Democratic pandering that comes up short in math, logic

Explaining a simple proposal to help people squirrel away gold for their golden years, Hillary Clinton said that a person "should not require a Ph.D. to save for retirement." But can even Ph.D.s understand liberalism's arithmetic and logic?

Consider the controversy over the State Children's Health Insurance Program. Most Republicans favor extending it. Almost all Democrats, and some Republicans, favor expanding it in a way that transforms it. Everyone agrees that SCHIP is for "low income" people. Under the bill Democrats hope to pass over the president's veto on Thursday, states could extend eligibility to households earning $61,950. But America's median household income is $48,201. How can people above the median income be eligible for a program serving lower income people?

Clinton's idea for helping Americans save for retirement is this: Any family that earns less than $60,000 and that puts $1,000 into a new 401(k)-type plan would receive a matching $1,000 tax cut. For those earning between $60,000 and $100,000 the government would match half of the first $1,000. She proposes to pay for this by taxing people who will be stoical about this -- dead people -- by freezing the estate tax exemption at its 2009 level.

A conservative case can be made for something like Clinton's proposal. It is a case for reducing the supply of government by reducing demand for it, and doing so by giving people ownership of private assets as a basis for security. It is a case for raising the nation's deplorable saving rate and encouraging the nation's economic literacy by giving more people a stake in equities markets.

George W. Bush made this case in his advocacy of personal accounts financed by a portion of individuals' Social Security taxes and invested in funds based on equities and bonds. Clinton stridently opposed him, and not just because she thought it would undermine Social Security. She also said it was a dangerous gamble that would make retirement insecure by linking retirement savings to the stock market. Today her Web site calls her proposal a way to save for "a secure retirement." After an undisclosed epiphany, she belatedly recognizes that 401(k) funds invested in equities are a foundation for security.

John Edwards, too, has puzzling ideas. In August, Edwards urged an Iowa audience to throw off Washington's yoke: "We need to take the power out of the hands of these insiders that are rigging the system against you."

To measure how much Iowans are suffering from the rigging, Stephen Slivinski of the libertarian Cato Institute was asked to mine the most recent Census Bureau data. He concluded that Iowans paid $15.6 billion in revenues to the federal government and got $19.4 billion back, a gain of $1,286.53 per Iowan. But that is not all. Washington has rigged the system to inundate corn-growing Iowa with subsidies for corn-based ethanol. Slivinski says it is difficult to pin down the Iowa corn farmers' harvest of dollars because the subsidies come from exemptions from excise taxes and tariffs that stifle competition from cheap ethanol imports. It is, however, reasonable to add $2 billion to Iowa's gain from Washington's rigging of the system, so the average Iowan's gain is at least $1,963.65.

Suppose Iowa did not have crucial presidential nominating caucuses. Or suppose it had them but that its crucial crop were, say, broccoli rather than corn. Would the federal government still be, well, rigging the system to create a phony "market" to satisfy a specious "demand" for mandatory and subsidized ethanol? No, but it probably would be mandating broccoli at every meal.

Many politicians pander, as Edwards does with gusto, to Americans' current penchant for self-pity. Hence the incessant talk about "the forgotten middle class." Because such talk is incessant, it of course refutes itself.

© 2007, Washington Post Writers Group