A Stitch in Haste

Perhaps the New York Times editorial board has finally embraced fiscal responsibility?

Congress has passed and President Bush is sure to sign into law a bill that will spare some 23 million Americans from having to pay the alternative minimum tax next April.
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What they fail to say is that the bill doesn't include a way to make up for the lost revenue[.] To make up the shortfall, the government plans to borrow the money, which will have to be paid back later with interest, either by raising taxes or reducing government services.
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That's at best bait and switch, or at worst gross negligence.

That's also the Social Security "trust fund" — which the Times embraces and adores. Go figure.

The FICA taxes — one-eighth of most Americans' paychecks — that the federal government confiscates currently exceed current Social Security liabilities. The surplus is spent on other stuff: war, domestic spying, bridges to nowhere, etc. It is also used to lie to the American people about the size of the federal budget deficit (i.e., the reported deficit is the operating or "on-budget" deficit, reduced by the size of the Social Security surplus, which is "off-budget;" some people might call that "Enron accounting").

How deceitful — or stupid — does one have to be to call "war, domestic spying and bridges to nowhere" a "trust fund"? Yet that is exactly what the Social Security "trust fund" is — FICA taxes that have already been spent on other stuff.

The "Treasury bonds" (actually just a notebook in West Virginia) that comprise the Social Security "trust fund" are nothing more than an IOU from the government to itself. And just as IOU from yourself to yourself is not a "trust fund," so too is an IOU from the government to itself not a "trust fund."

Those ledger entries in that notebook in West Virginia are nothing more than a pledge by the federal government to fund future Social Security shortfalls — starting in less than a decade — with higher taxes or higher deficits in the future. Exactly the same fiscal shenanigans that, in the context of AMT reform, the Times blasts as "at best bait and switch, or at worst gross negligence." Yet it can't be negligence in one context and competence in another.

How, exactly, is it "at best bait and switch, or at worst gross negligence" for Congress to call spending money today and promising to pay for it tomorrow in the context of the AMT but not in the context of Social Security? How is less of a "bait and switch" to call it "tax relief" than to call it a "trust fund"?

This is not a difficult concept, except to the extent that politicians and their apologists try to make it difficult.