SOCIAL SECURITY NOTES….Quick note on Social Security. A few people have mentioned that I’m all over the map on this, posting on a bewildering array of topics with no apparent rhyme or reason.

That’s true. At the moment I’m just tossing out everything that comes to mind, getting it all out on the table. In the end, some arguments will work better than others and some will apply more concretely to President Bush’s eventual plan than others. When he actually gets around to producing a plan, the criticisms should start to get a little more focused.

On a related topic, it’s also true that I haven’t proposed any kind of alternate plan of my own. But you can’t fight something with nothing, so what do I think Democrats should propose instead of privatization?

I’m not sure, but here’s an idea worth thinking about: changing the funding base of Social Security (and Medicare) from a payroll tax to a VAT, and setting it at a level that will produce a bit more revenue than the current tax. This has several things to recommend it:

  • It’s a consumption tax, and conservatives like consumption taxes. In fact, several of them have suggested using a VAT to replace the income tax, so on a political level they’d have a hard time turning around and suddenly arguing that it’s a fundamentally bad idea.

  • A properly constructed VAT would be more progressive than the current payroll tax, which costs middle class families about 15% of their incomes and millionaires only about 4%. So it should be attractive to liberals too.

  • VATs are quite efficient as a source of revenue.

  • It’s a big, bold proposal. Democrats need something like this to avoid looking like obstructionists who are just afraid of change.

Like I said, it’s just an idea. But it might be worth thinking about.