By Kevin Drum
FIVE EASY PIECES....For the past few days I've been wondering what's going to happen next in the Social Security battle. What I mean is this: it now looks pretty certain that George Bush's private account plan isn't going to fly. Democratic opposition is pretty firm and it increasingly looks like too many Republicans are backing away from private accounts for Bush to pull out a victory. So what's the backup plan?
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The Five Easy Pieces strategy postulates that the long-time conservative goal of a sweepingly radical tax overhaul, such as replacing the income tax with a flat tax or a national sales tax, runs too much political risk. Instead,
Christian has argued, conservatives can achieve the same goal by doing five things: cutting marginal tax rates, eliminating taxes on capital gains and dividends, allowing more generous treatment of business investment, doing away with the estate tax, and establishing tax-free personal savings accounts. The three major Bush tax cuts to date have achieved the first four pieces, partially or completely.
I wonder if the final phase of this strategy is behind Bush's Social Security posturing? Maybe the plan looks something like this:
Bush proposes private accounts for Social Security.
As expected, Democrats go to the mattresses in opposition. However, in an effort to demonstrate reasonableness they all agree — almost in passing — that of course they have nothing against encouraging savings, but that it should be done in addition to Social Security, not in place of it.
After pretending to give it a good try, Bush counts noses, realizes he can't win, and reluctantly agrees to settle for tax-free private accounts on top of Social Security, just like the ones Dems say they have nothing against. Of course, this will be the Republican version of tax-free private accounts — big, unrestricted ones that mostly help the well off — but by now the Dems can hardly oppose a compromise like this, can they?
Part 5 of Five Easy Pieces is now enshrined in law.
Is this right? I don't know. But there has to be something going on that's not obvious on the surface. Bush has smart people advising him, and they must realize that the odds of getting Social Security privatization passed is virtually nil.
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