Cato Daily Dispatch for October 26, 2004
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Bush to Request $70 Billion in Emergency War FundingBush, Kerry Differ Sharply on Social Security
Tax Issues weigh on Presidential Vote
Bush to Request $70 Billion in Emergency War Funding
"The Bush administration intends to seek about $70 billion in emergency funding for the wars in Iraq and Afghanistan early next year, pushing total war costs close to $225 billion since the invasion of Iraq early last year, Pentagon and congressional officials said yesterday," The Washington Post reports.
"White House budget office spokesman Chad Kolton emphasized that final decisions on the supplemental spending request will not be made until shortly before the request is sent to Congress. That may not happen until early February, when President Bush submits his budget for fiscal 2006, assuming he wins reelection."
In "War on Terror Does Not Require a War Machine" Cato chairman William Niskanen writes: "The prospect of more wars like Iraq may justify a larger defense budget but the war on terrorism does not. Terrorists operate in small bands and use often primitive weapons. They aim not to defeat a military force but to cause enough damage to induce governments to change their behavior. The Department of Defense may need, among other things, a ballistic missile defense system, three advanced fighter bombers and a new surface ship -- but not to fight terrorists."
Bush, Kerry Differ Sharply on Social Security
President Bush raised the idea of partially privatizing Social Security "during his 2000 campaign, then appointed a commission to advance the idea after he was elected. This year, Bush is recirculating the idea, saying personal retirement accounts should be the centerpiece of efforts to strengthen the system," the Pittsburgh Post-Gazette reports.
"Under his proposal, younger workers would have the option of channeling a portion of their Social Security payroll deduction into private accounts. Those who do would receive reduced Social Security benefits and shoulder responsibility for investing the money wisely."
In "The 6.2 Percent Solution: A Plan for Reforming Social Security," Michael Tanner, director of the Cato Project on Social Security Choice, proposes a plan that allows younger workers to invest their portion of the FICA payroll tax (6.2 percent) in individual accounts. The other 6.2 percentage points of payroll taxes, paid by employers, would be used to cover transition costs.
The Cato plan puts individuals, not the government, first. It protects younger workers and future generations. It puts each citizen in charge of his or her retirement. It allows workers to keep more of their own assets. As Tanner writes: "It would be a profound and significant increase in individual liberty."
Tax Issues weigh on Presidential Vote
"Democratic presidential candidate John Kerry has said he will raise taxes, just as the campaigning Bill Clinton did. And though Republicans are supposed to be the no-tax-hike party, Bush too may raise taxes. After all, that is what other Republicans -- even tax cutters such as Ronald Reagan -- did when confronted with unforeseen deficits," according to the Financial Times.
"On income tax, John Kerry has just about promised he will raise rates for higher earners. Bush says he will not."
The Cato Handbook for Congress recommends making the president's tax cuts permanent. Additionally, Congress should "make all federal taxes lower, flatter, and simpler," according to Cato director of tax policy studies Chris Edwards, in the Handbook.
Jonathan Block, editor, jblock@cato.org
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