A Rebuke to Readers of The New York Times

The inspiration for this piece was collective inanity of comments posted by Times’ readers in response to Gary Johnson’s editorial — Take a Deep Breath, Voters.  There is a Third Way — which appeared in the September 28th edition of the The New York Times.

The Roman political philosopher Marcus Tullius Cicero quipped, “Any man can make mistakes, but only an idiot persists in his error.”  I suggest my fellow Americans are wise to consider this piece of wisdom from the ancients as they weigh the choices for President in the upcoming election.

Judging from the comments posted in response, many readers of the NY Times are, alas, all too ready to repeat past mistakes by declining to consider alternatives to the status quo.  Although many of these same commentators are likely to congratulate themselves on their open minds, the uniformity of their comments, however, reveals a disturbing inability to question their own beliefs.  It is this rigidity of thought and hardening of worldviews that poses the greatest threat to American democracy.  Long gone is the pragmatism of earlier days that allowed for political compromise.

On no subject is this more apparent than the collective reaction to Gary Johnson’s statement that, “Changes to Social Security and Medicare must also be considered.”  Advocating reform and change of the two programs has been called touching the third-rail of American politics; the overwhelmingly negative reaction to his declaration shows this sadly remains the case.  Gary Johnson is frankly the only candidate with the honesty to face unpalatable facts.  For this he should be lauded and not pilloried.

One of the greatest lies ever perpetrated on the American electorate has been the fiction of the of the Social Security and Medicare trust funds.  The only assets either fund possesses are the ability of the federal government to levy taxes or to borrow money.  There are no other assets.  There is no portfolio of stocks, bonds or real estate which can be drawn down to pay future benefits.  The notional balance of Treasury bonds owned by the trust funds is an accounting illusion:  it just reflects the surplus of tax revenues to benefit payments in prior years allowing the government to borrow from future generations today.  All we have accomplished is to have written an IOU on ourselves payable tomorrow.

And, when the IOU falls due (and, that time is soon to come) we have but two choices: either borrow more money from the markets or tighten our belts.  The first option is not a viable alternative.  Borrowing to fund current consumption is the shortest road to insolvency.

The second option provides a wider range of policy alternatives.  If the past is any guide we will chose to make the programs more burdensome on the economy by raising contribution rates and income ceilings.  Alternatives such as eliminating the COLA or making retirees bear the full cost of Medicare Part B premium increases are deemed benefit cuts and so are beyond the pale.

But as we raise contribution rates and income ceilings we increase the tax on labor relative to capital, providing a further incentive to businesses to automate.  Since 2001 the payroll tax rates have exceeded the marginal cost of debt capital for most large American businesses.  This is another reason why job growth has been anemic over the past decade.  It is not though a fashionable topic to be discussed in liberal or academic circles.

A vote for Clinton is a vote for the further sclerosis of the U.S. labor markets.  If you have any compassion for your children or grandchildren – for their futures — than, maybe, you will appreciate Gary Johnson’s courage and honesty.

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