Over at National Review Online this morning, IWF’s Carrie Lukas assesses the realistic options for entitlement reform under a Democratic Congress. Carrie is critical of Republicans like Rep. Mike Pence (R-IN) who are opposing any Social Security reform that includes a tax increase:
“Perhaps Rep. Pence assumes that Congress won’t increase tax revenues to meet these obligations. It’s theoretically possible that Congress will at long last eliminate unnecessary agencies and programs, thereby freeing up resources to pay Social Security debts — just don’t count on it. No one who’s ever seen Congress in action believes this will happen, particularly when you consider the magnitude of cuts (entire Departments and programs) that would be necessary to meet Social Security’s obligations. And even if the dream of massive spending restraint were realized, surely conservatives like Pence would still disdain a ballooning public pension system that devours more and more of the federal budget and more and more taxpayer resources.
“In reality, of course, Congress won’t reduce spending and taxes will rise. By 2040, Social Security will require 17 percent of payroll — the equivalent of a nearly 40-percent increase above the current payroll tax. When the trust fund is finally exhausted, current law requires massive benefit cuts, letting taxpayers off the hook. It’s hard to imagine, however, that any group of politicians would allow seniors’ Social Security checks to be slashed. Taxpayers are sure to lose when squaring off against this most politically powerful demographic.
“Congressman Pence — an honest-to-goodness champion of fiscal sanity — is correct that tax increases aren’t the way to address Social Security?s many flaws: Social Security’s abysmal finances are only the tip of the iceberg. The system is a terrible deal for young workers. It also fails to provide individuals with the ability to save, invest, and build a real retirement nest egg. Increasing taxes only makes those problems worse.
“Yet urging fellow Republicans not to pass a ‘bad’ bill tacitly ignores the way current law is the enemy of limited government and low taxes. Conservatives must be clear on this point: Retaining the status quo would be a big victory for big-government liberals. It means massive tax increases and the continued bloating of the federal government.”
Check out the full article here.