Friday, May 11, 2012

Newt Gingrich's Real Change 6

In Newt Gingrich's Real Change, I read "Chapter Twelve: Real Change for Social Security" (which Newt wrote with Peter Ferrara of the Institute for Policy Innovation); "Chapter Thirteen: American History Requires Real Change in the Judiciary"; and "Appendix 4: D-Day Radio Prayer of President Franklin Delano Roosevelt, June 6, 1944".

1.  In Chapter 12, Newt defends allowing people to invest part of their Social Security payroll tax in stocks and bonds that would be approved by the U.S. Treasury Department.  Employers would contribute to this account as well, and, if the return falls short of what the government promises people in terms of Social Security, then the government would pay them the difference.  According to Newt, this would take care of the coming insolvency of the Social Security system, as well as the problem of the government raiding the Social Security trust fund to spend money on other projects----for a good percentage of that money under the system that Newt supports would be in the hands of the people, not the government.

But there is a problem that people have identified in this sort of proposal.  People's payroll taxes are going to the current recipients of Social Security.  If people are allowed to invest part of their payroll tax rather than contributing it to the Social Security trust fund, then there will be a shortage in the trust fund, and the government will have to find the money to pay current recipients of Social Security at the present level.

Newt actually addresses this problem.  First, he says that the amount that we allow people to invest should start at a manageable level and then go up.  That means that we should not start out allowing people to invest a significantly large chunk of their payroll tax, but we should start out at a more manageable rate.  Second, Newt states that the economy will grow as people invest part of their payroll tax into the stock market, and that will increase revenue and make up for the lost money in the Social Security trust fund.  Third, Newt says that the government should cut spending in other areas so there will be money for the Social Security trust fund.

Some people think that the current Social Security system is in danger of becoming insolvent, and that the trend of each Social Security benefactor being supported by fewer and fewer taxpayers will result in dramatically higher payroll taxes.  Others don't think that the situation is that bad.  As I read Newt, I can see how one could have a dismal view of the future of Social Security, since payroll taxes have gone up over the years.  

Is Newt's solution the way to go, however?  I fear that people could lose their money through bad investments or the stock market crashing, and stock market crashes do occur, as we saw in 2008.  The government would then have to step in and pay people the guaranteed amount of Social Security, with a possibly depleted Social Security trust fund.

2.  Newt's chapter on the judiciary was basically about how courts are attacking religion in the public square.  But there were some interesting things in this chapter.  For one, Newt talks about how the Federalists in America's early days supported a strong judiciary, whereas the Democratic-Republicans feared judicial tyranny.  Second, Newt discusses how the current system actually encourages people to sue public schools and the public square to remove religious items from their midst.  Essentially, the rule is that the defendant has to pay the legal fees of the plaintiff, if the plaintiff wins (even partially). 

Newt acknowledges that this sort of rule is appropriate for civil rights cases, especially when there are people who cannot afford to launch civil rights lawsuits when they are the victims of discrimination.  But Newt does not deem it appropriate for Establishment Clause cases.  Newt supports the Public Expression of Religion Act (which I do not think passed), which does not require defendants to pay the legal fees of plaintiffs in Establishment Clause lawsuits.  The court would still be able to order the removal of religious items from the public square, but the defendant would no longer have to pay the legal fees of the plaintiff.

Is this a reasonable policy?  It could discourage people from initiating Establishment Clause lawsuits, and Newt may actually like that, since he says on page 172 that people in a democracy may have to live with things that they don't like (presumably religion in the public square).  On the other hand, I have a hard time imagining the ACLU giving up just because the defendants would not pay the plaintiff's legal fees.

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