Charles Skelley: We don’t need the Liberals’ “pain caucus” as a solution to entitlement reform

Liberals in Congress insist on a “pain caucus” of tax increases, and Working Capital decreases, as the solution to entitlement reform. The Institute For Policy Innovation think tank says, in effect, that some candidate should run and win on the basis that entitlement reform can actually be accomplished by a Working Capital increase instead of a Tax Increase. And obviously, that is part of the Skelley2008 program.

The grand compromise package of tax increases and benefit cuts is a pain caucus political kamikaze mission doomed to failure. It is the 1990 budget deal writ large. That year the first President Bush broke his read-my-lips-no-new-taxes pledge and told voters to read his hips instead. Two years later voters booted those hips out of office.

Positive Alternative

In contrast, the alternative approach is based entirely on positive populist reforms that would leave working people and their families much better off. The personal accounts for Social Security would provide workers with a much better deal than the current system, with, indeed, substantially higher benefits than the current system even promises, let alone what it can pay. The welfare reforms are better for the poor as well, because the reforms get them off welfare dependency and into work.

CANDIDATES CAN RUN AND WIN ON THIS PACKAGE of positive, populist reforms, including presidential candidates. They can’t do that with the pain caucus, tax increase, benefit- cut package. With this positive, populist package, we don’t need a compromise with the liberals for a tax increase, and other compromises that would just undermine the reforms, like dropping real personal accounts. The strong, populist appeal of the positive reforms will eventually force enough Democrats to go along to pass the measures. This is how the Republicans passed the Kemp Roth tax cuts and the Reagan budget cuts in 1981, and welfare reform in 1996.

The challenge we face with the current, projected, explosion in federal spending is analogous to the challenge we faced from the Soviets in the 1970s. Under President Ford, Secretary of State Henry Kissinger became convinced that we could never beat the Soviets and must, instead, negotiate the best accommodation with them we could. But first candidate and then President Reagan rejected that and argued that there was no substitute for victory. We all know how that turned out.

Today some are arguing we can’t beat the left on federal spending and must just negotiate the best accommodation we can, giving in to a massive increase in such spending relative to GDP. I am confident that a new Reagan will come along again successfully arguing that there is no substitute for victory.


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