|Tackling Social Security
Perry Johnson’s Two Cents Plan to Save America is a book with clear ideas on how to revive America. Even though he is a novelty presidential candidate who will not become President, his book is still worth reading.
His view on social security and moving the economy forward through tax policy is similar to the proposal JD Johannes and I made in our book, Tax and Social Security in the New Paradigm. We called for a reduction of the social security tax and elimination of its caps simultaneously with lowering all other tax rates, including corporate, personal and capital gains. These changes would create a more growth-oriented economy that is at least revenue neutral. The goal is to remove obstacles to investors and entrepreneurs to continue to invest and to create new business opportunities while giving the Middle Class a tax break.
For many people making under the $200,000 dollars cap on income, the social security tax is the number one federal tax they pay. Researchers John Phelan and Mitch Rolling calculated that if we reduce social security by one point and eliminate the cap, it will add $90 billion dollars in surplus tax revenue. This could help with social security’s shelf life.
In our study of Politics of Retirement by Tom Donelson, Clara Del Villar, and JD Johannes, we found that over 40% of our sample — including many blue-collar Republicans – had saved less than $100,000 dollars for retirement. As one result of the 2007-2009 recession, the investor class had dropped from 63% to 53% of our sample by the time of the Pandemic. Millions of Americans did not participate in the stock market run up from 2009 to the present. The market went up by three times, but millions of Americas failed to add additional funds to secure their retirement.
One of the factors leading to this is a strong impression among voters that wages and salaries are not keeping up with expenses and they are just treading water financially. Debt, particularly student loan debt and the costs of healthcare and health insurance, which rose faster than inflation, also consume a huge portion of workers earnings.
The challenge for Republicans is to protect their base among older social security voters, while also designing a strategy that appeals to voters aged 18 to 49 and college graduates. Younger voters are facing their own financial distress with student loan debt that could slow down their accumulation of wealth for retirement. For older voters, conservatives are lacking policy solutions that focus on looming challenges to retirement savings and health care risks.
Tackling the US Budget
Perry Johnson’s strategy of dealing with the budget is to begin with discretionary spending and produce growth-oriented policies. Reforming social security can be achieved without raising payroll tax for the middle class and thereby opening up savings opportunities, as Clara Del Villar has shown through her Freedom Works Foundation and Americas Majority Foundation research. While entitlements will need to be reformed, Republicans and conservative cannot do so without some Democrat support, the Democrats will not cooperate with just any endeavor. By reining in discretionary spending and the regulatory state, the process of getting our financial house in order can begin. (Perry Johnson’s ideas are similar to those proposed by JD Johannes, Tom Donelson, and Clara Del Villar.)
The Coming Campaign
Biden’s ploy with student loans recognizes the anxiety many feel about paying those loans, and this anxiety has spread throughout much of our society – students, parents, spouses, and children — as they watch inflation change their lives.
The key for Republicans to win is to provide a pathway for individuals to succeed. The left has become the party of identity politics. The Republicans and conservatives must become the party of America, from Main Street to suburbanites and the urban centers, as well as small towns and farms and ranches –the party of the forgotten American.
The biggest cultural issue today is’ “What does it mean to be an American?”. And on that score, the left has abandoned the notion of America as a great nation; “America is just one of many on this planet.”
The candidate who is able to field a program that begins with telling the forgotten American that he and she are not forgotten but central to the success of America can win both the nomination and the Presidency. Trump succeeded in 2016 with this platform and Younkin of Virginia, DeSantis of Florida and Kim Reynolds of Iowa have put such a platform together, combining cultural issues, the educational concerns of family, and the economic sensitivity of Main Street.
Trump of 2024 wants a coronation but has yet to put forward an agenda that indeed shows Americans the way to a fair opportunity to succeed. DeSantis has his pathway to expand the conservative coalition as he did in Florida — beginning in Iowa.
[Notes: John Phelan and Mitch Rolling work for Center for American Experiment and provided significant research for our paper on social security. Tom Donelson, JD Johannes and Clara Del Villar conducted research under the auspices of Americas Majority Foundation.]