Wednesday, January 12, 2005

The Mote In FDR's Eye

And why beholdest thou the mote that is in thy brother's eye, but considerest not the beam that is in thine own eye? Or how wilt thou say to thy brother, Let me pull out the mote out of thine eye; and, behold, a beam is in thine own eye? Thou hypocrite, first cast out the beam out of thine own eye; and then shalt thou see clearly to cast out the mote out of thy brother's eye. --Mathew 7:3-5

An open letter to President Bush. [Click permalink to read more...]

Dear Mr. President:

I realise that you and I have very different political philosophies, so I am not someone you are likely to look to for advice on how to deal with such issues as the looming social security crisis. Ironically, however, while we have very different philosophies, we share the same favorite political and economic philosopher. His words, as I have quoted above, are some that I try to contemplate whenever I set about to help someone with a problem. I believe they are particularly apt today.

Social Security, if left on its present course, is expected to be short by about 4 tenths of one percent of GDP per year, starting in about 40 to 50 years. That is to say that it will be obligated to pay out that much more than it has in assets or dedicated revenue. The federal budget, excluding Social Security, has been short by about 4 percent of GDP every year since you have been in office. Yes, Social Security has a problem; but Mr. President, that problem is a mote compared to the beam that is the present federal deficit.

When the time comes, future Congresses and Presidents may simply choose to borrow the 0.4 percent of GDP needed to make up the Social security shortfall. That may not be the best solution, but it would certainly be no worse than borrowing the same amount to pay for a prescription drug benefit, or a tax cut or any of the other things that collectively are forcing us to borrow ten times that much--in relative terms--today. In fact, our present budget crisis is literally ten times bigger than the future Social Security crisis is ever expected to be! And that present, much greater, crisis is far more your resposibility than a distant, much smaller, one--if only because you were elected in 2004, not in 2044.

Finally, if we continue to run these kinds of deficits for the next 40 years, just the interest on the debt that we will have amassed will be far greater than Social Security's shortfall. Conversely, if we eliminate that deficit and the accompanying drag it places on the economy, the economy might grow at such a pace that Social Security could remain solvent indefinitely. Remember that in the 1990's, as budget deficits were brought under control and finally--at least briefly--eliminated, Social Security's "crisis date" was pushed back 15 years in less than 8. If we could keep that up, then there would be no budget crisis, Social Security or otherwise. In other words, Mr. President, that mote you see in your brother's eye could well be merely a reflection of the beam that is in your own.

Yours faithfully,

Kyle McCullough


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