Skip to main content
Home Working together to build your tomorrow

Joe Kelley stopped by my office recently to interview me for a paper he is writing on Social Security. Joe is a senior at a local high school, headed soon to a top college in California.

We talked about President Bush's statement in a recent news conference that his 58 percent increase (to $8.9 trillion) in the national debt was the result of the additional cost of Social Security and Medicare.

Someone needs to tell the president that Social Security is totally independent of the national debt.

In fact, Social Security currently enjoys a massive surplus that it currently loans to the government the same way China and other countries invest in U.S. bonds.

We can set aside Medicare because the huge cost of the prescription drug benefit has yet to contribute to the current 58 percent increase in the federal debt.

Then, while new studies illustrate that the total cost of the war will be well into the trillions, it has only amounted to a few hundred billion to date.

So, how could the president be so mistaken as to attribute the explosion of the national debt to Social Security and Medicare?

It could be a result of his having fired smart people who told him what his closest advisers didn't want him to hear.

Lawrence Lindsey, the president's lead economic adviser, and Paul O'Neill, his treasury secretary, were both fired two years into this administration for pointing out that the government's fiscal wheels were falling off.

Lindsey pointed out that the war would cost far more than anyone in the White House was predicting. That didn't go over well.

In O'Neill's case, he and Alan Greenspan had agreed to support tax cuts only as long as we were running an annual surplus. They were to be ended by "triggers" identified as the points at which annual surpluses reduced or ended.

Nobody wanted to hear that, either.

White House leadership sentiment trumped the deficit concerns of O'Neill, who rose from an impoverished youth in the Central Valley to lead Alcoa away from the brink of bankruptcy.

O'Neill eventually gave up almost $240 million worth of stock options to worry on our behalf. A civil servant with that level of integrity should never be fired.

I'm especially nervous about this huge debt if the misguided reason is thought to be Social Security and Medicare. Compounding my concern is the fear that the only economic advisers left are those who unconditionally support a president who says, "I refuse to negotiate with myself."

The next time I consider some possible business or financial alternatives based on changing conditions and more information, I think I'll refer to it as "negotiating with myself."

The healthiest economies in history have come about as a result of raising taxes and reducing deficits.

President Reagan set in motion the largest percentage tax increase in the country's history when he raised the Social Security tax -- a regressive tax that affected all employees and employers from the first dollar earned. It dwarfed his income tax cuts, and the economy still thrived.

President Clinton took Robert Rubin's advice and raised taxes in an effort to decrease the deficit and reduce interest rates. The 1990s represented the healthiest sustained economy we have ever had.

No responsible economist or financier actually believes that tax cuts raise revenue to the government. They sound good, but so do perpetual-motion machines.

For those of us concerned about the long-term future of Social Security, the answer lies with ice cream magnate Benjamin Cohen and a new organization, Business Leaders for Sensible Priorities.

In a talk I heard recently, Cohen pointed out that we now spend $442 billion annually on defense, not counting Iraq. By comparison, our enemies (Russia and China) spend $65 billion and $35 billion respectively.

Of this, we spend $15 billion a year maintaining 10,000 nuclear bombs when all we need in order to destroy both perceived enemies would be about seven.

I'm for a strong defense, but the military industrial complex that Eisenhower warned us against has run amuck. We could reduce military spending by as little as 15 percent without jeopardizing safety, and the savings would fund Social Security for 75 years.

It's discouraging to consider how little leadership we have in Washington from either political party. At the height of the President Nixon impeachment proceedings, Archibald Cox, the fired independent prosecutor, implored us to never give up and to "take joy in the endeavor."

As we struggle to protect our selfish interests, I like to believe that we create a better world for Joe Kelley and his classmates.

Get weekly articles delivered to your inbox!

* indicates required