Anyway, I am not saying that deals between classes are typically enforced through law, but through politics. As a positive matter, classes do make deals (although they revise them). As a normative matter, those deals create reasonable expectations and aid in political stability, so they should presumptively be respected.

And no, classes don’t make any deals worth respecting, and to the extent the world’s economies depend on them it’s because those economies have been corrupted by the vicious evil of managerialist, paternalist welfare statism, whose proponents claim that it’s perfectly OK to trample upon the inalienable liberties of individuals in order to “spread risks” incrementally better. The fact that you think rejecting such deals is a problem with my ideology indicates the essential evil of your ideology.

Anyway, it’s not my ideology that precludes any such deal being legally binding here, but the Constitution and the common law. For the last time: do you understand the principle that a Congress cannot bind future Congresses, or not?

The point is that Cato has been a party to this dishonest crisis talk. If Cato just said, “we’re libertarians and we hate all government programs, including Social Security”, that would be honest, although doubtless politically ineffective.

My own perspective is that classes can, and do, make deals. Every stable economy in the world depends on such a deal. The fact that your ideology precludes these deals is a problem with your ideology, not with the deal.

From the year before Reagan took office to the year before Bush passed his massive tax cuts for the rich, the lower 5th of American households had exactly zero growth in real income. That’s almost 25 years. Dogma does not equal reality!

Nicholas, real libertairans focus on government spending. Smaller government is the whole point. While you can’t get to a balanced budget by just cutting defense, it’s a great place to start.

Don’t you think that leveling the taxation playing field in terms of how corporations distribute earnings to their shareholders was a good thing? We haven’t had a quarter of GDP growth below 3% since they passed. A rising tide lifts all boats my friend.

But: recall that we libertarians, being libertarians, think that even at 50-year lows, even after the Bush cuts, our taxes are still extortionately high, and it would be unconscionable to raise them even higher. So, suppose you’re a fiscally responsible libertarian trying to come up with a proposal for rectifying the short- and long-term general budget imbalances without raising taxes. You’ve gotta cut something big, because the imbalance is big and will get bigger. What are the big things you can cut?

There is, as you say, defense. Defense cuts will go part of the way, but not nearly all of the way, esp. in the longer term. And non-defense “discretionary” spending is just too small a part of the budget to make much difference.

That leaves debt interest, Medicare, and Social Security– each of which is a big piece of the budget, in the 10-20% range IIRC. Defaulting on the debt, while it may not be immoral, would definitely be unwise, at least for now. Medicare ought to be phased out, but nobody seems to know how to do that; what with the awful new prescription drug benefit and all, it’ll be all we can manage to rein in the *growth rate* of the accursed thing, never mind cutting it.

Only one thing left…

Percentage of stock held by top 1% of households by income: 55%
Percentage of stock held by top 10% of households by income: 75%

Average income of bottom 5th of US households (2002 $) in 1979: $11,100
Average income of bottom 5th of US households (2002 $) in 2002: $11,100

Average income of middle 5th of US households (2002 $) in 1979: $37,300
Average income of middle 5th of US households (2002 $) in 2002: $44,100

Average income of top 1% of US households (2002 $) in 1979: $439,000
Average income of top 1% of US households (2002 $) in 2002: $781,000

Looks like the poor needed a little help in 2003, so Bush and congress passed a temporary tax break to help them out. After looting SS, making these tax breaks permanent is their next target. Here is what the Republican controlled House Ways and Means Committee Report on Jobs and Growth Reconciliation Tax Act of 2003, HR2 (issued May 16, 2003) said about it:

In tax year 2003, the capital-gains tax cut which only covers eight months of the year is worth $30,700 to millionaires, but only $42 to households with incomes between $40,000 and $50,000. Sixty-one percent of the benefits from the capital-gains dividend tax cut go to only 2% of households.

2. Cut personal and corporate taxes to 50 year lows

When did corparate taxes get cut? Last time I checked the top marginal rate was still around 35%.

1. Increased the size of the federal budget at near record rates
2. Cut personal and corporate taxes to 50 year lows

Why focus on SS?

I don’t think people realize how large the tax cuts passed in 2003 were. Simply by repealing them we could cover the projected shortfalls in SS and Medicare and still have money left over.

And an honest accounting would show that the U.S. is spending almost 2/3 of the global total on defense spending, yet our military is being turned into something that will be totally ineffective against another conventional army.

We would be just as safe if the defense budget was cut in half.

The only reason Bush is pushing SS “reform” is to distract people from the real cause of defecits.

SS will be in the black for the next 15 years or so. If Americans alive then want to do something when payments exceed receipts…that’s their problem.

The deal is the trust fund. In other words, there was no way that payroll taxes were going up except as a “fix” for Social Security’s “solvency.” That implies not treating the government as a black box.

You say other taxes and spending changed because of the 1983 deal. You may be right, and that may go to the merits of the deal. But it doesn’t prove that the deal didn’t happen (that the trust fund “does not exist”).

One other mistake: it’s not about social security. The government needs to figure out how to balance its revenues and expenses, outside of the payroll tax and social security payments. Cutting back on social security, as in Bush’s plan, does not even begin to address the problem. Changes to social security will not influence whether or not the government has serious fiscal problems come 2009.

You may be right that the deal that created the “trust fund” has increased the government’s ability to pay for Social Security by decreasing total borrowing, but that’s not at all the same thing as the “trust fund” increasing the government’s ability to pay for Social Security. The same “deal” sans trust fund (i.e. just raising payroll taxes) would have exactly the same impact. All the work is being done by increased government revenues, not by the trust fund.

Because the “trust fund” doesn’t increase the government’s ability to pay for Social Security (compared to an alternative system in SS and the payroll tax are simply lumped in with the budget) your “deal” that the Republicans are allegedly breaking was a setup from the beginning. If they’d been serious about setting up a trust fund, they would have invested the SS surplus in the market.

In any case the assumption on which your analysis rests (that taxation and spending would have been the same whether or not payroll taxes had been jacked up) is almost certainly false.