As I wrote last week, provisions built into current law threaten to take $500 billion out of the U.S. economy in 2013. While Congress cannot allow this “fiscal cliff” to occur as scheduled, it should use this “crisis” as an opportunity to pass a smarter package of spending cuts and revenue increases that will gradually put us on the road to fiscal discipline.
The Social Security Trustees released their latest report yesterday, which showed that the finances of the system are deteriorating. In particular, The Trustees moved up the date when Social Security will become insolvent by three years, from 2036 to 2033. In 2033, absent any reform, the Social Security benefits of all recipients will be reduced across the board by 25%.
With Newt Gingrich vying for front-runner status in the Republican presidential primaries, his positions on important public policies such as Social Security and income taxes deserve scrutiny. In both cases, Gingrich adopts familiar Republican concepts — but then undermines their key objectives.
Last week, former House Speaker Newt Gingrich unveiled details of his plan to partially privatize Social Security. His plan would allow younger workers to contribute a portion of their payroll tax obligation to a private investment account. Roughly speaking, Gingrich is signing on to the legislation from 2004 sponsored by Representative Paul Ryan (R-WI) and former Senator John Sununu (R-NH).
In not unsurprising news, the Supercommittee will shortly announce that they have failed to reach an agreement to cut $1.2 trillion from the deficit over ten years. The New York Times reports on why the twelve-member group became deadlocked:
In the end the two sides could not agree on a mix of tax increases and spending cuts and — perhaps above all — on the fate of the tax cuts originally signed by President George W. Bush, which are now scheduled to expire at the end of 2012.
A few days ago, I wrote about Rick Perry’s unviable tax plan. In the same policy document (PDF, see page 14), he outlines his beliefs about Social Security. A few months ago, Perry was calling Social Security unconstitutional and a Ponzi scheme, but now he seems to want to preserve it. Rick Perry’s statements about Social Security have moderated, but his proposal remains very far to the right.