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Shields and Brooks Discuss Social Security and Tax Reform

March 4, 2005 at 12:00 AM EDT

JIM LEHRER: And to Shields and Brooks: Syndicated columnist Mark Shields, New York Times columnist David Brooks.

David, do you agree that the president’s plan is stuck at the gate?

DAVID BROOKS: Yeah. I mean, if you look at the Republican opinion polls, what’s selling the s the idea is a problem and the current system is unsustainable. What’s not selling is person accounts, private accounts, intimate accounts I like to call it, it’s nicer.

So the president is going to spend 60 days trying to reverse those numbers. Meanwhile, on Capitol Hill, the Republicans are doing sort of a mating dance like a bird trying to get some Democrats to get on board. We’ll raise the caps, the payroll caps. We’ll cut the benefits on the rich. They’re trying to get four or five Democrats to come on board. So far it’s not working.

JIM LEHRER: Stuck at the gate too? Do you agree?

MARK SHIELDS: I do, Jim. Come on board what? I mean, there’s no train here. I mean, there’s no locomotive, they don’t have — they’ve missed their schedule, they don’t have a track. I mean, this thing is not — I’m not saying it’s dead but it’s on life support systems right now.

JIM LEHRER: Do you agree Ed Chen of the L.A. Times that the president has intentionally kept this vague, that he’s trying to avoid what happened to the Clinton health care plan?

MARK SHIELDS: He has intentionally kept it vague. That’s going to break on Monday when Sen. Chuck Hagel, Republican of Nebraska, maverick Republican, is going to introduce his own plan. This will be the first time…

JIM LEHRER: Very specific.

MARK SHIELDS: Very specific. The first time anybody has. And Chuck Hagel today was very blunt about it. He said “I think the mistake that has been made is talking about personal accounts.” He said “what you’ve go to do is you’ve got to reassure people that Social Security,” which is the most enduring, probably the most universally popular government program that touches the lives of people, never missed a payday, never bounced a check, lifted half of its recipients out of poverty “that that’s going to be solid.” And that’s one of the real problems that they have.

JIM LEHRER: Do you agree that if a mistake has been made, that’s where it was made, that they didn’t make that case strong enough before they started, okay, let’s tinker with it, but we are it but we’re not going to tinker with —

DAVID BROOKS: I think the president said privately he didn’t nurture the program enough and show how popular it was. I think the second thing they’ve done is they didn’t show how much people, not just rich people, should have assets, poor people should have assets. It’s sort of an egalitarian case to be made, to me a philosophical case — that in this age, in this information age, people should have more control over their own lives.

Politically, I think they’re right not to have a plan, mostly because I think the president’s plan would not have passed. I think they were right to send it to the Senate and say “you guys figure it out.” There are really three levers here if you want to make this thing sustainable. You can cut benefits, you can raise taxes or you can do a mixture of both. And I think they’re right to let the legislative process work at will to figure out some solution. The problem politically is that no Republican wants to get out on the train to get out in front and champion this thing because they don’t know what this thing is.

JIM LEHRER: And what you just outlined is separate and apart from personal savings accounts.

DAVID BROOKS: And I would say what’s about to happen is it’s going to get split. We won’t have one vote on Social Security; we’re going to have two votes, one on solvency, one on personal accounts, and we may end up with only this first half. But that first half is important. The thing we really have to fear is that nothing happens because that would be a disaster. We’d have increasing debt; we’d never get to Medicare. We’d have a big entitlements problem.

MARK SHIELDS: The biggest worry that I have as a citizen is they’ll just get personal accounts, they’ll get some sort of, you know, a bigger 401(k) for people who can invest. And — the investor class. Jim, Republicans are delusional about this investor class thing; they talk about 17 percent of American families got dividends in the stock market last year. That’s all.

I mean, 4 percent of American families got 83 percent of all the dividends. I mean, this is not something that – and the people who object most strenuously to this, the greatest resistance, it’s not generational. Part of it’s old/young, but the biggest group, Jim, are the three out of five American households that earn $50,000 or less a year; three out of five. These people don’t hold big fund-raisers, they don’t sleep in the Lincoln Bedroom or go to the Crawford Ranch. These are the people for whom Social Security has been the life source system of their retirement in dignity and not in poverty. They’re neighbors, they’re relatives. They were overwhelmingly against. And why this is important politically, they’ve been the Reagan Democrats. They’re the people who split from the Democrats on the issues of same-sex marriage, on guns and hunting in many cases, on abortion. But on this one, Social Security has become a value — a value.

DAVID BROOKS: One party has been flexible. Not to get too partisan but why not. One party has been flexible here. The Republicans talk about raising the payroll caps, the payroll caps so the rich would pay much more, a big tax hike for the rich.

JIM LEHRER: It’s now $90,000.

DAVID BROOKS: And it would go up maybe to $120,000. Then they’ve talked about cutting the benefits only on the rich, keeping the benefits for the poor. Then they’ve talked about giving personal accounts so the poor could have their own personal assets and take advantage of compound interest. So there’s been a lot of flexibility on one side. And while the Democrats benefit if this thing goes down, they are not benefiting in the polls right now because they seem to be the party that has no plan, that’s just no, no, no.

MARK SHIELDS: I disagree. I think, Jim, what we have here…

JIM LEHRER: Well, there is no Democratic plan.

MARK SHIELDS: There is no Democratic plan. The point of — I mean the Democrats are the minority party. The Democrats, they’re the opposition party. The majority proposal proposes. It is the responsibility of the Republican Party to introduce a bill. They don’t have a bill. Chuck Hagel has a bill. David says Republicans have talked about raising the caps; one Republican has talked, Lindsay Graham and he has been attacked by the right wing of the Republican Party for even suggesting that. Tom DeLay was set to personally accost him for even suggesting that people above $90,000 ought to pay at the same rate as people who make $45,000 all the way up in their income. I mean, so there’s hypotheticals out there, David, but there aren’t Republicans saying “let’s negotiate.” And Bush says “I’m not going to negotiate with myself.”

DAVID BROOKS: Well, the president talked about raising the caps. So there are two Republicans, Lindsay Graham and George W. Bush.

MARK SHIELDS: He said he wouldn’t rule it out.

JIM LEHRER: New subject. Federal Reserve Chairman Greenspan mentioned consumption taxes this week. What’s that all about?

DAVID BROOKS: Well, that’s about the tax reform proposal. If they’d listened to me in the White House, they’d be doing tax reform first and Social Security reform second because this is something you really can get bipartisan support. There’s a broad consensus in the country and in the world among economists that a consumption tax is something that encourages savings, builds growth, would be a real big change in the way we do our taxes. And Greenspan was caution about it but says we should move some part of the income tax to a consumption tax.

JIM LEHRER: He didn’t give it a blanket endorsement. And say —

DAVID BROOKS: I think in Europe, the U.S., around the world, economists generally agree we want people to save and a consumption tax helps people do that.

JIM LEHRER: Do you agree?

MARK SHIELDS: It’s interesting to see the Republicans endorse old Europe and borrow their tax plans. I mean, the stagnant economy —

DAVID BROOKS: It’s an open-minded group of people.

MARK SHIELDS: Jim, the biggest problem, the Treasury Department studied this in 2002 and the biggest problem it would face is it would raise taxes on the middle-class and cut taxes on the upper class. That’s what a consumption tax does.

JIM LEHRER: Because the percentages — if you have less money and you have to buy things you’re spending a bigger percentage.

MARK SHIELDS: You have to live. That’s right. All of your income goes to rent and food.

JIM LEHRER: Politically, is this going anywhere?

MARK SHIELDS: I would say that the Republicans would be best off if they followed Bill Thomas’ advice which is to put it all together. The only way they’re going to —

JIM LEHRER: You mean put tax reform with Social Security?

MARK SHIELDS: Social Security. I think the only way they’ll pick up Democrats is not on Social Security. They’re just not boarding right now, there’s nothing to board. But if they put in tax reform — hey, I don’t think anybody can defend changes that have been made in the — each one of them you can make a case for over the last 20 years since Ronald Reagan’s tax reform of 1986. That made it simpler, it made it fairer, it made it more understandable to Americans. The tax code today is more complex, less fair, and less understandable.

JIM LEHRER: That’s what you’re talking about, too, right, David? Reform for you two means make it simpler, right?

MARK SHIELDS: Simpler and just – and based on the ability to pay. That’s where the difference is between Democrats and Republicans.

DAVID BROOKS: I agree and I think it’s politically –they’re different propositions. The Social Security debate has been so polarized for decades, the tax reform debate is much more fluid and the thing we’re seeing in Social Security, I’ve been up on the Hill all week, I know more about the Democrats than the Republicans do. I know more about the Republicans than the Democrats do because they don’t talk to one another. And on tax reform, it’s different. They do actually. There’s actually much more common ground there.

MARK SHIELDS: I’ll tell you how dumb Republicans are. They had a retirement party for Tom Daschle this Thursday night, a man who had been the Democratic leader, had been a very important leader, had reached across the aisle in many cases worked cooperatively and not a single Republican senator even dared to show up.

JIM LEHRER: Were they invited?

MARK SHIELDS: Sure they were invited. The idea of putting your arm around him and saying “Tom Daschle, we disagreed but you’re a good guy.” That would have been so smart. I mean, that’s what David’s talking about being polarized.

DAVID BROOKS: It’s a symptom of the times.

JIM LEHRER: Do you see it the same way. Should the Republicans have gone?

DAVID BROOKS: Sure. I’m sure the food would have been inferior to a Republican event but you go.

JIM LEHRER: I mean, do you agree with Mark that that’s a symptom of where we are now?

DAVID BROOKS: As reporters, we talk to both parties. The politicians don’t talk to both parties so they’re asking us.

JIM LEHRER: Okay. Well, I’ve asked you and we’ve all enjoyed it very much. Thank you both very much.

MARK SHIELDS: Thank you.