Alan Murray
Jan. 4, 2005

Alan Murray re-joined the staff of The Wall Street Journal as Assistant Managing Editor in 2005, with responsibilities that include writing bi-weekly columns on business, the economy and public policy. (Read Alan Murray's bio)

Q: Critics of President Bush's Social Security plan argue that Social Security is fully funded until 2052. They say there is no crisis there. What's the real situation? Is the reform enunciated by the President likely to happen during his term?        

You can quibble over the word "crisis," but the best estimates show the Social Security system will be about $10 trillion short of the funds it needs to finance the baby boomers' retirement.  It may take until 2052 for the system to run out of money, but there's not much argument about where it is headed.        

The real debate is what to do about it.  President Bush wants to create "private" accounts, so that you have more control over your retirement funds and can put some in the stock market.  But as the critics will quickly tell you, that does nothing to fill the $10 trillion hole -- and in some ways, actually makes it worse, because if current workers are allowed to keep some of their payroll taxes, then the government needs to find money elsewhere to pay the cost of current retirees.        

But private accounts can be part of a solution.  If the government agrees to cut guaranteed benefits for future retirees in return for giving them private accounts, the system can be brought back into long-term balance. Good idea or bad idea?  That's the debate you'll be hearing this year.

Q: During the economic conference, the Vice President reiterated the need to make the tax cut permanent. Is tax-cut still on the administration's second-term agenda? Your comment on Washington Week that the Presdient's tax cut has clearly helped the economy drew criticism from our viewers. What is your response to those, like some of our viewers, who dismiss your perspective as "failed trickle-down economics."        

There is no question that the tax cuts have helped the economy, in the short term.  The points to debate are:  1) Should the distribution of the tax cuts have been different -- that is, less skewed to the wealthy.  And 2) How do we address the longer-term budget imbalance that has been caused by the tax cuts.        

That's where the proposal to make all the tax cuts permanent comes in.  Bush wants to balance the budget by cutting spending, but a lot of smart people here in Washington -- Republicans included -- don't think you can get balance by cutting spending alone.  Eventually, either some of the tax cuts will have to be allowed to expire, or some new tax hikes may be necessary.         

The President's new found interest in tax reform is interesting.   In the end, his gambit may be to try and keep the cuts in tax rates, but "pay" for them by eliminating various tax breaks and loopholes.

Q: Many people are concerned about the federal budget deficit and rising national debt. What does the administration plan to do to address goverment borrowing?        

See above.  This will become the big issue of George Bush's second term.  A growing number of Republicans are insisting on it.

Q: According to the Wall Street Journal, you will write a new column for the paper. Can you tell us more about it?        

Like my old column, Political Capital, the new one will focus on the intersection of politics and business, but I'll be spending more time on the business side of that intersection.  It debuts in February.   More details to come!