A couple of years ago, I was waiting for a friend in a Gramercy Park restaurant when Steve Forbes wandered in for lunch. He sat down alone, quite obviously at his regular table, opened a newspaper and tucked into a salad. No one looked up or seemed to recognize him despite his massive amount of TV time as one of the dwarfs running against Bill Clinton's second term just a few years earlier. Just another publishing geek grabbing lunch in between meetings. Yet I felt a stirring: there's the father of the flat tax taking his ease! Doesn't anyone see him there? That's Steve Freakin' Forbes! Where are the autograph hounds? The paparazzi?
Now, I don't mean to shock my liberal friends with this, but I always felt there was a generous sliver of validity in Forbes' quixotic flat tax campaigns. This narrow peninsula of common ground with hard-core economic conservatives came back at me this week, pouring through the brisk left-right combination being exchanged on this site, in comments on my post about the $6 b-b-billion Presidential helicopter contract (which, yes, those same hard-core economic conservatives supported whilst Barry Goldwater spun in his grave like the plastic urinal roulette at Pizza Beat).
Tom K., a regular commentor on this little digital experiment and avowed monetary conservative, fires off his best response ever in a conversation that ran quickly from the Federal budget to Social Security to the tax code:
I am against an absurdly complex tax code that taxes honesty more than any other quality, and rewards the obsessive pursuit of tax avoidance more than any other behavior.
I'd like to see no taxation for the working poor and possibly the lower middle class, and a flatter tax structure overall -- even entirely flat if possible (putting aside the fact that it will not kick in until, say, $40,000).
But far more importantly, I want to see a system that the average person has some reasonable prospect of understanding, and a system that does not lead to billions of dollar a year being spent finding and exploiting loopholes, which typically are available only to the very rich because the professional costs of taking advantage of them are prohibitive unless you're going to save tens of millions of dollars.
In short, our current system isn't really progressive; it taxes honest people, not rich people, disproportionately. Worse, it re-defines "honesty" downward: if you don't take advantage of any avoidance options that you can afford to exploit, you aren't being "honest" - just as people taking advantage of legal avoidance options aren't "dishonest." It makes a sucker of he who is not a schemer, and could be much fairer and simpler and, I would submit, more "progressive" with a flattening of rates.
There's not a syllable in Tom's post that I don't agree with. I also found it fascinating that a brisk argument over spending ran through the current Social Security "crisis" and settled into taxation - because that's really what all this folderol is about. Taxes and the public commons of American life. Look, this nation was founded on the shoals of a massive tax revolt and our inherent national DNA contains a built-in definition of liberty that limits taxation on the fruit of its citizens' labor. While we have a social democracy born in the middle of the last century, we'll never be Europe. That said, we'll also never return to the wild west days of American life, before the existence of a social safety net. As Fitz always says - and it seems appropriate to use the metaphor on Super Bowl Sunday minus one - we generally fight things out between the 40-yard lines. One 40 is FDR and other is Ronald Reagan (or maybe it's really Goldwater). Anyone who advances to the 39-yard line gets smacked down.
This is what the Bush Administration is attempting now - to go past the 40 in American politics. And it's getting stopped in the backfield, by Democrats whose knees jerk when Republicans talk about changing social programs, and by practical Republicans who know that seniors and aging Boomers ... how shall we put this ... vote.
Nonetheless, we're missing an opportunity here - just as we missed one when the GOP sacked Hillary Clinton for a loss in the backfield when she tried to cross the 40 on national health care a decade ago. When Bruce and Tom K. and Fitz come close to agreeing on some big picture points on this blog, you know there's an opportunity out there. And that common ground runs through the Federal tax code.
Tax simplification offers a siren song to both left and right, if they're honest about it. Easing the burden, putting more money in the pockets of the working poor and lower middle class, and lowering the cost of actually paying and collecting taxes - these love lights beckon us all. Nick Kristoff (no conservative, he) suggests in a terrific NYT op-ed piece today that increasing Americans' personal savings is a true and valid policy goal for our government, and I agree. This does not have to run through a stripped-down and privatized Social Security system, however. It should run through a generous and open debate on our tax code and its implications on our personal financial health.
As Kristoff and others note, our system currently rewards debt and interest payments to the extreme. Hell, I've refinanced my house a bunch of times, so that I can pay mainly interest on the mortgage, write it off, and lower my taxes; it's too good a deal to pass up, and most homeowners don't. But our growing debt may presage a crisis much, much worse than the so-called Social Security "crisis" a couple of decades hence. And borrowing more to create an investment-friendly Society Security is truly insane, as Kristoff notes.
There is one powerful objection to private Social Security accounts: We can't afford them now. Mr. Bush's plan would cost $1 trillion in its first decade and $3.5 trillion more in its second decade. Financing this with debt - an Argentinian approach - would be utterly reckless.
It shouldn't be liberal to oppose wealth-creating savings programs for workers. And it shouldn't be conservative to use loans to launch a multitrillion-dollar program.
Brilliant line, that last bit.
And it shows the opening, partly covered over by Bush's doomed Social Security foray. Americans are concerned with personal financial health, with the cost of health care, and with taxes - let's put that together in a bi-partisan brew that can quench the legitimate thirst for change between the 40-yard lines.
UPDATE: Fred agrees and adds this: "On the subject of fiscal conservatism, I think it should be the centerpiece of the new democratic agenda, led by a balanced budget, a social security reform plan that makes sense, and a flat tax."
UPDATE II: I like the series of items that Matthew Yglesias has on his blog, taking a look at what Democrats should really consider in the Social Security fight. Here's the latest, but read the last three or so. Also, Hoots - a 60-something from the 60s, wraps things up nicely.
