- The Washington Times - Sunday, September 2, 2001

Democrats think they've found the key to countering President Bush's popular tax cut. It's their old standby, the Social Security scare. The Congressional Budget Office says the government will need $9 billion from Social Security taxes in order to balance the current federal budget, and that more will be needed to offset future tax cuts. Democrats blame Mr. Bush for putting grannies everywhere in jeopardy.

This is so like Washington. Government can never afford to give you your money back, nor can it afford to cut a dime in spending, no matter how much of it goes to waste, fraud, abuse and duplication. But government never asks whether you can afford to give up more of your income. That the health of the economy has little to do with whether or not government has a balanced budget, a surplus or a deficit never seems to be discussed.

While Republicans do not have clean hands when it comes to wasteful and deficit spending, Democrats who are crying the loudest about "raiding the Social Security trust fund (which doesn't exist) have gladly spent money supposedly set aside for retirees.

Every year between 1983 and 1998, according to the CBO, money designated for Social Security was spent on other government programs, leaving a deficit. Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat, and other leading members of his party did not oppose this practice. Now we're supposed to believe House Minority Leader Richard A. Gephardt, Missouri Democrat, who claims the need to raid Social Security again is "a failure of the president's budget."

The problem is not that taxes were cut but that spending wasn't cut by at least as much. This year, the tax cut was $40 billion, but federal spending increased by $57 billion over the previous fiscal year. Some Republicans were accessories to the spending.

In an Aug. 23 essay for the Heritage Foundation, economic analyst Daniel Mitchell says the debate over Social Security is misguided. "Budget surpluses tend to be the consequence of good policy, not the cause," he says. "When the economy is growing, people have jobs, incomes climb, businesses earn more profits, and there is less pressure to utilize federal government income redistribution programs. This relationship explains why periods of prosperity are associated with lower deficits or larger surpluses."

There are a number of myths about Social Security, the federal budget and the economy that the politicians, especially Democrats, have made careers spreading. Chief among them is the Social Security trust fund, which is nothing more than IOUs written on government bonds. These bonds do not reflect real savings, as would an individual retirement account that earns interest on your money and has your name on it. Future retirees will have to depend on the kindness of politicians, not their own money.

Another myth, says Mr. Mitchell, is the notion that the tax cut is hurting the economy. Perhaps those who think so would like to explain why the economy began to weaken in the middle of last year, long before tax cuts were passed or the checks were cut.

Democrats want to shrink the tax cut when it should be enlarged and accelerated. Government does not stimulate the economy (as Alan Greenspan's reductions in the prime interest rate prove). People keeping more of their money to spend and invest as they wish stimulates the economy. Democrats who perpetuate the myth that Bill Clinton's tax increases are what boosted the economy in the 1990s and gave us a budget surplus are wrong. As Mr. Mitchell writes, "The Clinton tax increase delayed the economy's resurgence and had nothing to do with the budget surplus."

Social Security's problems are more structural than monetary. Let's liken it to air conditioning (mine was just repaired, so it's on my mind). The technician put in more coolant but noticed the unit had a leak. It would still work if he kept coming back to add coolant. but the more economical and efficient approach would be to repair the leak.

Government leaks money. Putting more money into government isn't the answer. Repairing the leak is the answer. Anything less than that is, to recall a phrase, voodoo economics.

Cal Thomas is a nationally syndicated columnist.

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