Washington Has a Snark Problem — Even When it Comes to Kids

The flood of snarky responses to my suggestion that KidSave could help solve American inequity shows the knee-jerk state of discourse in our country.

Newborn babies are pictured at the university hospital of Leipzig, eastern Germany, on January 2, 2012.
National Journal
Norm Ornstein
Feb. 19, 2014, 2:53 p.m.

My last column on Kid­Save gen­er­ated a lot of re­sponses. What I have found most in­ter­est­ing about the re­ac­tion to the column — set­ting aside a num­ber of glee­ful blog entries and tweets seiz­ing on the num­bers, ad­dressed be­low — are the knee-jerk, snarky re­ac­tions to the fun­da­ment­al idea be­hind Kid­Save.

Em­blem­at­ic is the re­sponse of Power­line‘s John Hinderaker, who called it “a lefty idea.” It was oth­er­wise labeled a gov­ern­ment giveaway to un­deserving people, an­oth­er ex­ample of quasi-so­cial­ism, etc., etc., by a long list of con­ser­vat­ives. How an idea that got the en­dorse­ment of Rick San­tor­um — yes, RICK SAN­TOR­UM — and Chuck Grass­ley could be a “lefty idea” is, shall we say, puzz­ling.

But it re­flects, I think, the state of con­tem­pla­tion and dis­course in the coun­try, something very dif­fer­ent than we had even a dec­ade ago. A typ­ic­al com­ment:

What an as­in­ine idea! That money would be spent on di­apers by the par­ents! The kid would nev­er see one dime and the au­thor knows it. It sounds good though doesn’t it? Give every kid a wel­fare pay­ment from day one. But it is pro­gress­ive, Marx­ist non­sense.

Why would Rick San­tor­um en­dorse a form of Kid­Save? We will have to ask him, but I can give some an­swers as to why many con­ser­vat­ive Re­pub­lic­ans looked fa­vor­ably upon the idea back then.

What Kid­Save would do is cre­ate a uni­ver­sal in­vestor class in Amer­ica. Every­one would be­come an in­vestor with a real stake in eco­nom­ic growth, in a ro­bust stock mar­ket, in a coun­try that worked. Every­one would have a piece of the Amer­ic­an Pie, and not feel en­tirely on the out­side look­ing in. The money saved and in­ves­ted would be used to help grow the eco­nomy. And, I am sure, some GOP­ers thought a siz­able por­tion of a new in­vestor class would look more fa­vor­ably on the Re­pub­lic­an brand.

Now I am sure that some fisc­al hawks also saw Kid­Save as a way to jus­ti­fy ma­jor ad­just­ments in So­cial Se­cur­ity; at least one com­ment­at­or on the left called it “a wedge to undo the last tattered rem­nants of the so­cial safety net.” To be sure, giv­ing every­one some ad­di­tion­al cush­ion in a re­tire­ment ac­count would cre­ate more wiggle room to make So­cial Se­cur­ity solvent over the long haul. But here is what I would sug­gest: Pay for Kid­Save from rev­en­ues cre­ated by ratchet­ing up the in­come levels sub­ject to the FICA tax, us­ing an idea floated by Al Franken — a dough­nut hole, where payroll in­come from say $100,000 to $200,000 would not be sub­ject to the tax, but every dol­lar over that amount would be. At the same time, beef up the min­im­um So­cial Se­cur­ity pay­ment for re­tir­ees sig­ni­fic­antly, so that no one, in­clud­ing those with no or few oth­er sources of re­tire­ment in­come, would have to struggle to get by in their sun­set years, and change the cost-of-liv­ing for­mula on a means-tested basis — keep­ing the status quo for those with lim­ited in­come oth­er than So­cial Se­cur­ity, and ap­ply­ing chained CPI for those with more than, say, $50,000 a year in in­come over and above their So­cial Se­cur­ity.

Many of the re­sponses to the column glee­fully slammed an er­ror — a big one. I want to ac­know­ledge the mis­take. I had data from the ori­gin­al ana­lys­is of the Ker­rey/Lieber­man plan on what the ini­tial in­vest­ments would ac­crue to after 60 years — but based on an 8.5 per­cent rate of re­turn, the middle al­tern­at­ive from the Thrift Sav­ings Plan, a not un­reas­on­able ROR if one in­ves­ted in an in­dexed stock fund like the S&P 500 which over long stretches has yiel­ded con­sid­er­ably more. I am not sure why I wrote 5 per­cent and did not cor­rect it in the edit­ing; I will have to do a deep dive in­to aging brain syn­apses to get the an­swer. But the res­ult was I used a dra­mat­ic­ally over­stated nest-egg pro­jec­tion. My apo­lo­gies. A 5 per­cent re­turn would ac­tu­ally yield $70,000 or so — more than the cur­rent av­er­age net worth of Amer­ic­ans, but no huge hon­ey­pot. Mean­while, 8.5 per­cent would yield some­where between $600,000 and $720,000 de­pend­ing on as­sump­tions of ac­cru­al rates.

Kid­Save is no pan­acea. It would not cre­ate a Lake Wobe­gon so­ci­ety, where every­body’s wealth is above av­er­age. It would not do much for the prob­lem of in­come in­equal­ity, but over the long haul would help sig­ni­fic­antly ease the prob­lem of wealth in­equal­ity. Some people would do ex­traordin­ar­ily well; oth­ers would not. Some would earn much less by be­ing su­per-con­ser­vat­ive with in­vest­ments; oth­ers might not be­gin to ad­just their mix of in­vest­ments in stocks and fixed-in­come as­sets as they grew older, leav­ing them vul­ner­able to the tim­ing of mar­ket drops or col­lapse. If we al­lowed in­di­vidu­als to with­draw some of their money be­fore 65, some would mis­use it or frit­ter it away. But there is no deep-seated ideo­lo­gic­al or philo­soph­ic­al reas­on why this ba­sic idea should at­tract such deep, at times patho­lo­gic­al aver­sion on the right, or sus­pi­cion on the left. It is the ten­or of the times, and the knee-jerk, snarky syn­apses in some com­ment­at­ors’ brains.

That knee-jerk and tri­bal re­ac­tion, I should note, plays out on many is­sues, and it has been es­pe­cially in­ter­est­ing to see the com­ments by some Re­pub­lic­an lead­ers about the stim­u­lus plan — and con­trast them with the re­ac­tions of the widest range of eco­nom­ists. By over­whelm­ing mar­gins, eco­nom­ists be­lieve that the stim­u­lus plan kept the eco­nomy from much ad­di­tion­al, deep dam­age, and kept job levels from drop­ping even fur­ther. The stim­u­lus was de­signed mostly for triage, and by any stand­ard, it worked — not as well as it could have, to be sure, but enough to stave off a de­pres­sion and cre­ate mil­lions of jobs or job equi­val­ents. It also, as journ­al­ist Mi­chael Grun­wald poin­ted out in his su­perb book, The New New Deal, and in a re­cent column, did a lot more in policy areas ran­ging from health IT to green en­ergy to broad­band ex­pan­sion. It was de­signed to be a shot of ad­ren­al­in in­to a fad­ing pa­tient, not a mir­acle drug to cure all the pa­tient’s long-term health prob­lems.

Eco­nom­ists of all stripes un­der­stand the im­port­ance of a stim­u­lus for a col­lapsing eco­nomy. But our tri­bal politi­cians, even in dire cir­cum­stances, re­acted dif­fer­ently. We know that Jerry Lewis, the rank­ing Re­pub­lic­an on the House Ap­pro­pri­ations Com­mit­tee, fol­lowed or­ders from on high not to co­oper­ate with Dave Obey, the Ap­pro­pri­ations chair­man, to come up with a bi­par­tis­an ap­proach. We know that des­pite the near-uni­ver­sal GOP op­pos­i­tion, the stim­u­lus had big tax cuts — mak­ing up 36 per­cent of the total, giv­ing ma­jor tax breaks to 160 mil­lion fam­il­ies. We know that the largest tax cut, the ex­ten­sion of the fix to the Al­tern­at­ive Min­im­um Tax — one that provided little stim­u­lus — was in­cluded at the in­sist­ence of Grass­ley, who then voted against the plan.

And we know what John Boehner and Marco Ru­bio said on the fifth an­niversary of pas­sage of the plan. Boehner: “More Amer­ic­ans be­lieve Elvis is alive than be­lieve the stim­u­lus cre­ated jobs.” Ru­bio: “If you re­call five years ago, the no­tion was that if the gov­ern­ment spent all this money — that, by the way, was bor­rowed — that some­how the eco­nomy would be­gin to grow and cre­ate jobs. Well, of course, it clearly failed.” Ru­bio ad­ded that the stim­u­lus is “proof that massive gov­ern­ment spend­ing, par­tic­u­larly debt spend­ing, is not the solu­tion to our eco­nom­ic-growth prob­lems.” Wheth­er he really be­lieves that the stim­u­lus was cre­ated or por­trayed as “the solu­tion to our eco­nom­ic-growth prob­lems” and not as triage, or is cyn­ic­ally chan­ging the terms in or­der to de­nounce, does not much mat­ter.

A real bi­par­tis­an stim­u­lus plan would have in­cluded more en­dur­ing spend­ing on in­fra­struc­ture, bet­ter tar­geted tax cuts, and con­tained few­er boon­doggles. Too bad that a per­man­ent cam­paign men­tal­ity, along with knee-jerk, snarky tri­bal­ism, kept a very pos­it­ive plan from be­ing a much bet­ter one.

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