Why Mitt Romney is my First Choice (and John McCain my Second)

What I found to be Most Important in My Decision

Mike Huckabee once quipped that “people are looking for a president that reminds them of the guy they work with, not the guy that laid them off” a statement which reaffirmed my conviction that not only is Mike Huckabee someone I would never vote for President, but I wouldn’t vote for any ticket that had him in the vice presidential slot either. The fact that career politicians like Huckabee seem to forget is that in voting for the President of the United States, I’m not voting for the guy who is going to be my boss (and any presidential candidate who thinks they’re being asked to run the entire country ought to be suspect), I’m voting for the guy who will be the boss of over a million employees in the executive branch of the federal government. Frankly a candidate who values results over loyalty to the extent that he’s willing to fire people who aren’t getting the job done is precisely what I’m looking for.

Romney is the only candidate who has any significant adult experience working in the private sector. He made his fortune during the 1970’s when the economy was in much worse shape than it is now and while he’s been accused of changing his position on a few social issues (actually just guns and abortion), he’s been a pretty consistent supporter of market-oriented economic reforms. John McCain on the other hand has this distributing tendency whenever he refers to any industry to use the phrase “taming the special interests” largely IMO because he’s spent most of his adult working life in government where his contact with private industry wasn’t working in the day to day affairs of actually running a business but rather as a legislator dealing with lobbyists who approach the government with their hands out. While I don’t doubt that McCain on at least an abstract level realizes that free enterprise is generally a good thing, Romney has spent most of his life living and breathing it in a concrete way that no “public servant” can fully appreciate.

Romney also has served as the governor of the one of the most liberal States in the country and had to work with a Democrat-controlled legislature. I don’t mean a 60-40 controlled legislature, I mean a legislature that was over 80% controlled by the opposition party and could override any veto he made. Yet he was still able to make importance progress in education, health care, improving Massachusetts’s job climate (compared to where it was), and balancing the State’s budget. The next President is going to be dealing with a Democrat-controlled Congress but one that is not as lopsided as the Massachusetts legislature. While the conventional wisdom is that governors make better candidates than Senators, McCain also has a proven ability to work with Republicans and Democrats alike. While I know many Republicans disagree with him on campaign finance “reform,” anthropogenic climate change, and immigration reform; the fact is that he’s also been able to deliver on fighting wasteful spending and confirming conservative judicial nominees. Moreover McCain is one of those unique figures in American politics who has the sort of stature amongst independents and even many Democrats that makes him one of the most effective legislators.

For me the most important domestic issue is health care reform. It’s over a sixth of the US economy and growing. While many of the criticisms (such as the inflated number of the uninsured and meaningless statistics about infant mortality and life expectancy) are overblown, the rise in costs and concerns that people have about making sure it’s affordable and available aren’t. Largely this is because Americans have the best health care in the world (in terms of outcomes after treatment) and we lead the world in innovation and advancement – all of which is expensive. The problem is that Republicans haven’t really been as engaged on the issue as they should and usually treat the issue as an afterthought behind the War, immigration, and judicial nominees. Mitt Romney has been one of the one of the exceptions and has made health care reform front and center to his campaign and has a track record of thinking outside the box. While I don’t agree with his individual mandate (much of the disagreeable elements of the Massachusetts plan were things he vetoed that were overridden), his views on supporting Association Health Plans, giving those who buy their own insurance the same tax break as employers who buy it for their employees, support for price transparency and electronic health records, and letting consumers buy a policy anywhere in the country are identical to mine. Senator McCain has pretty much the same position but Romney seems more likely to make this a top priority in his administration, hence I give the nod to Romney.

My second most important issue that concerns me the most is entitlement spending. The first of the baby boom generation retired last month and their numbers are only going to increase until entitlement spending consumes the entire budget and we are faced with either massive tax increase, benefit cuts or some combination. The longer we wait, the more expensive the problem is to fix and the more baby boomers that are receiving Medicare and Social Security when the fix is made, the more likely it is that we will get tax increases rather than benefit cuts. Both candidates have put about the same focus on the issue and both have supported personal retirement accounts as part of Social Security reform and both opposed Medicare Part D (Senator McCain voted against it). However what is troubling to me is that while McCain voted against Medicare Part D, he voted in favor of importing Canadian price controls and having the federal government “negotiate” with drug companies for lower prices (which IMO paves the way for price controls as it has in other western countries). My fear is that a President McCain who has already expressed hostility towards the pharmaceutical industry could support the foundation for price controls which could hurt new drug development and reduce the long-term benefits Americans have with one of the freest and robust medical industries in the world.

The other issue (and while it’s one the President has little to no control over, it’s still something that affects how people vote and may be the major issue) is the economy. Both have good records on being willing to veto spending and opposing tax increases (I’m actually one of those who doesn’t care as much as user fees so long as it actually pays for the services they’re for).Romney as I said before seems to be someone more likely to support free markets and better able to communicate complex economic issues. McCain on the other hand seems able to deliver bad news (such as telling Iowa farmers ethanol is a boondoggle and Michigan auto workers that those jobs aren’t coming back) in a way that makes people respect him. The problem is that he’s a little too quick to blame industry (such as the “predatory lenders” that were blamed when people couldn’t pay for the mortgages they took out) when people are paying the price for their own bad choices. From what I’ve seen of Romney his focus seems to be on long-term economic growth and he is willing to make the short-term deals (e.g. spending more on R&D) to achieve that vision. While I don’t doubt that a candidate like Obama or Clinton will be trying to sway voters on an emotional level about the economy (being that neither has actually held a real job their entire lives, what else do they have?), the best chance free market libertarians and conservatives have is to pick the candidate who is the most competent and effective communicator on complex economic issues and that is by far Mitt Romney.

What Won’t Sway My Vote in the Primary

1) The War – probably the most pressing issue of our time but whoever is elected as our next President isn’t going to be able to do anything about it until next year and any promise on how to prosecute it is going to have to take backseat to what the facts on the ground are. I should point out that since neither Romney nor McCain have followed Obama and Clinton’s reckless promise to begin retreating from Iraq by a certain date, I consider either McCain or Romney to be objectively superior choices (even NOT knowing what they’ll do) just because neither of them were stupid enough to make this sort of blunder just to win their party’s nomination. McCain deserves credit for pushing for the surge in Iraq and for being willing to stand up to both the defeatist who wanted to give the enemy a timetable for how long they had to hold out before we leave and the Bush administration for some of the mishandling (although I think it’s overstated) of the War. While I don’t necessarily agree with him about Gitmo and waterboarding, they’re pretty minor sub-issues in the context of the War. Romney hasn’t said much one way or the other about the War but he strikes me as someone who doesn’t value loyalty as much as results. Basically the War is an important issue in the general election against Clinton or Obama but between the GOP front runners, there’s not enough of a difference to sway me one way or the other.

2) Immigration – I didn’t support the McCain-Kennedy but I thought it was stupid to call it “amnesty.” It wasn’t amnesty because it required illegal aliens to return to their home countries, pay back taxes and a fine, and then reapply from their original country to reenter the country legally. That being said given what happened with the 1987 immigration reform bill, I don’t blame opponents for being suspicious of any reform but I think in the long run we’ve shot ourselves in the foot by not intelligently addressing the issue. The fact that every time a Republican candidate is asked about immigration they almost always begin by talking about why they’re against illegal immigration (or make some meaningless statement about why they think legal immigration is a good thing) has soured the debate. We do need comprehensive immigration reform but it needs to be reform that not only secures our borders but also reforms the rules to make them more rational for the people who are trying to follow them. There’s an old saying that “for the law to be respected, it must be respectable.” Given the defeat that McCain-Kennedy received due to overwhelming public opposition, I think it highly unlikely we’ll see a major push for immigration reform anytime soon.

3) Social Issues and Judges – aren’t they really the same thing at the end of the day? I’ve said repeatedly on multiple forums that judicial nominees are a crap shoot because no one knows who a future president will pick as their judicial nominee and the judicial canons basically prohibit judges from saying how they would rule on an issue that might come before them. Much as some of the single issue social conservatives might like to believe otherwise, you aren’t voting for a president who will appoint a judge who will vote a particular way on a given case. What you’re voting for is either a Republican or Democrat president who will be drawing from a particular pool of legal talent for their judicial nominees. That’s it. And given what we’ve seen with the Roberts and Alito hearings and the likelihood of the Democrats retaining control of the Senate, they’re all going to have to pretty much be “stealth nominees” anyway

4) Flip-flopping – so freaking what? Every candidate has changed their mind about an issue at one point or another. Romney was pro-choice (even if he didn’t like to call himself that) and then he became pro-life. McCain voted against Bush’s tax cuts when he was worried about the deficit and now supports them because he thinks they’ll help restore the economy. Frankly I don’t consider either to be a “flip-flop” because they’ve moved in one direction which is the direction that I’d wager most conservatives would prefer. Unless you think that either is suicidal enough to reverse their “flips,” I’d say that each is pretty much committed out of necessity to these positions and you’ve got a pro-life Mitt Romney and a pro-tax cut John McCain.

5) Temperament – which is another way of saying “John McCain has been known to yell and cuss at people. Given the work environment he’s in – the World’s Greatest Deliberating Body – and the type of personalities he deals with on a day-to-day basis, I would have serious reservations about anyone who didn’t drop an F-bomb once in a while. What I do find rather telling though is that these stories about the “McCain temper” are almost invariably about things that allegedly happened behind closed doors. Losing your temper in private isn’t as damaging IMO as being the sort of gossipy whiner who runs out to spread these sorts of stories.

6) Perceived Electability – is not as much of factor for me because neither I nor anyone else knows what the electoral scene is going to be like in November. It could be that McCain can bring in enough independents to win or it could be that enough conservatives follow through on their foolish vow to stay home. Or it could be that Mitt Romney is enough of an outsider and does well enough in a one-on-one debate (I haven’t watched them but from what I’ve read he does better in those forums) to win. It could be that Barack Obama and Hillary Clinton hurt each other enough in the primary that neither is able to win because they’ve angered each other’s core supporters. Or they could run on a unity ticket. People could change their minds (again) about what they think is the most important issue particularly those who literally wait until the last minute to decide who to vote for. There simply isn’t enough useful information to make an informed choice with any reasonable degree of accuracy on this.

Getting Back to First Principles (answering Mitch's challenge)

Mitch Berg at Shot In Dark has some questions for Republicans about getting back to “first principles.”

As far as I’m concerned (and Ed was more or less on board with this as well), the big principles on which the GOP needs to model itself are:
• Strong defense (not just in a military sense, either; securing the border is vital)
• Limiting government - both in bread and butter terms (taxes) and higher principles (like restraining judicial activism). Constitutional Constructionism generally goes along with this.
With that understood - that the party is a big tent, but the tent is built on those two key overarching ideals - I have some questions for Republicans:
1. Assuming you’re a Republican (Democrats can abstain from this one; I gave you your own post last week, with generally dismal results), do you agree? On what principles should the GOP base itself?

I don’t disagree with these principles but I would define the principles that guide my politics somewhat differently. In no particular order (and they can and do overlap):

Free Market Capitalism and the Opportunity Society – the best society is one in which people are free to make their own choices, bear the burdens of their mistakes, and reap the rewards of their wise choices. That means reducing the size, scope and cost of government on the private sector (taxation, regulation, and litigation). Reforming education, health care (including Medicare and Medicaid), and retirement programs (including Social Security) in a way that empowers individuals to make their own decisions and achieve self-sufficiency and prosperity.

American Exceptionalism – the principles that our American experiment were founded upon are unique in the history of humanity and we should endeavor to preserve them, improve them, and expand them through the world. That means having a strong national defense with a willingness to confront our enemies both at home and abroad. It means protecting our borders and having a rational immigration policy to assimilate legal immigrants who play by the rules and contribute to our society. It means also trying to create a more decent society in which we live by

Federalism and Self Government – the government which governs best is the government which governs least and closest to the people it governs and to whom it is accountable. That means having local issues decided at the local level, State issues decided at the State level, and national issues that fall within the enumerated powers decided at the national level. It means that public service should be a temporary serviced and not a career and that those who entrust with office must be accountable for their actions rather than passing along problems to future governments or other branches of government to fix. It means that when an issue involves deciding public policy, the deference should be to the politically accountable branches of government.

Individual Liberty and Personal Responsibility – competent adults should have to the right to do pretty much anything they please so long as they do not violate the rights others by initiating force or fraud and accept responsibility for their choices. The presumption should be that unless and until it can be shown that an action would violate the rights of another, an adult should be free to take that action and be held responsible for the consequences.

Who, given your principles, should the GOP support for President? VP? If you’re in Minnesota, for Senate in ‘06 and Governor in ’10?

I think it’s too early to tell who I would support for the next election. We don’t even have any declared candidates and a lot can and will happen between now and 2008 and 2010 that affects my decision. Right now I can say as far as the presidency is concerned, unless Governors Pawlenty, Owens, or Sanford enter the race – I would probably support either Senator McCain or Governor Romney (or a McCain-Romney or Romney-McCain ticket). As far the Senate is concerned, right now I’m hoping that Coleman gets knocked off by a competent primary challenger but I’m not going to hold my breath.

John McCain and Rudy Giuliani have both violated a number of these first principles (McCain sponsored Campaign Finance Reform, a gross inflation of government power, and chaired the Gang of 14; Giuliani is quite anti-Second-Amendment, likewise a big government power grab (and also political suicide for anyone, much less a Republican, these days). Both are “pro-choice”, which means either/both that they support abortion (a no-no among social conservatives) and they abrogate the state’s Tenth Amendment right to decide an issue that the constitution, but for the fairly ludicrously-written Roe decision, would seem to have been reserved for the states. So - if either of them made amends on these issues, given that both of them would be very strong on defense and generally useful on other conservative issues, then would you, as a conservative/Republican, support them?

I could easily see myself supporting Senator McCain for President in 2008 for several reasons but first let me address the points that Mitch raised. First, I completely agree that the Bipartisan Campaign Finance Reform Act is a bad law and disagree with the Supreme Court’s decision upholding it. However the fact is that President Bush signed it into law (even though he unlike McCain disagreed with it) and I nonetheless voted to reelect President Bush in 2004. It seems to me then that if conservatives were able to vote to reelect Bush in 2004, why should we hold it against McCain (or any other Senator who voted for it) should he (they) run for President in 2008? It’s water over the bridge as far as I’m concerned.

With regards to the Gang of Fourteen, I admit that I was a bit upset initially when they made their little “deal” regarding the filibustering of judicial nominees. However I’ve had over a year to think and reflect on it and I’ve decided that the blame actually lies with Senate Republicans (particularly the leadership) because they could have simply changed the rules at the beginning of the session when each House adopts its rules by a simple majority vote. Instead they were either so naïve as to think that Senate Democrats would refrain from filibustering Bush’s judicial nominees or they tried to provoke a showdown in order to whip up the base. If Senate Republicans wanted to stop the filibustering of their judicial nominees they had no less than two opportunities to do after the 2002 and 2004 elections. That they failed to change the rules at the beginning of the term does not IMO give them an excuse when they tried to change the rules in the middle of the session. McCain probably did the right thing even though it was inconvenient for Senate Republicans.

With regards to abortion, I’ve never bought the “McCain is pro-choice” line. Yes I know that he’s said at least at one point that he doesn’t think the country is ready for Roe v Wade to be overturned (he’s wrong, it’s a bad decision and overturning it returns the issue back to the States where it belongs) but so has President Bush when ran for office in 2000. Which I always took as his wink-wink-nod-nod way of saying “I won’t make overturning Roe a litmus test for my judicial nominees” (which he shouldn’t) while looking for judicial appointees whose philosophy probably will probably lead to them overturning Roe for any the numerous reasons that it should be overturned.

The fact is that McCain has about a 100% prolife voting record (for those who follow such things) and more importantly he would probably appoint the same sort of judges that Bush has appointed. Basically if one likes Bush on the abortion issue, McCain would probably be about the same.

Which brings me to the more important issue – why would a conservative (more of a libertarian actually) like myself support Senator John McCain for president? For several reasons. First, the biggest credibility problem that the GOP has IMO is spending and McCain has been on the right of side of Medicare Part D, the Farm Bill, the Energy Bill, and the Transportation Bill, i.e. he opposed them as I do. Bush and Congressional Republicans have failed to control spending and have cost future Republican congresses and presidents a lot of credibility by their over-spending and actually allowed Democrats to pretend to be the “fiscally conservative” party. A spending cutter like McCain would IMO be one of our best shots at regaining credibility on this issue.

Second, entitlement reform particularly Medicare, Medicaid, and Social Security. McCain was actually more assertive about this than Bush was in 2000, voted against Medicare Part D, and campaigned on Social Security reform when he was reelected in 2004. In 2010 the first of the baby boom generation will begin retiring which means that if we want to fix Medicare and Social Security before they begin retiring (at which point any meaningful reform will be opposed as a “cut”) we have about four years to do it (with the next two being wasted with an obstructionist Congress that is decidedly anti-reform).

Third, judicial nominees. Senator McCain has supported everyone of Bush’s judicial nominees and his members in the Gang of Fourteen would make it harder for Democrats and “moderate” Republicans to get away with filibustering his nominees. The next President will probably have the chance to appoint one or two associate justices to the Supreme Court.

Fourth, the War. Senator McCain has been more hawkish than most Republicans including President Bush (heck, he was talking about sending ground troops during Kosovo when President Clinton wanted to just rely on air power). The primary complaints that I’ve seen amongst serious critics of the Iraqi phase of the War has been that we haven’t been aggressive enough in sending in more troops, in cleaning out the Sunni Triangle, etc. Someone like McCain is not only unlikely to retreat from Iraq, he’s more likely to push to do what we need to do to win.

Finally, clean and honest government. Much as I disagreed with Senator McCain on campaign finance “reform,” there’s a reason why it has resonated with so many people. The fact is that many people voted against Republicans because of the perception (earmark abuse, Delay’s indictment, Foley’s resignation, Abramoff) that the Republican Congress was just as corrupt at the Democratic one which lost in 1994. In we want to restore people’s faith in their government then we need to take substantive (not merely symbolic) steps to increasing accountability, transparency in our lawmaking and reforming the appropriations process (banning earmarks would be a good step IMO). On the national stage there is no one who has been as zealous of an advocate of this than Senator McCain which would make him the ideal person to use the bully pulpit of the presidency to get it done.

Lobbying Reform: GOP and Democratic Proposals, Compare and Contrast

Tuesday House Democrats lead by House Speaker Dennis Hastert (R-IL) and Chairman of the House Rules Committee David Dreier (R-CA) outlined their principles for lobbying reform in the House of Representatives. Yesterday House Democrats lead by Minority Leader Nancy Pelosi (D-CA) offered their own set of reforms.

From the House GOP:

A ban on privately-funded travel;

A significantly stronger gift ban, preventing members and staff from personally benefiting from gifts from lobbyists;

The elimination of floor and gym access for former members who are registered lobbyists;

Expanding the post-employment lobbying ban to two years for members and senior staff;

The forfeiture of a Congressional pension for any member convicted of a felony related to their official duties;

Stronger and more frequent disclosure on the part of lobbyists and third parties; and,

Make the ethics committee more user-friendly and require training for all members and staff.

From the House Democrats:

Ban all gifts and travel from lobbyists. Period.

Kill the K Street Project, the Republican plan that trades favors for lobbying jobs, and toughen public disclosure of lobbyist activity.

Remove the revolving door by doubling the amount of time Members and staff are prohibited from going from legislating to lobbying. Stop legislators from negotiating legislation, while also negotiating employment contracts for themselves with those who benefit from that legislation. Keep former Members who are lobbyists off the floor of Congress.

Next we would end the ‘dead of night’ special interest provisions that turn bills into special-interest giveaways. Lawmakers must have the opportunity to read every bill before they vote on it. It’s common sense.

Eliminate the practice of irresponsible no-bid contracts, bring criminal penalties against war profiteers, and ensure that the government contracting process is honest, open, competitive, and fair. No more Halliburtons.

Prohibit cronyism in key appointments by making sure any individual appointed to a position has proven credentials. Brownie certainly wasn’t doing a ‘heck of a job’ for the survivors of Hurricane Katrina.

Both proposals agree on two things – they would double from one to two years the length of time that House members and senior staff could become registered lobbyists and would ban privately-funded travel. It should be noted that the proposed ban on privately-funded travel would not change the practice of elected official traveling on private jets and reimbursing their hosts at charter rather than first class rates.

Arguably both agree on a gift ban although Hastert’s comments indicated that he thought that there was a distinction between a House member getting a T-shirt or baseball cap from a group or students (okay) versus being taken to lunch by a lobbyist (not okay). Both proposals also called for “stronger” or “toughening” disclosures for lobbyists.

The House GOP proposal included a couple of specific provisions not included in the Democratic proposal, namely eliminating floor and gym access for former members that are registered lobbyists and the forfeiture of Congressional pensions for any member convicted of a felony related to their official duties. IMO the access restriction for former House members is probably one of the most significant proposals because that special access is what makes former Congressmen so sought after as lobbyists. Without being able approach their former colleagues on the floor at in private at the gym, their ability to exert any special influence would be curtailed especially while legislation is debated on the floor. This doesn’t mean that the knowledge they’ve acquired during their service or the relationships they’ve built wouldn’t give them an edge, but it would make them less appealing.

Neither set of proposals specifically addressed the issue of earmarks although Speaker Hastert said that was because it would be addressed in a separate set of proposals in February. The Democratic proposal did allude to “dead of night” provisions – presumably this means adding something into a bill before members have a chance to read it. It remains to be seen what if anything would be done about requiring that earmarks be listed in the main bill (as opposed to the record) so that members can see what the amounts are specifically being spent on or restricting the ability of the House to waive the House rules requiring that legislation be made available three days in advance (what you mean you didn’t know that this was already the rule and that it’s routinely waived?).

The remaining proposals by the House Democrats seem to be more about political posturing than any serious calls for reform. The gratuitous shot at former FEMA Director Michael Brown over Hurricane Katrina is particularly disgusting not only because the bulk of the political failure seems to belong at the State and local level but because the House isn’t even involved in either the appointment (executive branch) or confirmation (Senate) process. The reference to Halliburton and conflating no-bid contracts and “war profiteering” for its whopping 2% profit margin suggests that the interest of Minority Leader Pelosi is in the issue of corruption rather than constructive reforms to fix it.

Cross-posted at Redstate

Dump the Energy Bill

The United States Senate passed its version of the Energy Bill today on an 85-12 vote.

The estimated cost of the Senate bill per the Congressional Budget Office is $16 Billion over ten years in contrast to the House version which is $10.6 Billion*. The White House wanted a $6.7 Billion price tag. No doubt that after the House and Senate get out of conference committee, it will probably be closer to $20 Billion. Don’t worry though, we can always count on the White House for a veto

Both versions offer generous corporate welfare subsidies to agricultural interests in the form of ethanol subsidies. The House version would require a minimum of five billion gallons of ethanol be used by 2012. The Senate version calls for eight billion gallons. At an average subsidy of $.52 per gallon; the House and the Senate have voted to transfer approximately $2.6 Billion and $4.16 Billion of your tax dollars to Archer Daniels Midland and to a lesser extent, corn growers. All for an “energy source” that takes 70 percent more energy to create than it provides.

The Senate version would also require that public utilities produce at least 10 percent of their energy from wind, solar, or other “renewable” energy sources and would direct approximately $7.2 Billion in tax breaks to these industries. Well if you can consider something that requires taxpayer funding to be “viable” an “industry.”

In addition though, the Senate in its commitment to tax simplification, offered tax “incentives” for energy-efficient appliances and homes as well as gas-electric hybrid cars. Apparently it was lost on members of the World’s Greatest Deliberative Body™ that there are already “incentives” to encourage energy efficiency – they’re called higher prices.

As far as taxpayer funding for research into gas-electric hybrid cars, isn’t it good to know that in addition to eventually paying for the auto industry’s legacy costs, we can now pay for their R&D as well? What exactly is wrong with (a) letting a private industry pay for their own R&D costs and (b) letting them keep the profits should they materialize?

Both versions include about $1 billion in coastal impact assistance funds over four years to six coastal states with oil and natural gas production on the Outer Continental Shelf. The Senate defeated an amendment which would have allowed governors the authority to veto the siting of onshore liquefied natural gas (LNG) terminals off of the coasts of their States out of concerns for both security (apparently terrorists might want to attack something that has the capacity to explode) and environmental concerns. That’s federalism for you.

I suspect that many on our side will be fixated on the fact that the Senate version (unlike the House version) does not contain anything about allowing petroleum exploration in the Arctic National Wildlife Refuge.

Me, I’m a bit more distressed that we are being sold a bill which is pretty much pure pork lardened with corporate welfare and economic distortions. But that’s what you get when you rely on industrial policy rather than free markets for your “energy policy.”


* The House would like to claim that it’s actually “only” $8 Billion because their estimate relies on $2.6 Billion of revenue from the Artic National Wildlife Refuge. As someone who is weary of accounting gimmicks used to mask the cost of federal programs, I say let’s call it by its true cost.

Three Cheers for Senator Chuck Hagel (R-NB)!

Senator Chuck Hagel (R-NB) announced today his own proposal for Social Security reform. It would make the following changes:

1) No tax increases (not really a change so much as an essential starting point).
2) Allows workers age 45 or younger invest 4 of their 12.4 percent FICA in the same five indexes used in the Federal Thrift Savings Plan.
3) Raise the age for full retirement from 67 to 68.
4) Lowers the amount of partial benefits that workers who opt to retire at age 62 from 70% to 63%.
5) Changes the current formula for benefits (average income over their last 35 years of work and the wage index) by adding in life expectancy to calculate benefits

My thoughts:

I think that Senator Hagel deserves enormous credit for his approach on this issue. First, he picked the most conservative numbers (the next 75 years rather than the infinite horizon projection) to define the problem which has been a source of criticism from the Ostrich Caucus who have claimed (and not without some justification) that some pro-reformers have been exaggerating the problem. Using the more conservative numbers and contrasting them with the maximum “transition cost” still makes the case that PSA’s are cheaper than just the status quo.

Second, Senator Hagel has provided a greater level of detail on his proposal (including naming which five indexes workers would be able to invest their PSA’s in under his plan and their average rate of return). This is going to be key for countering arguments about “workers picking their own stocks” (which we all know was a strawman argument) or “hidden fees” eating up worker’s returns on their PSA’s.

Finally, and I think this is probably the most important – he brought up the fact that Medicare and Medicaid are bigger problems than Social Security and need to be reformed as well if not more so. Senator Hagel was one of the few Republicans who voted against the $849 Billion Medicare Prescription Drug boondoggle which has made the problem worse. IMO Republicans need to light a fire under the administration to deal with Medicare and Medicaid and pro-reform Senators like Hagel deserve credit for putting this front and center.

As far as the merits of the plan, I think it’s a good starting point. My own preference would be to raise the retirement age from 67 to 70 rather than 68. The AARP is going fight just as hard if we try to raise it to 68 so I say go all out and shoot for 70. I also support some sort of asset or means-testing for Social Security as it was supposed to be a “safety net” rather than a universal entitlement program that taxed poorer working class people in order to pay benefits to wealthier retirees. Moreover I think we should do the same for Medicare as well as Social Security. Also while I agree with changing the benefits formula, I think it might be simpler to go from wage-indexing to price indexing and change the retirement age as needed. However perhaps his proposal will accomplish the same but be easier to do politically.