Than-Red Florida votes while making enemies of the teachers' unions, a curiously convoluted and time-consuming way of pissing into the wind. Our man Dubya, of course, being too liberal for the fundamentalists, too moralistic for the libertarians, too conservative for the independents and too mentally feather-weight for the neo-con intelligentsia, is busy trying to position himself as the end-of-ideologies candidate for CEO-With-Stock-Options of the United States of America. And now everybody's all worried about Ralph Nader--who can be accused of having shifted some of his platforms only because some of the things he used to talk about, like Corvairs and flammable baby-jammies, are now safely illegal--being a "spoiler." It occurs to me that if you think Nader is the toad in the punchbowl, you've been drinking too much of the punch.

So here I am in the midst of all this ideological orthodoxy--which tends to make me feel like Hunter S. Thompson in detox: I'm OK, you're stoned--and I get myself jumped on the other day by an acquaintance for having linked Bush's Social Security policies to the Cato Institute. But, says my critic, Cato is libertarian! Bush isn't a libertarian! Oh, woe is me! I haven't given these folks the right "Hello, My Name Is" tags! The voters might get confused!

Of course Bush isn't a libertarian. As morally simple-minded as Cato-style libertarianism is, it's just too complicated a philosophy for Dubya. That, unfortunately, is why he has to rent a bunch of ideas from Attack Tanks like Cato. The fact that most of the Cato fanatics look down and spit on the ground every time Dubya's name gets mentioned doesn't make them any different from the Pro-Lifers, the NRA, the Council of Conservative Citizens, and every other reliable right-wing constituency Bush has seduced and betrayed so far.

If you're not familiar with Catoism, it's a philosophy that's easy enough to summarize, although many of us find it profoundly difficult to understand. Catoites are sort of the wild and crazy guys of moral, social, and economic viciousness. They hate to be called "conservatives," because, as Stephen Moore, Cato's chief fiscal policy propagandist, explained last year, "Conservatives seem always and everywhere to want to regulate my private life. As humorist P.J. O'Rourke once put it so aptly, conservatives are preoccupied with identifying all of those activities in life that are fun and doing everything they can to stomp them out. . . . These people are just genetically opposed to sex, drugs and rock 'n roll."

This is the libertine side of libertarianism, waging its lonely and forgotten culture war against the puritanical side of conservatism under the big right-wing tent, while the real world flows on around it generally unimpressed. (Camille Paglia performs the same service for Salon.) According to the Catoites, if it's "private," it's off-limits. Period. It's my party and I can cry if I want to. We are given to understand that Dubya has grown out of this phase.

The important thing is that the Catoites are only interested in private parties. If you can't afford a ticket, you'll just have to eat cake. The one thing you don't want to do is confuse the Cato frat boys with the anarchists of the Ruckus Society, who are currently attempting to take down both the WTO and the IMF, or those merry pranksters of the Grateful Dead set who think we'd all be better off if we just dropped some more acid and rocked out more frequently. Moore hates it when poor people don't play by the right rules in their private life:

"What did 30 years of Lyndon B. Johnson-style compassion really buy us? Well, for just $5 trillion, or about twice what we spent on World War II, we got the emergence of a massive underclass, millions of children without fathers, suffocating tax rates and the ruination of our once mighty cities."

If you're into Catoism, you resent it when the God Squad tries to snoop around in your own lavishly-appointed, tastefully-decorated, secludedly-suburban bedroom, especially when you're snorting a little high-priced coke and listening to "Hip to be Square." However, when these poor people of color start grooving to too much hip-hop and failing to live up to Reyn Archer's personal sexual and pharmacological standards, they can run, but they cannot hide--especially the homeless ones.

You might think that this is kind of self-contradictory, but really, you see, it isn't. The key to unlocking the coherence of Catoism is understanding that the rich really are different. As you'll notice in the little tirade about the Great Society quoted above, what annoys Cato more than anything else--war, disease, plant closings, acts of God, you name it--is parting any of them from any of their money. Human suffering, according to Catoites, is just shit that happens, preferably to other people. Levying taxes on the rich in order to mitigate that suffering is, however, downright criminal. On the subject of Bush's "compassionate conservativism," Moore lays it on the line:

"I am even more suspicious of politicians--mostly Nanny State Democrats--who trumpet themselves as compassionate. Washington is a bad place for people to become overcome with a sense of compassion. It invariably means their compassion is surely going to come out of my wallet. It is an iron rule of politics that no one in government is ever compassionate with their own money. Compassion is essentially interchangeable with taxes and Great Society social programs."

Those of us who prefer the government in its Mrs. Doubtfire mode--at least to the available alternatives of Rambo, Elmer Gantry and The Grinch Who Stole Christmas--are always fascinated by the Catoite pronominal system. "Washington"--all the people's representatives--are "them." The working poor, the children, the sick, and the elderly--all those "nonproducers"--are, implicitly, the other "them." "Taxation" as a concept is exhausted by what comes out of "my" wallet. Catoites, in short, are the center of the universe and the only people who have to file a 1040. And they get really cranky when Uncle Sam tries to take some of their stuff.

The only thing flint-hearted egomaniacs like Moore have going for them is their refreshing candor. Unfortunately, it strikes you at times like a breath of fresh battery acid. Here's Moore beating the dead welfare horse again:

"The war on poverty was not about compassion. It was about hubris and self-aggrandizement for the political class. Let us be clear on this: The fact that Rep. Barney Frank (D-MA) and Sen. Ted Kennedy (D-MA) want to take all my money and give it to someone else hardly makes them compassionate.

"Critics of free markets protest that capitalism is not compassionate. That is true. In fact, capitalism is often ruthlessly 'dog eat dog.' But if the definition of a compassionate government is one that improves the well-being of the vast majority of the people, then capitalism is unarguably more compassionate than any other system of government ever tried anywhere, at anytime on the globe.

"The purpose of our national government is not to be compassionate. The term compassion shows up nowhere in the Constitution or the Bill of Rights. The Constitution was established to promote life, liberty, and the pursuit of happiness; it guarantees the pursuit of happiness."

Well, I'm certainly chastened, especially since the phrase "life, liberty, and the pursuit of happiness" doesn't appear anywhere in any copy of the U.S. Constitution I've ever seen. It does show up in the "Declaration of Independence," a manifesto signed by a handful of rebellious colonial leaders which was never exactly passed into law by the soon-to-be-formed federal government. What the Constitution says is:

"We the people of the United States, in order to form a more perfect Union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution of the United States of America." Then it gets into a bunch of details about the right of Congress to tax people in order to pay for all those good things.

The Constitution was established to promote unity, justice, tranquility, security, welfare, and liberty, in that exact order. It doesn't say diddly-squat about the moral superiority of capitalism; in fact in a number of places it strongly suggests that we the people have the right to any old political, economic, social, religious and moral views we wish to adopt, as long as we don't let them interfere with unity, justice, tranquility, security, welfare, and liberty. I don't see anything in there about how this is just for the bigger, more aggressive dogs who know how to manage stock market accounts. In fact, if you read all the way through the amendments, you'll see that it isn't even just for white men any more.

Catoites, on the other hand, wish to draw and quarter the concept of "liberty" until it means nothing more than "he who dies with the most toys wins," while conveniently ignoring the equally Constitutional values of unity, justice, tranquility, security, and welfare. Especially that last one. This is why they can claim, along with Shrub, that campaign contributions are "free speech." For these folks, all the important rights have to do with getting and keeping money. There are some secondary rights having to do with sex, as long as they don't produce poor children living in single-mother-headed households. All the rest of it is, as Moore puts it, "touchy-feely":

"The combination of compassion and conservatism in government quite frankly frightens me. When I hear the term compassionate conservative, I think of a melding together of the worst ideas of the right and the left--of Jesse Helms and Jane Fonda lying down together. It is not a pretty picture. "No, I am not a compassionate conservative. I am a crotchety libertarian. If that seems hard-hearted to you, just remember: You do not have to worry about me invading your bedroom or snatching your wallet."

Unless, of course, your bedroom is yours because of an FHA or VA mortgage or a municipal-bond-financed housing development, or your wallet has money in it only because you just cashed your Social Security check at an FDIC-insured bank that clears funds through the Federal Reserve wire system. In that case, I'd stay away from crotchety libertarians as well as compassionate conservatives.

The reason why Dubya is lurching to Cato one day, the Christian Coalition the next, and waxing warm and fuzzy about cute little immigrant children in between, is that he has no political philosophy except personal enrichment for himself and his own class and getting elected by any means necessary. Since most Americans really don't worry as much about the government taking Stephen Moore's money away from him as they do about their children getting blown away with a semiautomatic handgun or their elderly neighbors eating dog food in order to be able to afford insulin, you cannot win a national election in this country by making up a hard-right story and then sticking to it. That's why trying to follow Bush's campaign always feels a little bit more like channel-surfing than it does sitting down to watch an entire episode of your favorite melodrama.

So don't be accusing Bush Watch of not having enough hobgoblins in its little mind if you read next week about how Dubya is beholden not to the go-go libertarians at Cato but to the crabby moralizers at the Eagle Forum or those avuncular elder statesmen at the American Enterprise Institute. We didn't make up this "any think tank in a storm" campaign; we're just watching it.

"THE SOCIAL SECURITY SURPLUS IS A FICTION."---TBP

The real Social Secuirty scandal is being ignored by all politicans, by your writer "Doris" and the 'experts' she quoted - Doug Henwood, Robert Kuttner,Diana Zuckerman and MarkWeigbrot. The supposed surplus of the Social Security Fund is a fiction. Most writers and researchers that deal with Social Security issues simply accept the Social Security administration's statements about revenue, expenditures and "assets", without looking at the details on the Social Security accounts.

It's true, that revenue into the Security Accounts from payroll deductions, to the extent that it exceeds expenditures, is invested in Government bonds. And, when expenditures exceed revenue, as is expected to happen in the next 20 years, then "assets" will be "sold" to fund expenditures. The supposed "surplus" occurs because in the 1980's congress intentionally raised the Social Security payroll taxes, to build a surplus for the baby boom retirees - a demographic bulge that may produce a huge number of retirees with a smaller number of workers paying into Social Security.

.What is missed in all of this is what Social Security considers assets. Keep in mind that the whole system of Social Security was not established as a way to invest actively employed workers contributions into a fund to pay for their retirement. An active worker's contributions are simply credits in a calculation of a benefit formula. Social Secuirty has always operated on the basis that actively employed workers' contributions provide the revenue with which to pay the benefits to retired workers. "Investment" of Social Security assets was always a short term requirement until recently, when the baby boom demographics projected an imbalance in how many actively employed workers would be supporting a huge increase in the number of retirees.

.So, where did our excess Social Security contributions since the Reagan years go, and what does the Social Security administration have on it's books as assets, to pay the baby boom genration benefits with?

.Yes, they bought U.S. Government Bonds. And what did the U.S. Treasury do with the money it got from Social Secuirty for those bonds? It spent it, to help offset the budget deficits of the Federal Government.

.Now, how will Social Secuirty get money for those bonds as the baby boomers retire? They will do want most bond holders do. They will redeem them when the bonds "mature". That is, when a bond reaches the date on which the issuer (the U.S. Treasury) said it would then pay a certain amount for that bond, the holder (Social Security administration) will give the bond to the U.S. Treasury, in return for money in the amount of the value of that bond - which will be the original amount paid for the bond plus an interest amount, based on the stated interest rate for the bond.

.How will the U.S. Treasury pay Social Security when the bonds are redeemed. It will pay them from it's revenue (your taxes then) or if the U.S. Treasury is running a deficit , it will borrow again to pay Social Security for the bonds it redeemed. In other words, if it can't pay for the bonds from the taxes it gets from you then, it will issue new bonds which will be paid for from taxes it gets from you later.

.But that is only part of the "assets"of Social Security. Our Federal deficits were so bad until just recently that even "assets" in the Social Security accounts had to be "loaned" back to the U.S. Treasury to offset it's deficits. What did the Social Security accounts get for these loans? It got I.O.U's - promissary notes from the U.S. Treasury - a "promise" to pay back a specific amount by a specific time.

.So is there actually any Social Secrity surplus? No. It is only an accounting manuever which replaced one kind of debt we owed ourselves with another kind of debt we owe ourselves. And, we will pay either form of debt with some form of taxes on ourselves when Social Security needs to cash in it's "assets".

.Either the payroll taxes for Social Security will have to be raised again, or general revenue taxes will have to be used to "cash" the bonds Social Security needs to redeem, or we will create new debt for more distant future tax revenues to pay off.

.Social Security was never and does not now operate as an "invested" fund. Current workers pay for current retirees. Increasing the payroll taxes to provide a "surplus" for the baby boom generation was not a wrong idea. "Investing" that surplus in nothing other than our own promise (U.S. TreasuryBonds) to pay it back in the future did not change a thing. Adding insult to injury, we then borrowed some of those "assets" again when we allowed the federal treasury to run such huge deficits for so many years.

.There is no actual surplus,other than our own promise to pay Social Security back in the future, for having lent us the money we needed to spend these past few decades. But, pay it back we will, in some form of taxes - sooner or later. --TBP, 5/9/00

"THE SOCIAL SECURITY SURPLUS IS NOT A FICTION.." ---DORIS

.As I've said before, the battle over Social Security is a political and rhetorical one, not a debate about economics or generally-accepted accounting principles. What language we use to describe the same set of "facts" says a lot about our implied values. I don't mind being perfectly upfront about what my values are. I have in the past accused certain conservatives and neo-liberals of keeping their own agendas secret. This letter does nothing to change my mind about that, I'm afraid.

.TBP makes a rather odd use of scare-quotes. It seems that while revenues are real and expenditures are real, the current imbalance between the two is a "fiction" or just scare-quoted "assets." Why aren't invested surpluses real assets? I happen to own a few government bonds myself, via my mutual fund. I call that an asset, even though it's "really" money I lent to the government. After all, the government hasn't defaulted on a treasury bill yet, and I keep getting statements showing interest paid. Social Security's assets are no more fictional than my 401(k) assets are. Certainly they're more real than the potential future imbalance between revenues and expenditures, which are projected to be "deficits." Will those be fictional, too? Is only bad news real news?

.TBP seems troubled by the fact that Social Security was not designed to be an invested fund. Of course it wasn't. Even though Roosevelt and Frances Perkins, among others, argued passionately for a system that would be funded in part from general revenue, the conservatives of the day demanded a "pay-as-you-go" system because they didn't trust the government to manage reserves. (Sound familiar? George Bush doesn't trust the government to manage reserves either.) The money-in-money-out nature of Social Security has always given the system some vulnerability to demographic changes and stagnation in real wage levels, which is the trade-off you get when the system is funded only by bottom-end payroll taxes.

.Remember that an "economic boom" in which most income is made by a few percent of the population, via compensation over the statutory FICA limit and capital appreciation--stock market wealth--doesn't do anything for Social Security directly because none of that is subject to payroll taxes. On the other hand, high earners and corporations pay the lion's share of income taxes, which create that "general revenue" thing. So, in the 80s, the idea was to cut income taxes--producing budget deficits and a bonus to wealthy individuals and corporations--while raising payroll taxes so that workers could pay for their own retirements without any help from "general revenue."

.I honestly have no idea what it means to say that the government uses the money it borrowed from the Social Security fund--via issuing bonds--to "help offset the budget deficits of the Federal Government." Spending borrowed money doesn't offset deficits, it creates them. If Congress wishes to spend more than it receives in revenue, it has to issue bonds to cover the difference. Social Security is the only government program that is required to live within its means.

.I suffer from a similar confusion when I am told that "our Federal deficits were so bad until just recently that even 'assets' in the Social Security accounts had to be 'loaned' back to the U.S. Treasury to offset its deficits. .. . . So is there actually any Social Security surplus? No. It is only an accounting manuever which replaced one kind of debt we owed ourselves with another kind of debt we owed ourselves."

.I must be reading the wrong reports. Social Security's government bond holdings are counted in the national debt, just like my mutual fund's bond holdings are. Commitments to pay retirement benefits are not counted in the national debt, because they are "funded." Where does the weird accounting come in?

.Look at it this way. I pay my payroll taxes into Social Security. Because SS has more revenue on hand at the moment than expenditures due, it uses part of my payroll taxes to pay retirees and the rest to buy bonds. Just like my mutual fund. When SS needs that money back to make future expenditures, it will liquidate its bond holdings. Just like my mutual fund does.

.On the other side of this, I also pay income taxes into the U.S. Treasury. Because Congress likes to spend more money than it receives, it finances much of its spending by issuing Treasury notes (bonds). My income taxes are, in part, being used to pay the interest and principal due to everybody who bought government bonds, including SS and my mutual fund. Of course the only money the government has to repay bond obligations with is general revenue. The only money it has to buy helicopters for the Pentagon is general revenue.

.It seems to me disingenuous in the extreme to imply that SS's investments aren't really investments because they are backed by government bonds, rather than being invested in corporate stocks or sitting around in cash in a huge vault somewhere. It makes just as much sense to me to say that my payroll taxes funded a lot of the government's domestic and defense spending for a long time, and now those payroll tax dollars should be paid back so that they can be used for their original purpose, which is paying retirees. Income taxes are supposed to be used for domestic and defense spending, and if Congress can't spend only what it has, it needs to either cut spending or raise income taxes or learn to live with a deficit. Whichever position you take on spending, you can't accuse the government of using income tax to finance Social Security. It's more like the government has been using payroll taxes to subsidize income tax cuts.

.I hear a lot of people--the Concord Coalition and Cato folks, pro-privatizers like Moynihan and Kerry--call government bonds "IOUs," as if that weren't the definition of a bond. It strikes me as rhetorical dishonesty. Bonds are simply an agreement to repay interest and principal. Stocks, on the other hand, are equity stakes in a company. Why don't we call stocks IPTMMS--I Promise To Make Money Someday?

.One reason why government bonds--as opposed to Amazon.com stocks, for instance--are generally considered the safest investment going is that they are backed by the "full faith and credit of the U.S. Government." It is part of the definition of a government bond that tax revenues will be used to make them good. Why are we all of a sudden upset about that? If the federal government cannot meet its bond obligations, we've got bigger problems than a potential future shortfall in retirement benefits in 37 years.

.What's lurking here, I really think, is another one of those subtle arguments for redistribution of wealth. The implication is that it's "unfair" somehow to use general revenues to repay the debt the Treasury owes to Social Security. Again, general revenues come from income taxes, mostly on high earners and corporations. For years and years, high earners and corporations have been getting tax cuts, tax-privileged retirement accounts (401(k)s, IRAs), mortgage interest deductions, and of course all the usual corporate welfare. High earners also drive on interstates, use health care resulting from publically-funded research, visit the Grand Canyon, and all the rest of it, just like those who pay more in payroll taxes than they do in income taxes. In other words, we all have benefitted--if unequally--from deficit spending. Some of which, as your writer notes, was financed by borrowing from payroll taxes, which--again, as your writer notes--have not only never been cut but have been increased. So now, the high earners and corporations want another income tax break, and are whining about having to repay the money they borrowed from Social Security. I'm sorry, but the only word I can think of for that is "welfare cheat."

.What George Bush is proposing--or hinting or whatever--seems to be that we should continue to tax workers to pay for their own retirement. On the other hand, we should refund income taxes to the top tier of taxpayers, because the government cannot be trusted to manage money. Further, Bush believes that the Social Security surpluses should be invested not in the government but in the private market, because we can always trust Amazon.com to make a profit. The only thing that gets accomplished by conflating income tax dollars with payroll tax dollars is that it plays into the hands of those who wish to continue the Reagan-Bush policies of income redistribution. --Doris in Des Moines, 5/10/00