The Week

National Review, August 20, 2001

--Robert F. Kennedy Jr. has named his child Aidan Caohman Vieques Kennedy (note the second-to-the-last name). That's not the strangest Kennedy-family moniker, however. We understand-seriously now-that Teddy's dog is named Splash.

--The Bush administration's proposed amnesty for illegal Mexican immigrants produced unexpected reactions: charges of favoritism from Democrats, and confusion from Republicans. If Mexicans are amnestied, why not amnesty illegals from other countries? What signal does amnesty send to foreigners who have tried to obey the law? Responding to the complaints, President Bush blandly said "We'll consider all folks here," but White House spokesman Ari Fleischer, trying to be more specific than folksy, only found himself in knots. Bush, said Fleischer, "has made no decisions about the exact groups that may be [eligible] for more humane and legal treatment." So Fleischer implies that Bush thinks the status quo is inhumane and illegal, and some groups will be left to suffer with it? The president has reaped the just rewards for abandoning clear thought. Citizens of other countries have no claim on the rights of this one. Over the years, the United States has let in no, some, or many immigrants, under policies based on an ever-shifting mix of generosity, necessity, and prudence. No one who misses the cut has any right to feel aggrieved. George W. Bush can't say this because he wants to be the Great Gringo, giving gifts to all the Americas.

--The tax cut Bush and congressional Republicans passed was justified on moral grounds: The surplus, they rightly said, was a "tax overpayment" that should be reduced. The goal of the tax cut was to keep money from going to Washington. A secondary justification was that the tax cut would give consumers more money to spend and thus stimulate the economy. The flaw in that reasoning is that the current economic doldrums are not a result of falling consumer spending but of a collapse in investment. It is time for a tax cut with a different purpose-improving incentives to save and invest. There is no shortage of policies that could accomplish this: reducing the capital-gains tax, letting businesses deduct the cost of investments as soon as they make them, expanding IRAs. Bush should propose a bill to increase economic growth-and if Democrats balk and the economy continues to slide, he should hold them accountable for it.

--Some progress on Social Security. The president's commission issued a draft of its preliminary report that validates the work of free-market think tanks and advocacy groups over the past half-decade. It documents that the program's taxes will not be able to cover its benefits by 2016. A "trust fund" is supposed to keep paying for the benefits after this point, but that fund is full of government bonds-and paying off those bonds will require massive tax increases or benefit cuts. Hence the need for reform now. The report also explains that Social Security is a poor investment for almost everyone and especially for blacks, women, and poor people. And it explains how letting workers invest some of their taxes could solve these problems. Two congressmen, Democrat Charles Stenholm and Republican Jim Kolbe, have introduced a pro- investment bill. It is flawed, since it includes too many benefit cuts to be politically viable, but it moves in the right direction. Going the other way are many Democrats, who have responded to the commission report by denying that any problem exists. Well-regarded left-leaning economists are lining up behind two arguments. One is the familiar obfuscation about the "trust fund." The other is that the commission's calculation of rates of return ignores Social Security's provisions for life and disability insurance-which is simply not true, the commission having explicitly included them in the calculations. Even this sort of dishonesty may be taken as progress of a sort: There don't seem to be any serious arguments left against reform.

--Liberals are now big defense spenders, at least when it comes to charging that the Bush tax cut has starved the Pentagon's budget. Unhappy generals have been quoted anonymously in the press making the same complaint. Superficially, there is something to it-the tax cut left less money for the kind of spending increases that the Pentagon needed. But this is only because of Washington's la-la-land budgetary rules. At the beginning of the year, the budget surplus was roughly $280 billion. After subtracting the tax cut and the effects of the economic slowdown, the surplus will still be about $150 billion. In no meaningful sense does Washington lack the money for defense spending (Secretary Rumsfeld wanted about another $18 billion this year). But congressional Democrats and Republicans have agreed to pretend to believe in Social Security and Medicare "lock boxes," to keep most of the surplus off-limits to more tax cuts and spending. So off-limits it is, not least to a Department of Defense struggling to fix readiness problems and transform the military.