Thursday, January 06, 2005


The Moose comments that there may be trouble in paradise.

One of the most surprising developments of the post-election period is that the Republicans appear far more fractious than the Democrats. Republicans are divided between the neo-cons vs. paleo-cons, open-borders vs. immigration restrictionists, tax cutters vs. budget balancers and social conservatives vs. moderates. The big stories of 2005 could be civil wars in Iraq among Shias and Sunnis and in D.C. among the Republicans. In comparison, the Democrats seem like one big happy family.

The debate over social security will apparently also result in significant GOP differences. The New York Times reports this morning,

"As he begins deciding on details of his plan to add personal investment accounts to Social Security, President Bush is confronting a deep split within his own party over how to proceed.

Two Republican camps are pitted against each other over how big the accounts should be and whether the president should embrace cuts in benefits."

For your viewing pleasure, the Moose offers a brief guide to the Republican social security factions -

The Free Lunchers - This group is primarily centered in the conservative think tanks. They argue for robust private accounts with the option of workers contributing the entire portion of their payroll tax. The free lunchers feel no obligation to either cut benefits or pay for the transition costs. The Chile privatization plan is their model.

The Incrementalists - These are White House staffers who seek more modest private accounts (2%-4% of payroll) and a reduction in social security benefits. Along with the Free Lunchers, the Incrementalists do not pay for the transition costs.

The Green Eyeshaders - These are Congressional privatizers led by Senator Lindsey Graham who are attempting to both restrain the growth of social security benefits and pay for the transition costs. Some in the business community are also in this camp. The New York Times article reports,

"Some economists and business groups that support Mr. Bush on Social Security say financial markets are already jittery about the government's ability to rein in the budget and trade deficits and that more borrowing could lead to a faster fall in the value of the dollar, higher interest rates and slower economic growth."

The Naysayers - This group includes some Republicans in Congress who are nervous about privatization and fear it could be politically disastrous. Interestingly, Tom DeLay is reportedly in this group. However, the Naysayers are largely quiet.

The Moose argues that it is the task of the donkey to heighten the contradictions among these groups. The primary fault line may be business trepidations about increasing the national debt to pay for the scheme. The Times story,

"In addition, he is dispatching his Treasury secretary, John W. Snow, to New York to reassure Wall Street that his approach, which could involve trillions of dollars in new government borrowing, is consistent with efforts to reduce the budget deficit and improve the nation's financial condition."

Little did we know that Secretary Snow was a Houdini like magician who could turn trillions of dollars in deficit into surplus. Barnum and Bailey should sign up this act.

Democrats should target the Republican Green Eyeshaders and the Naysayers for potential defections in undermining the Bush proposal. It shouldn't just be Democrats who are picked off in this fight!

-- Posted at 8:58 AM | Link to this post | Email this post