George Gilder Saves Social Security — Supply-Side Economics Redux

I am always amazed how market fundamentalists are able to use any problem — real or imagined — as an excuse to carry out their desired polices, even if they will make the problem worse.

“Lower tax rates will yield the additional revenues and borrowing power we need to sustain social programs for the aged for decades to come. As a pay-as-you-go transfer scheme, Social Security is currently working fine. But we have to stop driving aged workers out of employment through implicit Social Security taxes on their incomes. As a key first step, we need to reduce the payroll tax by at least a third — at least to the degree we are pretending to build up “reserves” for the future. Lower payroll taxes will mean more jobs and income for Americans of all ages, and build up the real capabilities as opposed to the mere accounting balances of the U.S. economy. Ideally, as part of a flat tax program, we should eliminate the payroll tax altogether.”

Gilder, George. 2007. “Economics Is Not For Actuaries.”Wall Street Journal (2 January): p. A 23.

3 comments so far

  1. Mike B) on

    The only “flat tax” I could support would be one which would eliminate taxes on wages and move them to profits and accumulated wealth.

    Social Security payments should not be an issue. The issue should be, “Where has all the wealth which my ever increasing productivity gone, if not to my retirement?”

  2. June Zaccone on

    Gilder is wrong to describe Social Security as “pay-as-you-go”. Its well over $100 billion surplus from the payroll taxes of ordinary workers, currently helps to offset billons of the Bush tax cuts. Oddly, Gilder’s recommendation of a payroll tax cut is a good one, though unlikely to help employment much, and he is right to point out that we [the whole society] cannot prepay future benefits. Only a productive economy will provide the goods and services needed by future retirees. Of course, a major point is that nothing is needed to shore up Social Security. Even the highly pessimistic projections of the Trustees yield no problem for nearly 40 years.

  3. mperelman on

    Thanks June. Will you also be returning to pen-l?


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