The Debate Goes On
With all due respect to my good friend Ed Crane ("Dear Ed, Dear Jack: A Campaign Debate," Jan.), I think Ed's chief objection boils down to my support for Social Security—which has been my position for 17 years in Congress. He says that Republicans have lost elections "only because they have focused on cutting benefits to older people." But the key trouble with the du Pont, Robertson, and other plans to privatize Social Security is precisely the new burden that they would place on younger people.
Privatizing Social Security would impose what amounts to a big tax increase on the baby boom—$3.2 trillion in today's dollars, according to du Pont's figures, or more than $40,000 per person over a lifetime. This is because, whatever one may have thought about shifting to pay-as-you-go in 1939, ending it after half a century would force the baby boomers to pay twice for their retirement—their parents' and their own. A tax credit can't reduce this burden for the generation as a whole—only shuffle it around. Under the du Pont and Robertson plans, this burden would fall heaviest on families with children. Our economy needs a $3.2-trillion tax increase in coming decades like a hole in the head. And Gov. du Pont admits his plan could increase the deficit right now by up to $100 billion a year.
I also want to answer Ed's other concerns: First, his argument about the life expectancy of black males, if true, applies to every retirement system with age restrictions, including IRAs, private pensions, and the privatization plans.
Second, the payroll tax is a tax on employment, to the degree that it exceeds the value of future benefits received by workers. The essence of the privatization plans is to turn the payroll tax into 100 percent tax with no benefit return for participants. Instead of increasing the cost of retirement, I've proposed to roll back the unnecessary 1988 and 1990 payroll tax increases. By the way, future payroll tax increases are mostly due to Medicare, not Social Security retirement pensions.
Third, the rate of return on Social Security for young workers depends on whether they are single or married, high or low-income. On an after-tax basis, the total return on retirement savings under current law is higher than it could be for the vast majority of workers under any privatization plan.
Fourth, most features of these plans are compulsory, not voluntary; for example, one would still have to pay the payroll tax and also be forced to belong to a retirement system.
I don't think we should force people to choose either Social Security or private pensions and IRAs—I think we need and can have both.
House of Representatives
Mr. Crane replies: With all due respect to Jack Kemp, our friendly debate is not primarily over Social Security but rather his advocacy of what he told a New York Times reporter is "feel good politics." That translates into "never criticize a federal spending program"—which is simply inexcusable for any self-described proponent of limited government and individual freedom.
As for Social Security, well, you know the old saw about lies, damn lies, and statistics. The privatization option put forth by Pete du Pont calls for no new taxes but does provide an income tax credit for those who choose to partially opt out of the SS system.
As for the average black male, in private plans he would own the very substantial corpus built up over the years of paying into the fund. At least the individual has the option of spending the principal and interest or leaving it to his loved ones. Social Security, as a pay-as-you-go system, callously denies us ownership of the money we pay in.
Jack fully understands the need for dramatic payroll tax increases eventually under the present system, regardless of his election-year opposition to the next scheduled tax hike. Kemp's chief staff economist, John Mueller, advocates an automatic trigger to increase payroll taxes, which the SS administration itself predicts could need to go as high as 35 percent early in the next century.
I've never supported Jack Kemp's reflexive pro-Pentagon positions or his social conservatism, but he has historically been a courageous advocate of lower taxes, privatization, and sound money. In fact, I much prefer the pre-"feel good" Kemp who wrote in his 1979 book, An American Renaissance: A Strategy for the 1980s, "Any serious effort to limit the growth of spending must deal directly with the areas where most spending growth has occurred. This means, above all, transfer payments to individuals."
I found the campaign debate with Jack Kemp and Ed Crane very enlightening. After reading Jack's letter to Ed, it is now easy to understand why the voter who believes in rational self interest and capitalism is running out of choices. Kemp contradicts himself. In his letter—and in the past—he has talked of Adam Smith, Thomas Jefferson, and Ludwig von Mises as if he championed their views. He talks of free markets and free people but wants to "strike a balance between the rights of the individual and the demands of the community." That is a pragmatist talking, not one who believes in the principles of a free society. Kemp has "made peace with the existence of the Social Security retirement program" because he has no principles. Since he has made peace with one socialist program, what would stop him from making peace with the entire program by stating "it's for the common good"?
David R. Hirschler
Laguna Beach, CA
Separation of Church and Real Estate
Thank you for your recent article "Quiet Crusade" (Dec.), which explains the current threat to religious liberty in the area of property rights. Unfortunately, an otherwise excellent article is flawed by some proposed solutions that are at best extreme.
The article states that "the First Amendment is not enough." Only when owners are "granted full control [emphasis mine] over their property" will the problems set forth in the article disappear.
Is the author suggesting that we turn back the clock on civil rights by permitting restaurants to exclude blacks or landowners to encumber property with the restrictive covenants of yore? Shall we return to the long hot summers of race riots and Klan activities? Would landowners be free to use their property without the constraints of even the most reasonable zoning laws? Suppose someone wishes to build a drive-in theater or a slaughterhouse next to your home. Is that the "full control over property" we really want as a society?
In fact, the First Amendment, if enforced, is adequate to protect the property rights of churches and religious organizations. But no right is absolute—not religion and certainly not property.
Oliver S. Thomas
Baptist Joint Committee on Public Affairs
I read Virginia Postrel's "Quiet Crusade" from start to anticlimactic finish to try to discover "how the government is quietly stealing religious liberty [and] strangling our cherished freedom of religious expression with a noose of insidious regulations." That churches pay neither property nor state or federal income tax seems like more than adequate recompense for their having to "endure" the onslaught of historic designation. Many individuals who own a historic property are caught in the same dilemma, yet few of them enjoy the benefit of not having to pay property taxes on their valuable asset. And, yes, some religious groups are not being permitted to meet in living rooms on a regular basis. Are we to do away with codes altogether, or just for the faithful?
Ms. Postrel would do well to consider the case of the Rajneeshi who attempted to carve out a theocratic kingdom—Rajneeshpuram—in Antelope, Oregon, two years ago. Were it not for "insidious regulations" in the form of enlightened federal and state land use plans, members of the religious cult would still be depleting scarce ground water and attempting to protect their followers from Oregon winters in floored tents.
Stephen J. McCabe
Rifkin Is Right
Regarding Marty Zupan's January editorial ("Don't Weep for Mary Beth"): I couldn't care less about Mary Beth Whitehead. However, I find it very ironic that Jeremy Rifkin is described as a gadfly, an insect that causes suffering to animals. Mr. Rifkin is trying to prevent the suffering of animals caused by so-called agricultural advances. So am I.
The fact that man is capable of doing something and making a profit on it does not mean that it should be done. Please cancel my subscription.
Considering the strong social liberties emphasis that is a hallmark of REASON and especially "Brickbats," the editorial cartoon "Love-Hate Relationship" in the January issue is puzzling as well as cavalierly hypocritical. Once a heterosexist chauvinist always a heterosexist chauvinist, right?
Phillip B. Harry
Temple City, CA
If You Make It, They'll Take It
In a general way, I endorse your editorial "The Witches of Wall Street," in your January number. However, the reason for the stock market crash was plain: stocks simply got too high for what they were paying, so the money went to other instruments or out of the country. Same as 1929, which I well remember.
Your statement that the government is the most powerful player in the market is absolutely right. "If you make it, they'll take it," has become my statement of life today. It is all very well for Walter Wriston to say that investors will simply go abroad for freer markets. But how will they bring the money back in without confiscatory taxation? I'm nearly 87, and it is far too late for me and my wife to emigrate. I'm very sad about the prospects for our children and grandchildren.
John E. Erb
Who Says Government's Efficient?
I very much enjoyed David Henderson's account of the development of public choice theory and the contributions of its various proponents ("James Buchanan & Co.," Nov.). However, the piece contains a serious misattribution. The conclusion that government programs to redistribute income will be the most efficient ones possible for achieving that redistribution, attributed to a 1983 article by Gary Becker, was first argued in a 1979 article by UCLA Professor Earl Thompson in the Journal of Political Economy.
To wit, Thompson stated: "We conclude that existing political processes in the United States, rather than being dominated by broad social thinking, have simulated an allocation system guided by a compensation principle. Under such a system, the potential gainers from proposed legislation always amend the proposal if the change is perceived to raise the expected utility of any individual without reducing the expected utility of any other.…If perceptions of individual gains and losses are accurate in such a system, any allocation generated by the system must obviously be Pareto optimal."
Velma Montoya Thompson
Mr. Henderson replies: I regret the misattribution. Velma Thompson is absolutely correct.
But let's not lose sight of the more important point: as Earl Thompson admits, the idea that political outcomes are efficient depends on people knowing accurately their gains and losses from every government activity. The very idea is absurd. That Thompson stated it four years earlier than Becker makes it no less so.
Your interview with Clarence Thomas (Nov.) is both informative and uplifting. Mr. Thomas states that he is uncomfortable with the labels libertarian and conservative. The label that best describes him is freedom fighter. One does not have to travel to the high jungles of Nicaragua or the mountains of Afghanistan to fight for freedom.
Throughout the world, including here in South Africa, the struggle for liberty is the struggle against state power. Anyone who can fight for freedom in the bureaus of Washington and survive has my vote of confidence.
University of Witwatersrand
Johannesburg, South Africa