An Obama Alum Mourns How Effective Their Social Security Demagoguery Was

By Noah Rothman

Friday, June 12, 2026

 

New York Times columnist Nicholas Kristof, who has somehow managed to avoid an encounter with reputational or professional consequences for damaging his employer’s credibility, drew my attention to a provocative op-ed this morning:

 

 

The search-engine-optimized headline Times editors chose to grace the essay composed by the chairman of Barack Obama’s Council of Economic Advisers, Jason Furman, did the piece’s author no favors: “Social Security Is Going Broke,” it read. “Where Is the Outrage?”

 

“This week the Social Security trustees announced that the trust fund for retirees and survivors will be exhausted in just six years,” Furman wrote. “That’s six years before tens of millions of Americans could see their benefits cut by 22 percent.”

 

“The crisis is closer than anyone in the Clinton or Bush years ever imagined we might let it get,” Obama’s top economic mind asserted. Alas, Furman mourned, policymakers are likely to “kick” the crisis “down the road again” with temporary stopgaps, and the public is either apathetic or hostile toward meaningful reforms that could avert the program’s imminent insolvency.

 

This, Furman suggests, is a fact of life as intractable as the weather. Social Security is “the third rail of American politics,” he warned. “Touch it and you get electrocuted.”

 

How did we find ourselves in this predicament? Furman’s cursory historical review fails to uncover a culprit. Perhaps his investigation was hindered by his obvious conflict of interest. After all, the problem Furman laments has been dutifully cultivated by the political party to which he has devoted himself.

 

Democrats spent decades demagoguing the issue of Social Security reform, attacking anyone who dared notice the program’s documented shortfalls. It was a reckless and irresponsible political messaging campaign. But it was also a wildly successful one on the Democratic Party’s own terms.

 

Recall how Democrats reacted back in 2005 when George W. Bush proposed allowing workers to divert just 4 percent of their payroll taxes into personal retirement investment accounts. Furman’s former boss, the 44th president, accused Bush of attempting to “privatize Social Security and gamble your retirement.”

 

From the presidential pulpit, Obama continued to radicalize the public against sensible reforms to America’s unfunded liabilities, accusing Republicans of adding “trillions of dollars to our budget deficit while tying your benefits to the whims of Wall Street traders and the ups and downs of the stock market.” Obama didn’t quite accuse Republicans of wanting to “destroy” Social Security, but Democrats didn’t object when legacy media outlets did.

 

“Cutting benefits in half, risking Social Security on the stock market,” warned the narrator in one pro-Obama spot from the 2008 campaign. “The Bush-McCain privatization plan. Can you really afford more of the same?” Even the Washington Post’s Ruth Marcus was repulsed by the Obama campaign’s mendacity. “The Obama campaign stretches the truth beyond recognition when it says that this would cut benefits in half,” she observed.

 

Mitt Romney and Paul Ryan’s 2012 presidential campaign made a valiant effort to persuade Americans of the fiscal reality that would consume them if they failed to confront it. When it came to Social Security, the Romney-Ryan camp’s message hued closely to the statutory language. In the absence of reform, they warned, the law compels Social Security to cut benefits for current recipients.

 

“We respect you enough to level with you,” Ryan told an unruly AARP audience in the fall of 2012. America’s entitlement programs are on a trajectory toward insolvency — an ill-fated arc worsened by Obamacare. But the American people were in no mood to be reasoned with, and the Obama White House exploited their attachment to the fantasy that Social Security was on sound footing.

 

The Romney-Ryan ticket “could include increasing taxes on Social Security benefits for middle-class seniors by an average of $460 a year,” the Obama campaign warned (a prospect Furman now embraces, among other “tweaks”). But that was “not part of Romney’s tax plan,” the Center for Public Integrity noted. Nor did the Romney-Ryan ticket seek “higher taxes for seniors on Social Security, including taxing benefits for seniors who make less than $32,000 a year for the first time ever,” as Obama’s allies claimed.

 

The Obama campaign even published a video warning seniors that Republicans would steal money from the pockets of the elderly so they couldn’t afford even that $20 on “a birthday present for your grandson.” No wonder those AARP activists were hopping mad.

 

By the end of the last decade, not only had the general public been persuaded that Social Security was just fine, but the progressive left concluded that the program could and should be expanded.

 

In 2019, Elizabeth Warren’s aborted presidential campaign published a widget that allowed users to calculate how much money they’d receive from her bigger, bolder Social Security program. “We should be increasing Social Security benefits and asking the richest Americans to contribute their fair share to the program,” her campaign declared in a display of contempt for those of us who know who pays payroll taxes, from which Social Security’s funding is statutorily drawn. Bernie Sanders agreed. “It is time to expand Social Security, not cut it,” he declared. Progressive Democrats have been attempting to do just that via legislation ever since.

 

Democrats got what they wanted. If Social Security is difficult to reform today, that’s only because the public believes Democrats when they contend that it needs no reforming. And the Trump-led Republican Party has thoroughly internalized the lessons they were taught by the Obama operation in 2012.

 

“There are people who would cut Social Security, throw our grandparents into poverty,” JD Vance said on the campaign trail in 2024. In his piece, Furman mourns the inclusion of a provision in Trump’s One Big Beautiful Bill Act that “included a de facto benefit increase that came at the expense of revenues partially earmarked for Social Security,” which contributed to the dire projections now coming from the program’s trustees.

 

That was fiscally reckless, but it takes a lot of nerve to blame the GOP for responding to the political inducements the Democratic Party has expertly exploited.

 

Furman positions himself as a brave truthteller, but he’s not telling the whole story of how the nation committed itself to a fiscal crisis. He and the president he served deserve their share of the blame, but that’s not what Times readers want to hear. Thus, Furman’s piece is yet another contribution to the Democratic Party’s decades of mendacity when it comes to Social Security.

The Enemy Tax

By Abe Greenwald

Friday, April 24, 2026

 

Last week, New York City Mayor Zohran Mamdani made a video announcing his proposed new pied-a-terre tax, which targets part-time apartments valued at or above $5 million. In the video, Mamdani stood on the street, pointed up to a penthouse owned by Citadel CEO Ken Griffin, told viewers that Griffin paid $238 million for the place, and scolded him for this supposed sin.

 

As ever with Mamdani, his terrible policy gets the headlines while the terrible intention behind it is surely the bigger story. 

 

Yesterday, Citadel responded with a statement denouncing Mamdani’s stunt and hinting that the company might pull out of developing new office space in New York, a project that’s expected to contribute $4.5 billion to the city’s economy.

 

Yes, we know that slapping wealthy job creators with punishing taxes is bad for the city because it drives them to other locales that will enjoy the infusion of jobs and tax revenue.

 

But Mamdani isn’t doing this because he thinks it will provide jobs or raise revenues for the city. The goal is to demonize and punish CEOs, both as a class and, more egregiously, as individuals. The goal, in fact, was achieved by the video itself.

 

What kind of policy announcement calls out a single individual by name, shows the world where the man (sometimes) lives, and broadcasts what he paid for his penthouse? Mamdani wanted to establish Griffin as an enemy of the left-wing mob, and surely he accomplished that.

 

The politics of left-wing vengeance never take into consideration the downstream effects of policy. It doesn’t matter whether defunding the police gets more black people killed or whether supporting Hamas dooms Gazans. So it certainly doesn’t matter whether a pied-a-terre tax helps or hurts New York City. All that matters is that the enemy is made to fear the mob.

 

So, in the same city where UnitedHealthcare CEO Brian Thompson was shot and killed by a radical activist less than two years ago, the new radical mayor targets a hedge fund CEO as a villain who’s ripping off the little guy. And at almost exactly the same time, we’ve got Mamdani’s friend and supporter Hasan Piker appearing on a New York Times podcast talking about revolutionary violence as it applies to CEOs committing “social murder.”

 

It’s not hard to see where this kind of thing leads. Because we’ve already seen it go there.

 

If I were Ken Griffin, not only would I never give another red cent to New York City. I’d consult a lawyer about hitting Mamdani with a suit for incitement or reckless endangerment or some similar charge. He may not have a case, but it’s worth sending a warning shot, nonetheless.

 

When Republicans publicly focus their ire on private citizens, liberals take great offense. And they should.

 

The social-justice left loves to talk about feeling “unsafe”? Mamdani has more than 10 million social media followers. He’s a hero to left-wing revolutionaries around the world. How safe would you feel being singled out by name and address in one of his vengeful Instagram videos?
 
What happened to that national conversation we were supposed to have about turning down the temperature of political debate? This was a strange and sickening week for American politics.

Jacobin Confusion on Social Security

By Ramesh Ponnuru

Friday, April 10, 2026

 

Debate over Social Security, scant though it is, usually and understandably focuses on its insolvency. I recently tried to call attention to some of the program’s other flaws, such as its negative impact on U.S. savings rates and its failure, notwithstanding its enormous cost, to eliminate poverty among senior citizens. I argued that we should think not just about how to save the existing program but about what kind of program would make sense as part of a modern American retirement system. I suggested that a better system would include a flatter benefit structure, one that gave people with the lowest lifetime earnings larger checks but asked people with the highest lifetime earnings to plan to rely more on retirement savings outside the program.

 

These changes would, by the standard definitions of the term in fiscal contexts, make Social Security more progressive. But self-proclaimed progressives who work in this area generally hate it — because, I suspect, they place great value on the political power of the program roughly as it is.

 

So it would not have surprised me if Josh Mound, writing in the left-wing magazine Jacobin, had disagreed with me. What surprises me is how little resemblance there is between his characterization of what I said and what I actually said. His criticism somehow manages to be even more irrelevant to my argument than Dean Baker’s was.

 

Mound writes:

 

As with earlier attempts to persuade younger generations to support cuts to old-age benefits, proponents of the [Total Boomer Luxury Communism] narrative hope to create the impression that cutting Social Security would allow younger Americans to stick it to supposedly “greedy geezers.”

 

Last month, conservative Washington Post columnist Ramesh Ponnuru declared, “Don’t Save Social Security.” Echoing the TBLC discourse, Ponnuru argued that the program simply funnels money to already-well-off retirees — citing the common conservative talking point that a rich retired couple could receive $100,000 in benefits each year.

 

I never suggested that senior citizens are greedy, nor did I claim that the program “simply” sends money to well-off retirees, nor did I advocate any change affecting current retirees.

 

Mound continues: “His solution? Raise the retirement age and replace the current benefit formula with a flat payment of roughly $1,350 per month.” I have no idea where Mound got that $1,350 per month figure, or the idea that I came out for a flat payment. I didn’t endorse either idea in the column.

 

Some more from Mound:

 

The CBO’s benefit-to-tax ratio is also the source for claims like Ponnuru’s that workers receive “more than the sum of what the person paid in taxes and the interest on that money.”

 

Yet this raises an obvious question: If Social Security returns more than workers contribute, how can conservatives simultaneously claim that the program is a “very bad deal” and that, as President George W. Bush put it during his privatization push, workers’ “money will grow, over time, [in private accounts] at a greater rate than anything the current system can deliver”?

 

By “conservatives simultaneously claim,” Mound means, based on his links, that different right-of-center people made these claims 14 years ago, 26 years ago, and 21 years ago. As I have written before, I think the time in which personal accounts made sense as a partial replacement for Social Security has passed.

 

I’ll end with a confession: There is no way, based on the inaccuracy of the passages I know most about, that I am ever going to read the entirety of the more than 15,000 words Jacobin gave Mound for this article. I cannot recommend that you do so either.

Trump Is Making Socialism Great Again

By David Frum

Sunday, July 27, 2025

 

In the 1980s, the world’s largest producer of shoes was the Communist Soviet Union. In his 1994 book, Dismantling Utopia, Scott Shane reported that the U.S.S.R. “was turning out 800 million pairs of shoes a year—twice as many as Italy, three times as many as the United States, four times as many as China. Production amounted to more than three pairs of shoes per year for every Soviet man, woman, and child.”

 

And yet, despite this colossal output of Soviet-socialist footwear, queues formed around the block at the mere rumor that a shop might have foreign shoes for sale: “The comfort, the fit, the design, and the size mix of Soviet shoes were so out of sync with what people needed and wanted that they were willing to stand in line for hours to buy the occasional pair, usually imported, that they liked,” Shane continued.

 

The Soviet economic system put millions of people to work converting useful raw materials into unwanted final products. When released from the factory or the office, those workers then consumed their leisure hours scavenging for the few available non-useless goods. The whole system represented a huge cycle of waste.

 

For a younger generation of Americans, the concept of “socialism” is an empty box into which all manner of hopes and dreams may be placed. But once upon a time, some humans took very seriously the project to build an economy without private property and without such market rewards as profits. What they got instead were unwearable shoes. But memories fade; hopes and dreams endure.

 

Growing numbers of Americans feel that the economy does not work for them. Donald Trump’s stewardship has blatantly favored insiders and cronies. And so, in the 2020s, Americans find themselves debating ideas that once seemed dead and dusty, and in some cases, electing politicians who champion them. The new socialism addresses the problems that wrecked the old socialism only by denying or ignoring them. If socialism is to be beaten back, and if market economics are to uphold themselves in democratic competition, exposing the unworkability of proposed alternatives won’t be enough. It will be necessary to reform and cleanse the market economics indispensable to sustaining Americans’ standard of living.

 

***

 

During socialism’s heyday, the world’s leading minds hailed the superior potential of a planned socialist economy. Albert Einstein wrote in 1949:

 

The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals … A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child.

 

In 1960, the Harvard economist Abram Bergson predicted that the Soviet economy was on a trajectory to overtake the U.S. economy. Bergson’s was not a crank opinion at all. Similar estimates underlay CIA analysis of the Soviet economy well into the ’60s. Americans might reject socialism for themselves as oppressive. But experts believed that, as unlovely as Soviet socialism was, it could produce positive results.

 

The same overestimation of the U.S.S.R.’s productive capacity was also applied to Communist China. On the U.S. Senate floor in 1959, the future president John F. Kennedy gave a speech in which he accepted almost completely at face value China’s claims of a “Great Leap Forward”: “The mobilization of the unemployed mass of Chinese rural workers through economic communes, cottage industry, small pig-iron schemes, and all the rest is an achievement whose political and intellectual impact in less developed areas is bound to be immense.”

 

In actuality, the Great Leap Forward amounted to perhaps the deadliest self-inflicted calamity in human history. Mao Zedong’s forced industrialization program caused a famine that killed at least 23 million people, and perhaps as many as 55 million.

 

The Soviet economic statistics that so impressed the CIA were faked or meaningless. It did not matter how many pairs of shoes a Soviet factory made if nobody wanted to wear them. To escape Soviet sclerosis, Communist China began, in 1978, to open up first its farm economy, then its industry, to private management, market competition, and foreign investment. Communist Vietnam and other formerly closed and controlled economies followed the Chinese example.

 

Across the democratic West, socialist ideas went into eclipse. In 1995, under the new leadership of Tony Blair, the British Labour Party amended its party constitution to delete venerable language pledging “common ownership of the means of production, distribution, and exchange.” In Germany in the early 2000s, Gerhard Schroeder’s Social Democratic coalition government introduced the most dramatic reductions in decades to social benefits to push the long-term unemployed back to work. In the United States, Democratic President Bill Clinton declared in 1996, “The era of big government is over.”

 

***

 

The seeming triumph of market economics was not welcomed by all, of course. Those disgruntled by the seeming triumph rejected Margaret Thatcher’s taunt that “there is no alternative,” yet they could not articulate in any concise or coherent way what that alternative might be.

 

The anti-corporate activist Ralph Nader ran for president in part to challenge the Clinton-era pro-market consensus. In his 2000 campaign as the nominee of the Green Party, Nader assembled an array of grievances: over-lengthy commutes to work; unhealthy meals at fast-food chains; excessive CEO pay; young people getting too much screen time; the criminalization of narcotics; the demise of urban electric-trolley systems. He could not have been more specific about what he opposed. But what was he for? Nader could not say.

 

And so it went for one project after another to imagine an anti-capitalist future. Some who belonged to the era’s left glumly quoted a saying attributed to the American Marxist literary critic Fredric Jameson: “It’s easier to imagine the end of the world than the end of capitalism.”

 

Over the quarter century from early 1983 to late 2007, the United States suffered just two brief, mild recessions: one in 1990–91, and a second that lasted only from spring to fall of 2001. From the beginning of Ronald Reagan’s second administration to the end of George W. Bush’s first, the U.S. unemployment rate never once reached 8 percent. Over that same period, inflation was low and interest rates steadily declined.

 

Economists call this era “the Great Moderation.” The moderating influence was felt on politics too. For nearly 50 years, Gallup has surveyed Americans’ mood with a consistent series of questions about the general condition of the country. From 1983 to 2007, the proportion of Americans satisfied with “the way things are going in the U.S.” reached peaks of about 70 percent, and was often above 50 percent.

 

Then the long period of stability abruptly ended. Over the 15 years from 2007 to 2022, the U.S. economy suffered the Great Recession, the coronavirus pandemic, and post-pandemic inflation: a sequence of bewildering shocks.

 

You can see the effects in the Gallup polling. Over this period, the percentage of Americans who described themselves as generally satisfied rarely exceeded one-third and often hovered at about a quarter.

 

The era of moderation yielded to a time of radicalism: Occupy Wall Street, the Tea Party movement, “birtherism,” the wave of militant ideology that acquired the shorthand, “woke.” In 2015, in the throes of this radicalism, Hillary Clinton announced her second campaign for the Democratic presidential nomination. In her stump speech, she listed categories that described the American electorate as she saw it, offering a fascinating portrait of the politics of the 1990s meeting the realities of the 2010s. She dedicated her candidacy equally to “the successful and the struggling,” to “innovators and inventors” as well as “factory workers and food servers.” In other words, she addressed herself to Americans for whom the world was working more or less well, and to familiar and long-established blue-collar categories. She made no specific mention of gig workers, downwardly mobile credentialed professionals, or any of the other restless social categories that multiplied after the shock of 2008–09.

 

A few weeks after Clinton’s announcement, Senator Bernie Sanders of Vermont declared his campaign for the same Democratic nomination. Sanders was an odd messiah. He had spent a lifetime in politics with little to show for it. No major piece of legislation bore his name, and precious few minor pieces either. An independent socialist, he had stayed aloof from the Democratic Party without building a movement of his own. Few had considered him an inspiring personality or a compelling orator. Yet amid this new radical temper, he quickly gathered a cultlike following—and won 13 million votes, to carry 23 caucuses and primaries. When he ultimately lost to Clinton, the defeat left many of his supporters with resentments that divided leftists from liberals in ways that may have helped Donald Trump win the Electoral College in the general election in November 2016.

 

In 2002, toward the end of her public career, Thatcher was asked to name her greatest achievement. “Tony Blair and New Labour,” she replied. “We forced our opponents to change their minds.”

 

Sanders might say the same about Trump and his Republican Party. Goodbye to Reagan-era enthusiasm for markets and trade: Trump vowed much more aggressive and intrusive government action to protect American businesses and workers from global competition. He also offered a bleak diagnosis of America’s condition, for which the only way forward was to return to the past.

 

At the same time, Trump’s persona vindicated every critique Sanders might advance about the decadence of late capitalism. Here was a putative billionaire whose business methods involved cheating customers and bilking suppliers. His private life was one scandal after another, and he spent his money on garish and gimcrack displays. He staffed his administration with plutocrats flagrantly disdainful of the travails of ordinary people, and with grifters who liked to live high on public expense.

 

The coronavirus pandemic intensified the anti-market feeling. The economic effects enriched those who possessed assets, especially real estate: The median house price in the U.S. jumped from $317,000 in the spring of 2020 to $443,000 by the end of 2022. The federal pandemic response could also be gamed by business owners; the U.S. government estimates that as much as $200 billion of COVID-relief funds may have been fraudulently pocketed. On the other hand, if you were a person who rented his or her home and lived on wages, you were almost certainly worse off in 2022 than you had been in 2019. Your wages bought less; your rent cost more.

 

The outlook was especially bleak for young college graduates. The average new graduate owes more than $28,000 in student debt a year after graduation. Hopes of repaying that debt were dimmed by the weak post-COVID job market for new graduates. Joe Biden’s presidential administration did relieve some student debt, but its most ambitious plans to help new graduates were struck down by the Supreme Court as exceeding executive authority.

 

In some respects, people born since 1990 are more conservative than their elders. Academic surveys find that Americans, male and female, who attended high school in the 2010s express more traditional views about gender roles than those who attended high school in the 1990s. But on economic questions specifically, an observable shift of attitude against markets and capitalism has occurred. Only 40 percent of adults younger than 30 expressed a positive view of capitalism in a 2022 Pew survey, a drop from 52 percent pre-pandemic. Older groups lost faith too, but not so steeply: Among over 65s, a positive view of capitalism dipped from 76 percent pre-pandemic to 73 percent post-pandemic.

 

This disillusionment has opened the door to self-described socialists in the 2020s. The most recent and most spectacular of this new cohort is Zohran Mamdani, who earlier this month won the Democratic nomination for mayor of New York City in an upset election.

 

Mamdani campaigned on promises to raise taxes on New York’s richest inhabitants to finance a bold new program of state enterprise: free bus service, government-owned grocery stores, a rent freeze for the 1 million apartments under city jurisdiction, and a vow to build 200,000 affordable-housing units over the next decade. After the tallies were boosted by New York’s ranked-choice voting system, Mamdani won 56 percent of the vote. He now tops polls for the general election in November. His agenda already is influencing Democrats nationwide.

 

***

 

Few if any of the Americans who use the term socialist would today defend Communist central planning. But as they criticize the many failings of contemporary American society, they tend to shirk the obvious counter-question: If not central planning, then what do they want? Liberals such as Bill and Hillary Clinton proposed to let markets create wealth, which governments would then tax to support social programs. If that’s out of style, if something more radical is sought, then what might that something be? Merely Clintonism with higher taxes? Or a genuine alternative? How can a society that aspires to socialism produce the wealth it wants to redistribute if not by the same old capitalist methods of property, prices, and profits?

 

The socialists of a century ago promised both a new way to create wealth and a new way to share it. The preeminent American socialist of the early 20th century, Eugene V. Debs, outlined that new system in speeches such as the one he delivered in Girard, Kansas, in 1908:

 

We Socialists propose that society in its collective capacity shall produce, not for profit but in abundance to satisfy human wants … Every man and woman will then be economically free. They can, without let or hindrance, apply their labor, with the best machinery that can be devised, to all the natural resources, do the work of society and produce for all; and then receive in exchange a certificate of value equivalent to that of their production. Then society will improve its institutions in proportion to the progress of invention. Whether in the city or on the farm, all things productive will be carried forward on a gigantic scale.

 

As soon as it was attempted, this breathtaking utopian vision bumped into a daunting challenge: Without market prices, how can any of those gigantic socialist enterprises know what to make or how to commit their resources? And without market institutions, including the profit motive, how can we have market prices? Socialist enterprises would blunder about in the dark, unable to communicate with one another, unable to respond to changing circumstances, because socialist planning severed the lines of communication that connect economic actors.

 

Much brainpower was invested over many decades to solve this riddle. Francis Spufford’s novel Red Plenty makes improbably poignant literature out of the desperate hopes of Soviet economists that the new technology of the computer might somehow rescue socialism from its own impossibility.

 

But there was no escape. There is no socialist way to create wealth. There is only a socialist way to spend wealth. The socialist revival of the past half decade no longer even pretends to worry about wealth production. It exists purely as a new set of claims on existing modes of production: socialist apartments funded in effect by taxes on nonsocialist apartments, socialist grocery stores that do not have to pay the taxes or rent paid by nonsocialist grocery stores.

 

The beneficiaries of these claims will not necessarily be society’s poorest. New York City distributes affordable-housing units through a process that begins with a lottery but rapidly transforms into a test of skill, savvy, and connections. In the first place, New York favors applicants who work for the city, in itself a step that advantages middle-class people over the truly needy. Then, once the lucky lottery winners get their good news, they must assemble a mass of documents to prove their desirability as tenants—pay stubs, lease records, birth certificates. As an expert on the process explained to a real-estate website: “Once you’ve been selected, it’s all about being organized and efficient.” The people most at risk of homelessness are those least likely to navigate New York’s system of nonmarket and submarket rents.

 

In 2022, Mayor Eric Adams—elected as a Democrat, though now running for reelection as an independent—cut the ribbon on a $120 million project in Far Rockaway. This outer-borough development offered studios starting at $522 a month, two-bedroom apartments for $809 a month. But the building contained only 224 units. For all the excitement of the lucky beneficiaries, this is the faintest replica of a housing solution—as well as a reality check to Mamdani’s grandiose vision of government-led housing abundance.

 

***

 

Given this disappointing record, why are so many New Yorkers signing up for more and bigger? The short answer is that the debate about socialism is scarcely about socialism at all. Socialism’s catastrophes are today obscure, relegated to a poorly remembered past. Dissatisfaction with the present-day economic system is felt urgently in the here and now.

 

The progressive economist Joseph Stiglitz recently remarked, “Trumponomics is ersatz capitalism.” The president and those around him are accumulating huge fortunes by unashamedly preying on the credulity of their followers. Trump insiders have used political power to harass regulatory agencies and cripple tax enforcement. Trump’s big policy moves are accompanied by an avalanche of suspicious trades. “Of the stock and stock fund sales administration officials reported between Jan. 20 and April 30, 90% fell within 10 days of the tariff announcements,” USA Today reported last week. The New York Times suggested in April that if Trump seems to care little about crashing the stock market but a lot about the bond market, that may be explained by his own holdings: few stocks, many bonds. (Unlike most past presidents, Trump has not put his holdings in a blind trust.)

 

While Trump’s behavior discredits markets, his rhetoric vilifies markets. In April, the Trump administration imposed the most crushing tariffs on international commerce since the Smoot-Hawley Act’s regime of 1930. The Trump adviser Stephen Miller explained to Fox News the administration’s reasons: “Our leaders allowed foreign countries to rig the rules of the game, to cheat, to steal, to rob, to plunder,” he said. “That has cost America trillions of dollars in wealth.” Echoing his boss’s grievance-laden language, he said, “They’ve stolen our industries.” It’s not always phrased so vituperatively, but the message is consistent: free exchange is an illusion; there is nothing but exploitation. The only way to protect Americans from exploitation is for the nation’s political leaders to subject more and more of the U.S. economy to state control. If this way of thinking is true, then the severest critics of capitalism are right.

 

Happily, this way of thinking is not true. Free exchange is a system of cooperation and mutual benefit, the most effective that humanity has yet discovered. But who in the Trump-led United States is arguing the case for free exchange? The most influential intellectuals of the left reject markets as too inequitable; those on the right reject them as too cosmopolitan. On one side, the professional politicians are intimidated by their most radical supporters; on the other, the politicians are under the sway of crooks and con artists, whose idea of capitalism is unregulated permission to bilk and defraud.

 

Marxists condemn capitalism as “organized robbery.” They could not be more wrong. But who will refute them when the government of the world’s largest capitalist democracy is in the hands of organized robbers?

Bolivia Is Fed Up with Socialism

By Dominic Pino

Monday, August 18, 2025

 

Since 2006, Bolivia has been governed by the Movement for Socialism party. Former President Evo Morales, in office until 2019, became a darling of the international left, moving the Bolivian economy to greater state control and moving its foreign policy against the U.S. and toward Venezuela, Russia, and China. “Capitalism is the worst enemy of humanity,” Morales has said.

 

After seeing capitalism’s alternative firsthand for two decades, the Bolivian people seem to have decided capitalism isn’t the absolute worst.

 

A few years of relative success on economic measures seemed to vindicate Morales, but things have been going downhill for many years. Politically, the socialist movement has fractured, with Morales leaving his old party and encouraging his supporters not to vote for it. In the first round of this year’s presidential election, which concluded on Sunday, the Movement for Socialism candidate received just 3 percent of the vote. The party could potentially lose all of its seats in the Bolivian legislature.

 

On a per capita basis, Bolivia is the poorest country in South America besides Venezuela. Bolivia’s 1990 GDP per capita of $5,124 was about $1,000 behind neighboring Peru’s. Today, Peru is more than $5,000 ahead, and Peru’s growth hasn’t been exactly stellar either. Inflation is about 25 percent.

 

In recent times, Bolivians have been dealing with persistent fuel shortages. Fuel is price-controlled, of course, which has caused a steep decline in production and exploration in what was once South America’s natural-gas powerhouse. When the ruling-party candidate went to cast his ballot on Sunday, other voters shouted that he should wait in line to vote like they have to wait in line for fuel.

 

The two candidates who advanced to the runoff, scheduled for October 19, both want to undo socialism. The first-place finisher, Christian Democratic Party candidate Rodrigo Paz Pereira, said he wants “capitalism for all, not just a few.” The second-place finisher, Jorge Quiroga of the Libre party, was already president from 2001 to 2002, before the socialists took power.

 

The result might remind you of Javier Milei’s victory in Argentina to undo decades of socialism there. But the most Milei-aligned candidate was Samuel Doria Medina, a businessman with a more radical austerity agenda, and he finished third. He endorsed Paz after conceding.

 

Paz comes from a family of Bolivian politicians, and his father was president from 1989 to 1993. He did not run as a “brash populist,” but rather as the candidate of “renewal,” according to Latin America watcher Kevin Ivers on his Substack newsletter. “Campaigning more on vibes than bold policy, Paz gathered the confidence of voters hungry for change but not yet ready to go too abruptly to the right,” Ivers wrote. A Quiroga victory would be a more straightforward return to the pre-socialist era, restoring the right-wing former president to office.

 

Either way, Bolivians will be getting a step toward freer markets and away from government control. Paz wants to decentralize government power by sending half of all public funds to regional governments. He also wants to shut down failing state-owned enterprises, stabilize the currency, and remove import barriers. Quiroga has been promising to do Milei-lite, with public spending cuts and government reforms to root out the socialists in power.

 

One key difference is that Paz opposes help from the International Monetary Fund, while Quiroga is open to it. Milei has had a positive relationship with the IMF while pursuing his free-market reforms in Argentina.

 

Choosing between which variety of pro-market candidate is a great place for Bolivia to be. Bolivian bond prices have been rising this year as investors anticipate the end of two decades of socialism. More important, though, the Bolivian people can finally expect some relief from shortages and stagnation.

 

Government controls on the price of bread haven’t changed in 17 years, but the size of the loaf has been cut roughly in half. In an Associated Press story this month, 60-year-old bread seller Raquel de Quino said, “Let’s pray to God that under the next government, there will [be] bread for our children.” The enemy of humanity is the economic system that makes poor women say that sentence.

The Illogic of Tariffs Has Turned the Trump Administration into ‘Degrowthers’

By Noah Rothman

Monday, April 07, 2025

 

Call it “the fierce urgency of now.” Among those who “know what time it is,” whose narcissism imbues them with confidence that “we are the ones we’ve been waiting for,” incrementalism is a dirty word. That’s particularly true of modernity’s discontents. Cloistered in impenetrable bubbles populated by like minds, the radicals engage in a game of rhetorical one-upmanship until they convince themselves that the whole contemporary artifice must go. That outlook led so many on the political left to endorse a program that its critics have aptly branded a “degrowth” agenda.

 

What else could you call it? To hear environmental activists tell it — at least, when they’re comfortable enough to reveal their true motives and preferred outcomes — the modern world, with its comforts and abundant necessities, is a suffocating contrivance. Plentiful food is contributing to disastrous overpopulation. The on-demand availability of power is overheating the planet. Novel consumer goods and their commercialization have made us soft and weak. “So much neon and noise, plastic and profligacy,” the New Yorker’s E. Tammy Kim wrote contemptuously of the copious miracles that have delivered mankind from the Hobbesian existence that defined the human experience until roughly 300 years ago.

 

It was assumed that the Trump administration and Republicans, generally, stood athwart this perverse masochism masquerading as altruism. But the inescapable logic of Trump’s preferred tariff regime and the global trade war it has inaugurated has led the president’s backers to embrace the defective logic of the degrowth movement.

 

As Trump himself insisted, there is no market reaction apocalyptic enough to divert him from his chosen course. Indeed, it’s “stupid” to imagine that the president would alter his deep ideological convictions based on minor externalities like the implosion of the global economy. “Sometimes you have to take medicine to fix something,” he warned.

 

Sure, it’s a bitter pill, but compelling consumers to absorb price increases and struggle amid the reduced economic activity that will follow Trump’s tariff regime is good for you. Indeed, many in and around Trump’s orbit have — either out of conviction or desperation — borrowed the rhetoric of the degrowthers.

 

“You can lose money,” declared the gadfly and popular MAGA podcaster Benny Johnson. “You can lose points in your portfolio. It costs you absolutely nothing. You won’t miss them when you’re dead.” In much the same way that environmentalist Luddites insist that your sacrifices will beget a better world, eliding the many steps along the way from privation to prosperity, you’re called upon to suffer for a greater good that is never properly defined.

 

Whatever his reach, Johnson’s outlook is not anathema inside the Trump administration. “I’m not happy with what’s going on in the market today,” Treasury Secretary Scott Bessent said during an ill-conceived interview with Tucker Carlson. “But the distribution of equities across households — the top 10 percent of Americans own 88 percent of equities, 88 percent of the stock market. The next 40 percent owns 12 percent of the stock market. The bottom 50 has debt; they have credit card bills, they rent their homes, they have auto loans, and we’ve got to give them some relief.”

 

This is an unreconstructed version of the faulty economic rationales to which Bernie Sanders and Alexandria Ocasio-Cortez are partial. It presupposes that investment income and the economic growth it generates come at the expense of low-income Americans. Moreover, Bessent seems to have reached the conclusion that engineering worse but marginally more equal outcomes is the only way to remedy this intolerable disequilibrium. After all, as the secretary said previously, “Access to cheap goods is not the essence of the American dream.” In other words, paying less to get more, freeing up income for productive purposes other than funneling it into the insatiable maw of the U.S. Treasury, is a gateway to vice: sloth, ingratitude, and the weak constitutions that typify the atomized modern man. Take your medicine.

 

“The army of millions and millions of human beings screwing in little screws to make iPhones, that kind of thing is going to come to America,” Commerce Secretary Howard Lutnick forecast in an appearance on CBS News over the weekend. “Great Americans — the tradecraft of America — is going to fix them, is going to work on them.”

 

According to Trump, we may have to endure two more years of this before menial manufacturing of the sort Lutnick describes is reshored to Trump’s satisfaction. Meanwhile, back in our shared reality, only China outpaces America’s global manufacturing output — production that has been on the rise in recent years. And if the goal is to restore the status quo ante that comparative advantage undid, Trump’s trade policies are the enemy of that objective. At least, according to the manufacturers who are vocally terrified about the trade war’s effect on their bottom lines, to say nothing of their ability to employ the forgotten masses.

 

The faint Bolshevist notes that consumers of this sort of rhetoric may detect become far more pronounced when surveying the pro-tariff arguments of the MAGA faithful.

 

Free Press contributor Batya Ungar-Sargon dispensed with the burden of proof when she insisted that the global economy to which we were all accustomed last week was a plague on mankind. Something drastic had to be done. “And yet when somebody has the courage to show up and say to Wall Street, screw you, I am waging class warfare on behalf of the American working class,” she shouted during a recent cable news appearance. “And you elites in Wall Street, you do what you need to do because I’m not going to stop fighting for the American working class.”

 

“We must reorder the American economy to work for the masses of working-class citizens,” declared one-time Donald Trump and JD Vance campaign operative Steve Cortes. In some ways, he added, the economy Donald Trump inherited was “actually even worse than the Great Depression” because the rich are “getting wealthier and wealthier while the working-class masses suffered.”

 

Cortes concludes with a note of caution to free traders. Populism “is ascendant,” he notes. “The question is, do you want populism of the left,” he asks, “or do you want populism of the right?” That is not the question. Rather, what inquiring minds really want to know is, what’s the difference?

 

It took the Bolsheviks and their fellow travelers in the West decades to abandon Marxism-Leninism’s unrealizable promise of material abundance. Only then, when the belief that socialism would usher in a new stage of human progress was finally abandoned, did central planning advocates retreat to the notion that collectivism was morally superior. What that argument lacked in empiricism it made up for in being the last safe rhetorical harbor.

 

It took MAGA just days to arrive at the same place. With some exceptions, the MAGA right has not undergone a sudden conversion to degrowtherism. They’re merely groping for a rationale that renders Trump’s tariffs comprehensible to skeptics of this faith-based initiative. Their progression was predictable because it’s the same path the left follows. First, they raise prices. Then, they shriek at the producers who respond to increased prices. Ultimately, they settle on the notion that deprivation and hardship are good for your soul. In the end, the argument resorts to coercion. You will have less, and there’s nothing you can or should do about it.

 

That argument tends to be the final word in the authoritarian systems necessary to maintain an intolerable level of distress. We’ll see soon enough if civically active Americans are likewise intimidated.

Is Social Security a Ponzi Scheme?

By Kevin D. Williamson

Friday, March 07, 2025

 

Elon Musk—who is, let us not forget, one of those “unelected bureaucrats” Donald Trump raged against on Tuesday night—has sent Democrats to the fainting couch by referring to Social Security as a “Ponzi scheme,” an ancient and bog-standard piece of libertarian rhetoric that, while not entirely accurate, captures the spirit of the thing. Social Security resembles a Ponzi scheme in that its economic structure requires a steady flow of new taxpayers into the system to fund benefits promised to those eligible to collect them; it is different from a Ponzi scheme in that there isn’t really any fraud involved in it beyond the loosey-goosey marketing language politicians have used to sell it over the years. Social Security is a perfectly ordinary social-insurance scheme (“scheme” here in the nonpejorative British sense) very similar to many other programs around the world that are—predictably—failing for the same reason.

 

The fraud involved in Social Security is political rather than financial. Franklin Roosevelt described Social Security as though it were an investment plan, a kind of federally secured savings account for retirement, and his epigones in both parties have continued that long and dishonest tradition. It is, of course, no such thing: Social Security is an ordinary welfare program in which the federal government takes money from taxpayers to provide benefits to a favored class of people, in this case oldsters and people with disabilities. There is a separate payroll tax producing revenue the federal government pretends to set aside for Social Security and Medicare, which is done to reinforce the myth that Social Security is a system that people “pay into” before receiving payments that are, in some sense, a return on investment.

 

Heeding the proverbial wisdom that “a program for the poor is a poor program,” Roosevelt insisted—against the advice of some economic advisers—to link the program to a payroll tax in order to diminish the “relief attitude,” meaning the identification of Social Security as a welfare program like food stamps and payments to the poor. “With those taxes in there, no damn politician can ever scrap my social security program,” Roosevelt told his advisers. “Those taxes aren’t a matter of economics, they’re straight politics.”

 

(Poetically, we owe the survival of that cynical quotation to Luther Gulick, who was kind of an Elon Musk before Elon Musk, an unelected official who advised the FDR administration on efficient administration in government, having served on the Brownlow Committee, which made recommendations about government efficiency, and later advising the president on ad hoc basis.)

 

Americans “pay into” Social Security in the same way they “pay into” the Pentagon budget—and taxes paid to support the Department of Defense do not entitle Americans to tanks and aircraft carriers for their personal use. You do not own your Social Security “contributions” (“contributions” that are collected, ultimately, at threat of gunpoint) any more than you own your contributions to the national defense or to agricultural subsidy payments that are made to the hardworking, salt-of-the-earth farmers of … Manhattan.

 

Social Security is not in a bad fiscal situation because the trust fund was “raided.” The “trust fund” is, in effect, a figure of speech. Tax money comes in the door and benefit money goes out the door, and the difference between what Americans have paid in payroll taxes and what the federal government has paid out in benefits is documented and talked about as though it were a trust fund. The “trust funds” are “invested” in Treasury securities, which means that the government is more or less moving money between different accounts while spending more than it takes in and pretending that this is a form of savings or investment. For some years, Americans paid more in payroll taxes than the government paid out in benefits, and this difference is the “trust fund,” which is being depleted—again, this is purely a paper exercise—as payments exceed revenues.

 

Payments exceed revenues because the ratio of active workers paying payroll taxes to retirees receiving benefits is out of whack. In 1940, in the program’s infancy, there were 159 taxpayers per beneficiary. That ratio was never going to last, of course—it was an effect of the program’s having just begun—and by 1955 it had fallen to 8.6 taxpayers per beneficiary. That’s not too bad a number, but the ratio kept declining: to 5.1 in 1960, 4.0 in 1965, 3 in 2009, and about 2.8 today. Projections have it at more like 2, possibly less, in a couple of decades.

 

As the ratio declined, the payroll-tax rate increased: Originally, it was 2 percent on the first $3,000 of income (which is about $66,000 in today’s dollars), and, today, it is 12.4 percent on the first $176,100. Contrary to Democratic claims, lifting the cap and applying the 12.4 percent tax on all income would not cover the program’s unfunded liabilities—even if we work from modest expectations about how a new 12.4 percent income tax would affect compensation practices (Americans are pretty good at minimizing their taxes, and rich Americans are particularly inventive), eliminating the cap probably wouldn’t even cover half of the shortfall. (Estimates vary.) The ideas put forward by many Democrats would cover even less, because they wouldn’t apply the payroll tax to all income above the tax but only to income in excess of some envy-inducing ceiling, $500,000 or $1 million or whatever.

 

In the spirit of Luther Gulick and Elon Musk, it probably would be better to eliminate the payroll tax entirely and quit pretending that we fund Social Security out of something other than ordinary government tax revenue. That would at least be an administrative improvement and simplify the tax system a little bit, which is to be welcomed. But it wouldn’t fix Social Security.

 

There are a few things lawmakers could do to improve the program’s finances. One would be to cut benefits, which are, per the wishes of the program’s designers, paid out irrespective of beneficiaries’ wealth or income: Elon Musk, the world’s wealthiest man, will be eligible for a check just like anybody else—a high price to pay for a marketing fiction.

 

Another measure would be to raise taxes—if you want benefits and other government spending, someone has to pay for them. Most of the European welfare states admired by American progressives have relatively high tax rates on middle-class earners and those of relatively modest means—they do not fund government by soaking billionaires because there aren’t very many billionaires and, weirdly enough, they often do not have the kind of incomes you’d expect them to. Billionaires are billionaires because of their assets—in the U.S. context, that’s often a large stake in a company they founded—not because of their income.

 

A third thing to do would be to expand the population: Musk, who has at least 14 children with at least four different women, is doing his part. But natalist policies probably aren’t going to do very much, and have largely fizzled in other countries where they have been tried. (The Williamsons had four children in less than two years—you’re welcome.) Immigration could expand the tax rolls greatly, but Musk, an immigrant, serves an administration that is generally hostile toward immigration when it isn’t planning to sell U.S. citizenship papers at $5 million a copy or when the boss is looking for a new wife or seasonal hotel staff.

 

Democrats believe that Musk’s loose talk about the “Ponzi scheme” gives them a political opening, and maybe it does, but: an opening for what? By and large, Democrats are no more interested in means-testing Social Security than Republicans are, and don’t hold your breath waiting for Democratic leaders to propose paying for the Scandinavian welfare state of their dreams with Scandinavian taxes on blue-collar workers and the middle class. The Democratic product may come from a different species of bull than the Republican product, but the output is similar in consistency and smell.

 

I don’t expect the Trump administration to come for Social Security benefits. Trump won in November on support from old people, who make up the largest share of the electorate, and Republicans have long been solicitous of the benefits of Social Security and Medicare recipients. Medicaid is another story: Trump may have changed the demographics of the Republican coalition, but most Republicans can get behind screwing the poor, if only to honor tradition. The wrinkly old guys doddering toward the 18^th hole down in Palm Beach are probably safe, for now—the Grim Reaper is going to catch up to them before fiscal reality does. But those 45-year-old men who got bigly on the Trump train had better be saving for their own retirements, because there are only a handful of things that can be done to straighten out Social Security and, so far, the Trump administration opposes all of them.

Walz’s False Freedom

National Review Online

Thursday, August 22, 2024

 

In accepting the Democratic vice-presidential nomination, Minnesota governor Tim Walz tried to present himself as a sort of Mister Rogers type whom everybody should want as their neighbor. But in the weeks ahead, that image will have to contend against a record that includes a history of fabrication and radicalism.

 

In his speech, Walz tried to portray Democrats as a laissez-faire party. He claimed that in Minnesota, “We respect our neighbors, and the personal choices they make, and even if we wouldn’t make those same choices for ourselves, we’ve got a golden rule: ‘Mind your own damn business!’”

 

But as governor, he imposed among the most draconian Covid restrictions in the nation and even set up a hotline for residents to rat out neighbors who weren’t following his social-distancing rules.

 

In Walz’s twisted moral universe, “Mind your own damn business!” isn’t actually about letting neighbors make their own choices, it is a justification for the unfettered ability to kill unborn babies.

 

In another reframing of freedom, Walz said, “I believe in the Second Amendment, but I also believe our first responsibility is to keep our kids safe.”

 

It is a universal truth that whenever a politician says he believes in the Second Amendment and then adds a “but,” he doesn’t actually believe in the Second Amendment.

 

During her first run for president, Democratic presidential nominee Kamala Harris called for the confiscation of AR-15-style guns, a position that she has yet to publicly disavow (despite what campaign officials tell reporters). At a minimum, Harris and Walz have both called for banning them.

 

Walz also claimed that Democrats support Americans’ ability to make their own health-care decisions. Meanwhile, he and Harris both support expanding Obamacare, which mandated that every American had to purchase government-designed health-insurance policies and outlawed policies that millions had used. In her first campaign, Harris proposed kicking 180 million people off of their private insurance.

 

Meanwhile, Walz lied about the positions of his opponents. He falsely claimed that there was a Project 2025 plan to “gut” Social Security and Medicare and ban abortion nationwide “with or without Congress” and that Donald Trump supported it — and implied that Trump and J. D. Vance were a threat to IVF. Though we wish Trump were actually serious about reining in entitlement programs, in reality Trump has disavowed Project 2025 (which, again, doesn’t call for Social Security cuts anyway), and the Republican platform that he had direct control over explicitly says that abortion should be left to the states, that IVF access should be supported, and that Medicare and Social Security shouldn’t be cut.

 

These distortions shouldn’t be a surprise. Over the course of decades, Walz has played fast and loose with the facts for his political benefit. He has enabled misrepresentations of his career in the Minnesota National Guard to flourish. In the run-up to the convention, in attacking Vance with the false claim that he wanted to ban IVF, Walz advanced another lie — that his own children were conceived through the procedure. In reality, his wife used another fertility treatment that does not involve the creation or destruction of embryos outside of the womb. (He was more careful in his phrasing during his convention speech.) These lies are on top of a history of untruthful statements during his career, including his preposterous claims that 80 percent of rioters after the George Floyd killing came from out of state and that, despite protracted school closures during Covid, “over 80 percent of our students missed less than ten days of in-class learning.”

 

Though Walz tried to tout tax cuts in his convention speech, he has been a fiscally reckless governor, squandering surpluses on liberal wish-list items and proposing tax increases on individuals, businesses, capital gains, dividends, and gas, as well as various fees.

 

Harris and Walz have had a remarkable run for several weeks, boosted by a party that was desperate to replace a flailing President Biden and a cooperative press corps. But as the fall approaches, it will become much harder to hide the truth from voters.

Kamala Harris Proposes Bidenomics, but Bigger

National Review Online

Monday, August 19, 2024

 

Kamala Harris can’t decide whether Democrats’ economic record the past few years is something to build on or something to run from. But she has decided on what she will do if elected: government decrees and government spending.

 

The second part is probably not a big surprise. Progressives’ solution for inflation, health care, crime, sadness, and the Yankees’ bullpen is government decrees and government spending. It’s all they have.

 

The economic agenda Harris announced on Friday is the campaign’s first attempt at a policy platform, unless you count her advisers’ telling the press she does not believe the things she said she believed in 2019 when running for president, or in 2020 when serving as a U.S. senator. It doesn’t include a lot of numbers, but where it does, it makes sure to note that the numbers are bigger than Biden’s.

 

Biden proposed a $20 billion “innovation fund” for housing construction; Harris wants $40 billion. Biden wanted $25,000 in down-payment assistance for people whose parents aren’t homeowners; Harris wants $25,000 for all first-time homebuyers. Biden capped the price of insulin at $35 for seniors; Harris wants it to be $35 for everyone. On top of increasing the child tax credit to $3,600 per child, Harris also wants a $6,000 tax credit for the first year of a child’s life.

 

The message here is clear: For progressives who thought Biden was too moderate — it beggars belief, but they do exist — a President Harris would kick things up a notch.

 

Harris wants the Federal Trade Commission to decide what food prices should be. She wants rules to guard against “excessive profits in food and groceries.” As capitalist pigs, we grant that our definition of “excessive” might be different from Harris’s, but the profit margin for grocery stores last year was 1.6 percent. Would she be happier if they lost money?

 

When Republicans cut the corporate tax for all corporations, taking it from the highest rate in the developed world to the average rate, that was an evil special-interest giveaway, according to Democrats. But when Democrats want to give $90 billion in tax breaks just to the homebuilding industry, as Harris’s proposals do, that’s a “plan to lower housing costs for working families.”

 

Harris is calling for 3 million new housing units in the next four years. We call for 4 million in the next three years. Your neighbor Rob is calling for 5 million next year. None of us has any idea why those particular numbers make sense, and calling for it is not going to make it happen, but rest assured, it is being called for.

 

Harris and Biden (who is still the president, at least on paper) made a joint appearance on Thursday to celebrate the administration’s Medicare price negotiations. It says those negotiations will save taxpayers $6 billion (for perspective, Medicare’s projected budgetary shortfall over the next 30 years is $87 trillion). But it won’t say how much prices will come down for people who actually use the drugs, mostly because they likely won’t by much. Harris is doubling down, promising to speed up these negotiations that are doing so little.

 

The Harris campaign says — and this is a direct quote — that she wants to “cut taxes to help Americans afford health insurance on the Affordable Care Act marketplace.” The Affordable Care Act, ten years on, has still not made care affordable. So, naturally, you’re supposed to vote for the same party that passed it and hope it gives you a tax cut to make up for its failure.

 

There’s a lot of that kind of argumentation going on in Harris’s agenda. In Democrats’ own telling, the housing market is a disaster, health care is too expensive, food prices are too high, the tax burden is too heavy, and the American economy is characterized by price-fixing plutocrats stealing from the poor. And the way out is to vote for the same person who has been the vice president for the past three and a half years and supported all of the current administration’s policies? Because if given another term, with even more spending, it’ll work out better this time?

 

Harris clearly thinks Biden’s approach has been the right one. But she also seems to think that the U.S. economy is terrible. And rather than propose anything substantially different, she is running on Bidenomics, but even more so.

President Trump’s Terrible Social Security Idea

By Veronique de Rugy

Thursday, August 01, 2024

 

Charlie Cooke is 100 percent right about President Trump’s proposal to lift taxes on Social Security benefits. It’s a bad idea, even if voters will love it.

 

It’s one thing for Trump to claim that he doesn’t want to reform Social Security and Medicare, knowing that it will have to happen anyway. He’s simply, if irresponsibly, avoiding the political cost of telling the American people the truth about what is unavoidable. But it’s a whole other thing to multiply this irresponsibility with this new proposal.

 

Exempting Social Security benefits from taxation will further increase the insolvency of Social Security. Since these tax receipts also help fund the Social Security and Medicare Hospital Insurance (HI) trust funds, the Committee for Responsible Budget calculates that the move would “advance the insolvency date of Social Security’s retirement trust fund by over one year,” and “advance the insolvency date of the Medicare HI trust fund by six years.”

 

Adoption of the proposal would also be regressive. Benefits are currently taxed in a progressive way. The taxation was expanded in 1993 under the Clinton administration allowing for up to 85 percent of benefits to be taxable for higher-income beneficiaries (a vague estimate for the benefits that higher-income seniors haven’t already been taxed on).

 

It is also a bad thing from an intergenerational fairness perspective. This would grant an additional benefit to the older generations who are overrepresented in the top income quintile, resulting in a bigger burden falling on younger generations who are overrepresented at the bottom.

 

This would also make it harder to keep inflation low. The decision to tax benefits happened in 1983 on the recommendation from the National Commission on Social Security Reform, also known as the Greenspan Commission. The announcement of the tax change raised the present value of primary surpluses. It complemented the efforts that the Federal Reserve at the time was making to reduce inflation permanently. (The Fed can’t do it alone.) Trump’s proposal will work in reverse. The announcement that benefits won’t be taxed increases the present value of primary deficit in the future relative to how much debt is outstanding today. That news induces bond holders to reevaluate the value of their holdings. If they believe that values will go down, then eventually they will sell bonds, which increases aggregate demand creating inflationary pressure.

 

I hope that Trump drops this idea. I hate taxes as much as the next person — indeed, maybe more so. But tax breaks without spending reforms are plain irresponsible, especially in light of our growing debt. The 2024 GOP platform is strong on deregulation and other tax reforms. That’s the surest way to create abundance and help everyone, including seniors.

There Are Two Sides to Every Debt

By Kevin D. Williamson

Monday, May 13, 2024

 

Sen. Bernie Sanders of Vermont and Rep. Ro Khanna of California introduced a bill last week that, in their telling, would “eliminate” medical debt.

 

But there are two sides to every debt: One party’s liability is another party’s asset. And we have a word for taking away people’s assets by force: robbery.

 

Sanders and Khanna’s legislation would amount to robbing Americans, declaring that debts owed to them are no longer valid or binding. And why should those Americans be made to forfeit their property? Because they did something unforgivable: They helped people to get health care.

 

And there you have it: American progressivism, 2024 A.D.

 

The Sanders-Khanna plan—which thankfully has no chance of becoming law anytime soon—would “cancel” something on the order of $250 billion in medical bill debt owed mostly to Americans by other Americans. It would make it illegal to collect medical debts incurred prior to the bill’s enactment. It would censor credit-reporting agencies and forbid them from recording medical debts. And it would, of course, include some payoffs to politically connected institutions and influential constituencies. 

 

The two gentlemen put out a wonderfully illiterate press release, which includes this just fascinating line: “Unpaid medical bills can ruin credit scores and make it challenging to get a loan, take out a mortgage, or buy a car.” You don’t say? Failing to make good on previous debts makes it less likely that people will lend you money in the future? Well, raise my rent!

 

Wait until they hear about how interest rates work.

 

***

 

Debt is a wonderful thing with a bad reputation. 

 

It’s partly the word debt that bothers people: If I were to write that access to credit is a wonderful thing, fewer people would object. But credit and debt are so deeply intertwined as to be in a great many cases essentially the same thing. Debt is a way of pulling forward in time the benefits of one’s income and/or assets. If you are going to make more than enough money to pay for a house over the course of the next 40 years, a mortgage allows you to have the benefit of owning the house now rather than in 40 years. Yes, you pay for the privilege of using someone else’s money to buy a house today, but you get some pretty significant benefits: a place to live, first and foremost. 

 

You also get the enjoyment that comes from owning your house and thus not having to negotiate with a landlord if you want to paint the bedroom or get new flooring. You get financial relief from having to pay rent, and you get an asset that helps you to build wealth and that may, if you are lucky, appreciate at a rate that exceeds the interest you pay on the debt. Even if your new home doesn’t appreciate that much, building equity is still generally a better deal for you financially than paying rent. Yes, there are costs associated with homeownership, too: insurance, taxes, upkeep, interest, etc. In some cases, these will outweigh the benefits of buying a house. But, in either case, most people who want a house want it soon rather than in 40 years, both because they prefer owning to renting and because of the financial benefits associated with owning. 

 

That’s an obvious and familiar example, but there are lots of others. Many, many businesses have lumpy income but regular expenses: You may do 90 percent of your business during a few busy months (or even weeks) but have payroll to meet year-round, along with rent, utilities, insurance, and everything else. Or maybe your business gets most of its income on the last day of the month (as an apartment owner does) or in an unpredictable fashion.

 

You may have heard the jargony phrase “short-term commercial paper,” which refers to promissory notes companies issue to pay for regular operating expenses rather than trying to pay those obligations out of current income. This is really, really helpful if you are, for example, a car dealership: You know about how many cars you can expect to sell in the next quarter, but do you really want to pay for all that inventory up front? You may not even have the cash on hand to do so. You’d much rather get your cars now and pay for them in three months or six months or nine months, after you have sold them and have the money to do so. As I understand it, car dealerships often operate with very modest profit margins, so it’s not like you are going to fund this quarter’s inventory out of the 3 percent profit you made from last quarter’s sales. 

 

Businesses also make money by being creditors, and not just in the obvious way banks and other lenders do. Imagine that you are a modest provider of building supplies and construction services. Your clients are building houses, and they often don’t have the money to pay for everything they need upfront. In fact, it might be a year or more before you get paid for the goods and services you are providing. If you happen to be sitting on a gigantic pile of money, that’s no big deal. But that isn’t how most businesses—or most people—operate. One thing a business can do is borrow money against its receivables—against the money it is owed by its customers—or even sell those debts outright to a third party, who buys them at a discount that you are willing to pay in exchange for getting your money now and transferring the risk of non-payment (and the trouble and expense of debt collection) to somebody else. 

 

Which brings us around to medical debt. 

 

In spite of what it may sometimes feel like from the consumer side (ask me sometime how much money goes out the door when you have four children in 20 months—answer: I don’t even know! But it was a lot!) medical practices are not bottomless reservoirs of money. Some doctors make tons and tons of money. I had a doctor in New York who worked on a cash-on-the-barrelhead basis. His motto: “Unless your insurance card says ‘American Express’ on the front, I don’t want to see it.” When I discovered that he owned more than one Ferrari, I suggested I might be paying him too much. He scoffed: “Do you really want a doctor who can’t afford a Ferrari?” But there are all kinds of doctors—and nurses, and nurse practitioners, and technicians, and assistants, and schedulers, etc.—in the medical business, and most of them are not diving into great big heaping piles of gold ducats like Scrooge McDuck. And when those people lend you money—by providing you medical care on the promise that you will pay for it—you should pay them back. 

 

Generally speaking, people should always pay their debts. I would say that nobody likes a deadbeat, but the American people have already once elected a famously deadbeatish serial bankrupt president and may yet do so again—unless they elect the guy who is running in part on his plan to enable deadbeats who don’t want to pay back their student loans. But those guys are not where you want to look for your moral yardstick. 

 

We seem to have somehow forgotten that you should pay your debts because you should keep your promises. Instead, we invent implausible moral scenarios in which the person who lent someone else his money to use is the bad guy, the so-called predatory lender—as though there were no predatory borrowers. Or we invent categories of consumption that have a special moral valence to them and insist that debts undertaken for these benefits—education, homeownership, health care, etc.—are somehow invalid. 

 

Sen. Sanders and Rep. Khanna insist that no one should have to go into debt to pay for health care. Why not? Somebody has to pay for it—nurses and radiology technicians have their own bills to pay, too—and, in most cases, it makes sense that a benefit should be paid for by the person who is enjoying the benefit. Of course, there is room for things like insurance and social insurance programs for uninsurable risks, as well as old-fashioned charity for people we don’t expect to be responsible for their own needs, such as children and some severely disabled people. But ordinary, able-bodied adults should be expected to be more or less responsible for themselves, which means making good on their promises and paying their debts. If you want to shake your fist and protest that we have a stupid health care system, you won’t get too much argument from me. It would be good to know ahead of time whether that procedure is going to cost $4,000 or $400,000, but good luck getting an answer in advance rather than a bill after the fact. There is much in need of reform. 

 

But that doesn’t mean that you get to walk away from your obligations. 

 

The Sanders-Khanna proposal has lots of problems, starting with the minor detail that the federal government might not actually have any legitimate power to step in and simply cancel private debt. It is one thing for the federal government to forgive debts owed to the federal government—but there is no obvious constitutional basis for the federal government to forgive debts owed to … well, to you, for example. And though the fact is not widely discussed or understood, credit reporting is ultimately a free-speech issue: Credit-rating agencies are asked for their opinions on the creditworthiness of institutions and individuals, and the government does not get to dictate to them what their opinions are or how they form them. (No, the credit-rating agencies are not always very good at their jobs. But in a free society, people are free to be stupid and wrong and lazy.) But this probably is not a serious proposal: It is left-wing Democrats (I’m lumping in the notionally independent Sen. Sanders) looking to get some profile in election season and signal their willingness to bribe voters with other people’s money. 

 

The dumbest part of this—and that is saying something!—is that every time the government steps in to provide relief to a class of borrowers at the expense of lenders, it makes lenders less likely to want to lend to those borrowers (and borrowers who are similar to them) in the future. Ultimately, that means higher interest rates, bigger down payments and security deposits, and less access to credit for everybody—but especially for those who have lower incomes and less wealth or who have experienced financial troubles that put them in default on earlier obligations. There’s an old proverb among bankers that you don’t want to lend money to people who need it—the idea being that you’d rather provide financing to moneyed parties who are likely to pay you back without any arm-twisting—but we don’t really want to build a financial system in which the poor have no access to credit. 

 

If you really want to relieve the medical debts of poor people, then the best thing to do is to write them checks so they can pay their debts off themselves: Easy-peasy—except that then you’d have to account for the spending in the budget rather than pretend like debt relief is a magical program that has no costs.

 

But telling medical providers that they cannot collect debts owed to them is another way of telling them that they cannot provide medical care that hasn’t been paid for in advance. That may be an unintended consequence, but it is not an unforeseeable one. 

 

If that’s an Economics for English Majors entry, then it must be time for …

 

Words About Words

 

Related to the previous item. I have read some very dumb things in the Washington Post—dumb things for which the newspaper has recently been awarded a Pulitzer Prize, in fact!—but, holy moly, this is the kind of dumbness that leaves me … dumbstruck. 

 

In a piece headlined “5 myths about Social Security as the program faces a funding crisis,” personal-finance columnist (!) Michelle Singletary undertakes a tour de force of abject buffoonery. The column begins:

 

Myth No. 1: Social Security is, or will be, ‘bankrupt.’ Words matter.

 

Words matter is pretty much our motto around here, and it is true that Social Security will not be bankrupt in the legal sense, because we don’t have any bankruptcy law that covers federal programs. But Singletary argues something very different: “The program is financed by payroll taxes, so as long as workers pay into the system, money will always come in.” Okay. And, then: 

 

Even if Congress fails to act, there will be enough projected income coming in to cover 79 percent of scheduled benefits.

 

“We’re not bankrupt,” [Social Security Administration chief actuary Steve] Goss said. “We’re not without money. We just wouldn’t have that reserve to make up the full 100 percent.”

 

… It’s possible changes in the law could reduce the future level of scheduled benefits, but one thing you should not worry about is whether the money will be paid when you are ready, Goss said.

 

Do you know what we call it when you have income but not enough to pay your obligations, so you go through a legal process by means of which you don’t pay the full 100 percent but some lower figure, such as 79 percent? Bankruptcy. What Singletary is saying is a “myth” is literally how bankruptcy proceedings work. 

 

(Also, this piece seems to have been edited by a drunk baboon, with sentences clearly out of order, e.g.: “Think of the Social Security Trust Funds like your savings account, Goss said. And the bank then repays you, with interest, when you make a withdrawal.” Wha?) 

 

(No offense to my dear friends in the baboon-American community.)

 

Words matter. 

 

Singletary also insists that the program’s finances are going to work themselves out because … everybody wants them to! Seriously. She writes: “Because so many Americans rely on Social Security, it’s not going anywhere.” As though the fact that people rely on Social Security changed anything about its underlying finances. 

 

The unfunded liabilities of Social Security and Medicare today amount to $73 trillion over the next 75 years—almost $1 trillion a year through the end of the 21st century. As Romina Boccia notes over at the Cato Institute, under current policy “debt would exceed 500 percent of GDP by 2098,” which means that current policy ain’t gonna last forever. Making good on the unfunded liabilities of our major entitlements would mean raising almost another 4 percent of GDP in taxes—forever—just to keep the status quo funded for two federal welfare programs that disproportionately benefit relatively well-off people.

 

The thing about running a government on a debt basis is that people have to believe in your story—that’s one meaning of the word credit—“believe,” from the same root as creed.

 

When the choice comes down, as it ultimately will, to the question of which howling mob Washington wants to face—the bond market or grandmas expecting the Social Security benefits they have been promised—somebody is going to be paid and somebody is going to get stiffed. 

 

My money is on the bond market getting paid.

 

In Conclusion 

 

One of the ugliest parts of the criminal case currently underway against Donald Trump was the effort of the former president’s lawyers to use the fact that Stormy Daniels (whose real name is Stephanie Clifford) has appeared in pornographic films to morally discredit her. I’m libertarian about this stuff, and I think of the pornography business the way I think about the heroin business: I wouldn’t outlaw it, but I don’t think it is good for people. That being said, do you know who also has appeared in pornographic films? Donald Trump, who had cameos in three softcore porn films released by Playboy. Unlike Daniels, he did not perform any actual sexual deeds in his porn films. And isn’t that just like Trump? Looking for a payday while adding nothing to the basic value proposition of the product. Such as it is.