6 Thoughts About Last Night's Democratic Debate

The mystery over tax and Social Security reform only grows deeper.

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A few things struck me as I watched the MSNBC Democratic presidential debate in Philadelphia, other than I was glad it didn't take place Monday night or else it would have conflicted with Heroes:

1) When Social Security's impending solvency crisis came up, Hillary Clinton said "we have to change the Bush tax cuts" and create "a more fair and progressive tax system" as part of a broad solution. In short, wealthier Americans can kiss their 2001 and 2003 tax cuts goodbye. But here is the real issue: As I have mentioned many times in this blog, restoring the old Bill Clinton-era tax rates on those making over $250,000 brings in only an additional $50 billion a year at most, assuming no ill economic effects from the rate rise. That is the same $50 billion that is supposed to go to funding Hillarycare 2.0. Plus, Clinton wants to reform the alternative minimum tax, though she would not sign on to Charley Rangel's recent AMT elimination plan and its surtax on families making as little as $200,000 a year. Does she plan on using that magic $50 billion for AMT reform as well? She also said America "should be investing in college affordability, universal pre-K..." Are there other possible tax increases that she is considering if elected and not mentioning? Right now, the math does not add up.

2) Clinton and Barack Obama both recommended a "bipartisan commission" to come up with some options for fixing Social Security. (As if there are not dozens and dozens of plans already floating around D.C.) First of all, many Americans may be operating under the assumption that they've already installed a pretty big bipartisan commission to deal with Social Security and other major problems. It's called Congress. Second, any truly bipartisan panel will almost assuredly come up with some mix of tax hikes, spending cuts, and extending the retirement age. So why not skip the blue-ribbon panel and get right to a discussion of which solutions are best? Isn't that what these debates are for?

3) Bill Richardson spoke about an economic "competitiveness gap" between the United States and other nations. Interestingly, a report on this very issue came out today. From the Associated Press: "The United States has regained its status as the world's most competitive economy thanks to strong innovation and excellent universities, according to...the World Economic Forum."

4) Despite Clinton's past experience with commodity futures, it was Obama and Joe Biden who accurately explained that a big chunk of the recent price rise in oil prices is due to geopolitical tension with Iran.

5) Tim Russert related this quote from Bill Clinton: "Charley Rangel wants me to pay more taxes so you can pay less, and I think that's a good idea." And billionaire investor Warren Buffett just came out and said pretty much the same thing, adding, "I just follow what the U.S. Congress tells me to do." Hey, nothing is preventing these gentlemen from voluntarily adding a zero to their IRS checks come April 15.

6) Chris Dodd came out for a carbon tax, even referring to former Bush economic adviser Greg Mankiw's advocacy in the process. But Mankiw also thinks that a $100 billion-a-year carbon tax should be offset by a cut in income taxes. So it would be revenue neutral and not create a new pot of money to fund higher government spending.


TAGS:
Democratic Party
2008 presidential election
social security
federal taxes

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