With Republicans Like These . . .

Most libertarians, including me, have generally leaned somewhat toward the Republicans on economic issues.  Therefore it is especially dismaying to read the following comments from the Republican House Leader, John Boehner:

Besides raising the retirement age for full Social Security benefits to 70 for people now 50 or younger, Mr. Boehner suggested curbing benefit growth by tying cost-of-living increases to the consumer price index rather than growth in wages, and providing benefits only to those who need them.

I suppose there are good arguments on both sides of the first point, although it seems a bit unfair to make coal miners work until 70.  I seem to recall that the Brits tried indexing initial benefits to the CPI, and it failed for the obvious reason that people judge how they are doing relative to their neighbors, not relative to those who lived 100 years ago in log cabins.   But it is the third point that really bugs me.  This is penny wise and pound foolish policy-making.  We are already getting all sorts of subtle and not-so-subtle increases in marginal tax rates (MTRs), why would the Republicans want to raise the implicit MTR on people who save for retirement?  We should be moving closer to the Singapore high-saving model, not ever further away.

I suppose some would argue that the benefits of lower government spending outweigh the costs of higher MTRs.  In fact, there is no way that AARP would allow them to means test benefits for any but the top few percent of earners—so it won’t save much money.  And in any case, saving money doesn’t seem to be the most important factor motivating Boehner:

Mr. Boehner advocated continued free spending on defense and said that should Republicans take control of the House in the fall elections, one of his first acts as speaker would be to repeal the $534 billion in Medicare cuts used to finance the Democrats’ expansion of health care this year.

Many of those cuts are the same ones seen in a Republican budget plan, the only one to date that carries out the GOP pledge to get the deficit under control without tax increases, authored by Rep. Paul D. Ryan of Wisconsin.

Liberaltarianism looks more appealing every day.

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About Scott Sumner 492 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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