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May 02, 2005
Social Security "Means Testing"
Some commentators have a built in bias against the government doing too much or anything at all that takes away the personal economic liberty of its citizens. Andrew Sullivan is more or less in that camp, And so of course he's going to like what the President said in his press conference, because as a well off Tory he doesn't much care for Social Security in the first place and isn't really able to put himself in the place of someone who makes $40,000 / year and is depending on Social Security when they retire and nor does Sullivan really care to put himself in that place either.
If you think what the President proposed was means testing then your idea of well off Americans is a little different than mine. Bush's proposal cuts future benefits for anyone who makes over $20,000 / year. If we do absolutely nothing, and all of the pessimistic assumptions in the trustees report pan out, then after 2041 Social Security cuts benefits across the board for everyone by about 28%. In the Bush proposal, somewhere around $45K/year, your benefits will get cut by more than that percentage. Below that, you won't see quite 28% depending on how little you make.
The entire projected shortfall can be erased by either eliminating or raising the cap on payroll taxes. Currently, you only pay social security taxes (and only receive benefits) on the first $90K of income. Part of the program's success is that it hasn't been means tested in the past...the poorest and wealthiest Americans get more or less an equal return on their investments in the program (whether that return is retirement, disability or survivor's benefits). If, like Andrew Sullivan claims, you truly want to implement means testing, make the wealthy pay their full share of payroll taxes on every dollar of income, and then means test their benefit when they retire. Simple. Program "fixed".
I don't think Bush and Rove quite appreciate the potential for Democrats to weave a great narrative out of this, or maybe they do and don't think Democrats are with it enough to accomplish it (quite possible). Here it is: 10 years ago a Democratic President took the lead on welfare reform. Now, a Republican President is trying to turn the most successful government program in history that rewards hard work into a welfare program. I can't think of a better message to conservative white working class voters that one party honors hard work while the other merely honors wealth. In other words, if you've worked in a factory your whole life making about $40K/year, one party wants to keep it's promise to you in retirement, the other wants to make retirement about 20% more difficult. The culture war only works (as it does now) if lower-middle values voters don't believe there is any economic difference between the parties. Maybe this social security stuff will be as disastrous for the Republicans as Hillarycare and the Assault Weapon Ban was for the Democrats.
Posted by Chris at May 2, 2005 02:23 PM
Comments
Chris, good post! I have just one comment. It's my belief that we must consistently remind people that Social Security Insurance, was designed as just that, Insurance. I think of it, not the way I think of my retirement savings, but the way I think about health, car and home owners insurance. Social Security is not an investment account - it's insurance.
Posted by: Catherine ![[TypeKey Profile Page]](http://www.chrisishardcore.com//nav-commenters.gif)
at May 4, 2005 05:09 AM
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