The men in my family of my father’s generation returned home after serving their country and got jobs in the local steel mills, as had their fathers and their grandfathers. In exchange for their brawn, sweat, and expertise, the steel mills promised these men certain benefits. In exchange for Social Security taxes withheld from their already modest paychecks, the government promised these men certain benefits as well.
Yes, they were union men: they paid their dues, occasionally went on strike, and negotiated (at least, on their part) in good faith with the mill for the best wages they could get for the back-breaking work that brought the mills profit. There was honor in the arrangement and a proud culture among the families of these workers that grew up in steel towns. These were church-attending, flag-waving, football-loving, honest family men. They are rightfully proud of providing homes and educations for their children and instilling the sorts of values and manners that serve them well as adults. And if I have to move heaven and earth, now that they’ve retired, the Republican party is NOT going to redefine them as welfare recipients.
My father currently has three sources of income: a pension from the mill, a modest IRA account, and Social Security.
As George Will noted on "This Week with George Stephanopoulos" yesterday, the President’s Social Security plan is designed to reframe Social Security as "welfare." Stephanopoulos immediately agreed. "You’ve cracked the code," he said.
This is insidious and despicable. After a lifetime of work that’s left many of them literally permanently crippled with pain, my father, and other workers like him around the nation, deserve much better than this.
The GOP sees this path as the easiest way to dismantle Social Security altogether. It’s typical of their divisive methods—separate the classes and then paint the working class as parasites. As Krugman noted today:
The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn’t driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts.
No, this is about ideology: Mr. Bush comes to bury Social Security, not to save it. His goal is to turn F.D.R.’s most durable achievement into an unpopular welfare program, so some future president will be able to attack it with tall tales about Social Security queens driving Cadillacs.
My father, God willing, may live another 20 years or so, well into the stage when Bush and his silver-spoon-inheriting cronies intend to reframe the rhetoric. I expect this to become a very public debate. So, for the record, let me state that the first schmuck foolish enough to suggest my father or any of the retirees of his generation are "welfare recipients" will feel the full force of my boot up his ass, and then I’ll get really angry.
Spare me the pointless promises Bush offered in his "press conference" the other day, too. The checks WILL keep coming, BUT they WILL keep coming with no stigma attached. If not, this country is headed toward a class warfare the likes of which it has never imagined. You don’t f*ck with my father.
Well said.
Bush is trying to split off those with a minimalist social conscience, those entirely focused on personal gain, color me unsurprised since the tactic has proven electoraly successfull for the GOP on taxes and social issues.
He is attempting to re-focus the debate on SS toward the ideaology of generating retirement income not the economics. The fact that this also serves to obscure and distract from the federal deficit problem and the looming medicare crisis, helping to preserve the climate for tax cuts and proflegate spending, is a bonus for conservatives.
spoken like a true streetfighter 🙂
Edward: will you marry me?
Well, these are gonna be pretty damn interesting days at ObWi, given that Sebastian has been championing means testing from the start and I favor means testing as part of a plan that includes private accounts. Maybe we can set it up so that we’re, as much as possible, responding to each other’s arguments (with internal link backs and the like).
von: there’s one thing I don’t get about your position on this (and that not meant in a snarky way; it’s genuine.) You are, as far as I can tell, generally a deficit hawk. We have horrible deficits, obviously, which we have to do something about. Personal accounts will, by their nature, require several trillion dollars in transition costs, and will do nothing to help the solvency of Social Security. So: do you favor personal accounts in a general way (as distinct from favoring them here and now), or do you think they’re the best policy in our present circumstances? And if the latter, what about them makes them worth adding several trillion dollars to our deficits, with all the attendant costs to economic growth and so forth?
There were no WMDs. There isn’t a SS Trust Fund crisis. The Pozen Plan doesn’t fix what it aims to fix.
Well said indeed, Edward.
And let’s hope that the mill pension fund is adequately funded and no one comes up with a clever scheme to raid it.
Maybe we can set it up so that we’re, as much as possible, responding to each other’s arguments (with internal link backs and the like).
Are you thinking of restructuring the site or developing a better mode for the debate?
I agree that there are certainly issues on which civilized debate must take place and the debate must remain civil, von.
But if Will, Stephanopoulos, and Krugman are correct in their assessment of what’s really happening here, it’s going to get very ugly, and not just on ObWi.
When my father, in good faith, paid his SS taxes all those years, he was doing so with the understanding that there would be no stigma attached to collecting that money back when he retired. I’ll work night and day against any politician who intends to shame him now that’s he’s retired. That simply will not happen.
oh, it’ll happen. just as AARP members became anti-soldier, pro-SSM devils, and tens of millions of ordinary Americans became pro-Saddam, America-hating traitors, and Federal judges became worse than both the KKK and al-Q, SS recipients will become welfare queens and parasites on the noble hard-working dumbasses who fall for such demagoguery.
I don’t see what long-term phased-in means testing has to do with your father. The whole reason I want to start NOW is so that we can phase it in over a long enough period of time that it won’t hurt the people who have actually spent their whole lives relying on it. That is why the constant chorus of “there is no crisis [now]” is so damaging.
cleek,
Exactly right. Many other examples can be supplied upon request.
How long is “long-termed” Sebastian? And if it’s heading in that direction anyway, how is the stigma not going to attach itself to my father?
Welfare for Old People?
WELFARE FOR OLD PEOPLE?….Is Social Security really just welfare for old people? Over at Obsidian Wings, Edward says that will happen over his dead body:The men in my family of my father’s generation returned home after serving their country and…
Well, the marriage of plutocratic fiscal policies with populist moralizing and jingo sabre-rattling that has kept the GOP a cohesive political power over the past 25 years or so is starting to have serious internal conflict. I wonder whether the base will recognize the problems presented in the policy outlined by the party, or whether they will keep drinking the kool aid…?
That is why the constant chorus of “there is no crisis [now]” is so damaging.
heh. the people who are trying to prevent SS from being knee-capped by the libertarian-fantasy-land crowd are the same people who are damaging it. that’s funny.
As I read it, Max is saying that there’s no problem with SS; all we have to do is increase taxes. Which is pretty much the same as what Bush is saying: we’ll have to raise taxes.
Welfare for Old People?
WELFARE FOR OLD PEOPLE?….Is Social Security really just welfare for old people? Over at Obsidian Wings, Edward says that will happen over his dead body:The men in my family of my father’s generation returned home after serving their country and…
If we are to believe President Bush that the problem is all these IOUs, one has to ask (as Paul Krugman so aptly points out), what about the many-times-larger stack of IOUs we’re handing out in Medicare and the budget overall?
Complaining about the SS crisis just demonstrates innumeracy.
Sebastian:
Here. The slippery slope of means testing from today’s Krugman that you are going to have to convince the other 99.99% of us here is guaranteed a myth:
It’s an adage that programs for the poor always turn into poor programs. That is, once a program is defined as welfare, it becomes a target for budget cuts.
You can see this happening right now to Medicaid, the nation’s most important means-tested program. Last week Congress agreed on a budget that cuts funds for Medicaid (and food stamps), even while extending tax cuts on dividends and capital gains. States are cutting back, denying health insurance to hundreds of thousands of people with low incomes. Missouri is poised to eliminate Medicaid completely by 2008.
If the Bush scheme goes through, the same thing will eventually happen to Social Security. As Mr. Furman points out, the Bush plan wouldn’t just cut benefits. Workers would be encouraged to divert a large fraction of their payroll taxes into private accounts – but this would in effect amount to borrowing against their future benefits, which would be reduced accordingly.
As a result, Social Security as we know it would be phased out for the middle class.
“For millions of workers,” Mr. Furman writes, “the amount of the monthly Social Security check would be at or near zero.”
So only the poor would receive Social Security checks – and regardless of what today’s politicians say, future politicians would be tempted to reduce the size of those checks.
The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn’t driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts.
No, this is about ideology: Mr. Bush comes to bury Social Security, not to save it. His goal is to turn F.D.R.’s most durable achievement into an unpopular welfare program, so some future president will be able to attack it with tall tales about Social Security queens driving Cadillacs.
Paul Krugman in the NY Times
http://www.nytimes.com/2005/05/02/opinion/02krugman.html?ex=1272686400&en=186d761171ee5754&ei=5090&partner=rssuserland&emc=rss
So, was Welfare Reform a bad idea? Discuss.
That is why the constant chorus of “there is no crisis [now]” is so damaging.
But there may not ever be a crisis, Sebastian, if obligations are met.
Bush’s Social Security plan is a classic “starve the beast” maneuver. Pass irresponsible tax cuts to create a fiscal crisis, then blame the crisis on Social Security, so you can cut benefits.
The current system already is skewed toward those with the lowest income, but it also gives people of moderate incomes an opportunity to retire in a reasonable way with a pension and some other savings. The President’s newest proposal will make it much harder, once again rewarding the malefactors of great wealth at a cost to the middle class.
“Do nothing” is the best option on the table today. If the President offers to collect seven trillion dollars from the wealthy to pay for the long term cost of privatization, I will consider privatization. Until then, I will assume that he is continuing his wastrel ways, spending money he doesn’t have and whining about how high taxes are on the rich. I see no reason to support any proposal he makes. Nothing he has done so far has been in the national interest. I will assume that everything he proposes in the future will also be contrary to the national interest. I doubt that I will have the opportunity to apologize for my cynicism.
Slarti,
“Which is pretty much the same as what Bush is saying: we’ll have to raise taxes.”
Please provide a cite for this, as opposed to Bush proposing a plan which provides we’ll have to cut benefits.
Slippery-slope arguments are generally held in low regard.
How is it a crisis that the Social Security system might start paying out more than it takes in some decades from now, but it’s not a crisis that the whole rest of the federal government is paying out more than it takes in right now and has been for some decades, and the numbers are much larger?
“The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn’t driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts.”
We’re talking not just about the burden on “the budget”, but the burden on the taxpayers that have to cough up all this cash to pay ever-increasing benefits to ever-increasing numbers of beneficiaries. “Reconsidering the tax cuts” doesn’t do much for the burden of the people, although it might ease the burden on lawmakers and the recipients of their largesse.
The burden on the taxpayers will grow rather heavy unless we stop promising benefits growing right along with the taxpayers paychecks to beneficiaries growing rapidly in number. Is this burden not worth considering? These are our kids and grandkids you’re talking about.
“How long is “long-termed” Sebastian? And if it’s heading in that direction anyway, how is the stigma not going to attach itself to my father?”
Well, it’s not like he had a choice. If he votes against allowing his children to reduce the eventual burden they represent on his grandchildren and great grandchildren, however, I’ll be glad to criticize him for that.
“And let’s hope that the mill pension fund is adequately funded and no one comes up with a clever scheme to raid it. ”
Too bad that mill didn’t pay in cash instead of holding some back and substituting an IOU. At least nowadays most companies are letting you hold on to the money, even if it’s in a separate restricted account, instead of holding it and promising to give it to you later.
Slarti, the low regard for slippery slope arguments is far from universal, especially when the argument includes a specific mechanism for the slippage.
If he votes against allowing his children to reduce the eventual burden they represent on his grandchildren and great grandchildren, however, I’ll be glad to criticize him for that.
This is comedy right? Are you equally willing to criticize Bush for the burden he’s passing on to my father’s grandchildren and great grandchildren by running a historic deficit, while continuously cutting taxes that really only benefit millionaires, and sending hundreds of billions over to pay for a war he ensured us would pay for itself?
And yet you’re willing to suggest my father’s generation are the greedy ones here or responsible for this mess. How much would reinstating the estate tax do toward relieving my father’s heirs of this burden? My Dad lived up to his end of the bargain. He deserves to live out his life with dignity and pride.
What’s the mechanism proposed here, Blar? Other than an assumption of evilness, I mean?
So, Ken, is Social Security “welfare” or not?
Ironic, given that it was the stigma against welfare in the first place that undoubtedly contributed to SS being turned into a permanent entitlement, rather than simply putting seniors who were ruined by the Depression on welfare to keep them from starving and paying for it out of general revenues. Now if we try to fix the problems inherent in the system, we’re going to provoke tantrums from whoever’s ox is gored in the process. It’s a shame that FDR didn’t have enough spine to stand up to those seniors back then to say, “We’ll take care of you, but let’s be honest, it’s welfare.”
Slarti:
According to your link, such arguments are held in low regard because “there is no reason to believe that one event must inevitably follow from another without an argument for such a claim.” (emphasis mine.) In this case, fast pete (and Krugman) have produced an argument for their claim, citing the campaigns against welfare and medicare as evidence for their arguments. The onus is upon those who disagree to explain, if they can, why those examples don’t apply. Simply waving a hand in disdain at “slippery slope arguments” is not really a response to the argument on offer.
Oh, and as for your welfare reform red herring, whether it was a good thing or not, the lying and racist demagoguery that accompanied the campaign against welfare was not a good thing, at all, and cannot be excused by any positive results of the welfare reform act (presuming such positive results exist). It is that ugly legacy that we are talking about here. If you want to privilege ends above means, that kind of ends the discussion.
“You don’t f*ck with my father.”
Nah, we’ll just keep f*cking with your paycheck.
It’s a shame that FDR didn’t have enough spine to stand up to those seniors back then to say, “We’ll take care of you, but let’s be honest, it’s welfare.”
That’s not realistic, M. Scott…As Kevin Drum noted:
The best way to ensure the nation has a safety net (and keeps that safety in place when times get tough) is for everyone to participate, for it not to be seen as charity, and for creative solutions to be applied with sincerity (rather than disengenous attempts to dismantle it) when tweaks are necessary, as they inevitably will.
given what has happened to the United Airlines pension holders, and given this country’s long-standing commitment to free mobility of labor, and given the immigration policies of both parties which have kept entry-level wages low, the conservatives REALLY need to argue from first principles as to why a public pension, with a disability component, is a bad idea.
People don’t save; people haven’t saved. Those who do can afford to be somewhat speculative in their investments in reliance on the soc sec backstop.
Eliminating an enormously successful public pension seems, to me, to be yet another component of a long-term republican strategy to create a social darwinian society where risk is placed on those least able to bear it. The political consequences of creating such a society are left for another post.
Red herring? It was a simple question. The angst it evoked as a response is interesting, though, if irrelevant.
Nah, we’ll just keep f*cking with your paycheck.
Two points for parallelism, but minus five for irrelevance and minus 30 for not understanding that I’m not kidding. If anyone thinks they’re gonna dismantle SS by painting my father as a leech on society, they’re gonna have a war.
There must be ways to fix SS, but this lazy-ass classist avenue toward dismantling it can’t be among them.
Hmmm…Bush is painting your father as a leech on society? Do tell.
It’s a shame the Democrats don’t have the spine to call Bush’s budget-busting tax cuts what they are–Park Avenue Welfare. Say what you will about Paris Hilton, at least she dances for her welfare checks. If the rest of Bush’s moneyed “base” would go out and put their arms up a cow’s rear on TV, they’d almost be worth they money I paid for them.
The Republicans Are Starting To Quietly Go Nuts.
The ranking Democrat on the House Rules Committee called Sensenbrenner (Judiciary Committee Chairman) on these little snubs. According to Rep. Slaughter: “He said, and I quote…’You don’t like what we wrote about your amendments, and we don’t like wha…
Slarti – Max is saying there’s a General Fund problem (honoring the IOUs) up through 2041, not a Trust Fund problem. After 2041, Max says, assuming there’s a shortfall, the same general fund will keep funding SS (unless we’re planning on reneging on T-Bills/finishing the job of raiding the pension plan to pay for ongoing operations). According to many observers, there won’t be a shortfall in the Trust Fund after 2041. These observers rely on the SS Actuaries Low Cost projection and point out that of the three projections, the assumptions about productivity and economic growth in the Low Cost projection are closest to historical norms.
Ken – productivity increases still mitigate the problem of “too few workers supporting too many retirees” even with wage-indexed benefits because wage indexing sets benefits for retirees at the time of retirement. It’s not used to re-jigger benefits for every participant year after year (periodic COLAs are used for that. COLAs are CPI based, not wage based.).
Bush is painting your father as a leech on society? Do tell.
Slarti, you’ll have to convince pundits as disparate as George Will and Paul Krugman that isn’t his intention down the road.
Errr, the parenthetical in the first graf needs to be bumped up a sentence.
I have four separate filings today, so I can’t respond in depth. But, to Hilzoy:
So: do you favor personal accounts in a general way (as distinct from favoring them here and now), or do you think they’re the best policy in our present circumstances?
“In a general way.” Indeed, I’ve criticized Bush for using SS’s looming fiscal crisis as an “argument” for personal accounts. (For more on my views, see this post: http://obsidianwings.blogs.com/obsidian_wings/2004/12/security_social.html).
Edward: I don’t mean restructing the site, only coordinating behind the scenes and responding to each other arguments in a respectful way on the front page (rather than just in comments).
Whoops, the post got cut off. Google: “security social and otherwise”; the relevant post was the first link when I did it. (Add “von” and “obsidian wings” to the search if it results in too much chaff).
I don’t mean restructing the site, only coordinating behind the scenes and responding to each other arguments in a respectful way on the front page (rather than just in comments).
This may not be what you mean here, but I wasn’t sure after the first comment and am even less so now, but this is not directed at personal accounts or even means testing, per se, but rather at the insidious attempt to reframe SS as “welfare” while Americans who worked their whole life believing they could count on it are collecting checks. I don’t imagine for a moment either you or Sebastian support that approach.
Too bad that mill didn’t pay in cash instead of holding some back and substituting an IOU. At least nowadays most companies are letting you hold on to the money, even if it’s in a separate restricted account, instead of holding it and promising to give it to you later.
So this frees them of their obligations?
I find it interesting that so many conservatives regard credit card debts as sacred obligations, to be honored no matter how disastrous the debtor’s circumstances, while they consider pension obligations, including Social Security, are simply “IOU’S,” and often “worthless” ones at that.
This may turn out to be an amazing thread;thank you, Edward. Not just your father, there are generations of workers after your father whose quality of life and dignity depend on SS.
Getting to brass tacks and bedrock here; this GOP is serious and radical.
There are very good and serious economic arguments for a middle class safety net and entitlement system that have been forgotten for too long in this era of the “entrepeneur society”. Among those are mobility of a skilled workforce and risk-taking personal investment strategies. Maybe now we start talking.
Ed, no one’s reframing SS as “welfare,” except George Will. What I’m saying is that it makes no sense to raise payroll taxes on everyone (or reduce the benefits paid to everyone) if the SS gap can be closed by giving folks like me* a smaller check come retirement time.
von
*I should add: I hope to be included in “folks like me.”
What the opinions of George Will and George Bush have to do with each other is a little beyond me, Edward. But I do find it interesting that you’ve bought into the whole welfare=bad mindset.
And, this:
Responding to WH inaccuracy with inaccuracy of your own sort of takes the moral-high-ground element away, don’t you think, Edward?
in the same vein as my prior post and BY, Tim Sandefur (who claims to be a righteous libertarian who finds that Lochner was wrongly decided) cites with approval a post by one SlitheryD who approves(!) of United’s pensioners getting hosed.
(no links; i recently dislocated my pinky and typing is a huge chore.)
now wait a minute. if unions have too much power, so private (and public — see San Diego) pensions are too generous, and so its appropriate to renege on that contract, then contract power really is for the corporate interests only and pensioners need the SS safety net more than ever.
The best way to ensure the nation has a safety net (and keeps that safety in place when times get tough) is for everyone to participate, for it not to be seen as charity, and for creative solutions to be applied with sincerity (rather than disengenous attempts to dismantle it) when tweaks are necessary, as they inevitably will.
[my emphasis added]
So in other words, pretend it isn’t welfare for the first recipients, and stick the others with an entitlement that is inferior to what they probably could have gotten in the private sector all along.
FDR showed a lot of determination in many areas of his Presidency, but this wasn’t one of them.
In other words, BRGORD, some guy said something stupid, and someone else agreed with him.
Acknowledged. Happens all the time. Doesn’t necessarily mean anything, though.
Bob is right…it’s time to start talking.
What the opinions of George Will and George Bush have to do with each other is a little beyond me, Edward.
Will, Krugman, Stephanopoulos…it’s across the board speculation, Slarti…not just one opinion. It looked like a duck back before last week…it began to quack like a duck when Bush offered more details…it doesn’t require too much projection to see this bird has a name.
But I do find it interesting that you’ve bought into the whole welfare=bad mindset.
With all due respect, that is not your best work Slarti. Welfare, as a temporary hand-up when crisis strikes, is a very good thing. It should IMO come with a tinge of stigma to prevent people from abusing it though. The goal to that stigma is to help push them back into the workforce.
Retirement, however, is permanent (or at least one hopes so)…so to call SS checks “welfare” with that same stigma attached is to shame seniors who shouldn’t have to bear the Scarlet A (or W, or whatever) on their chests. They lived up to their end of the bargain and deserve to enjoy retirement with dignity.
Oh, and my objective is to be also included in the group of “folks like me[von]”. My current plan is for SS to be the least of my retirement assets. I’d plan for it not to be there at all, but my financial planner is more meticulous than that.
So in other words, pretend it isn’t welfare for the first recipients, and stick the others with an entitlement that is inferior to what they probably could have gotten in the private sector all along.
You’re leaving out the key element of the program though M Scott…here’s a hint…it’s in the name.
Oh, and my objective is to be also included in the group of “folks like me[von]”. My current plan is for SS to be the least of my retirement assets. I’d plan for it not to be there at all, but my financial planner is more meticulous than that.
You realize, of course, that’s a luxury that was never an option for millions of Americans, right?
There must be ways to fix SS, but this lazy-ass classist avenue toward dismantling it can’t be among them.
Oh, Bush wants to fix Social Security alright. [/snark]
It’s a power struggle, and one side is fighting to benefit rich white straight men at the expense of, well, everyone else. And if you’re supporting them and you’re not a rich white straight man, stop kidding yourself that they’re on your side.
(And if you are a rich white straight man, consider the fact that a) you may not be rich forever, and 2)you may actually care about someone on the other side)
I share Edward’s surprise at Slartibartfast’s opportunistic poke about welfare–“I do find it interesting that you’ve bought into the whole welfare=bad mindset”. I have come to count on the ObWi gang as holding itself to a higher standard than that.
The reason why it is strategically insidious of Bush to attempt to recast SS as a welfare plan for the indigent is because this will doom it to political impotence. As Krugman noted, programs for the poor become poor programs, because they have no effective (i.e. voting and contributing) base of support.
So the Bush plan for phasing out SS is to first marginalize it as a welfare plan, and then when only the poor have any stake in it, it will be easy to kill it altogether.
So the reason that Edward (and I) resist treating SS as a welfare plan is not because “welfare=bad”, but because welfare is and always will be politically tenuous and lacking in strong and self-interested support by a broad majority of the population.
Social Security enjoys strong and self-interested support by a broad majority of the population. Because Bush knows he would lose any honest debate about phasing it out, he is instead providing a series of dishonest attempts to phase it out covertly. They will fail.
Paul from Pimco,
Social security is a welfare program, not a retirement program. Always has been and always will be. It is a social contract between generations, with the young funding on a pay-as-you-go basis an honorable duty to protect the old from a destitute journey into life’s sunset. As a matter of financial architecture, Social Security is not anything like the ERISA-grounded retirement plans for which PIMCO manages huge portfolios.
President Roosevelt “sold” Social Security as a retirement plan simply because it could not be politically sold as a welfare program, even though that is what it is: old people didn’t/don’t want to admit that they take “welfare” from their children, but rather want to believe that they are “getting a return” on what they “paid in.”
Well, at least one thing is clear, here: that it’s nothing but guesswork.
Actually, this is your work, Edward. But I agree, low quality. You’re arguing from emotion, here.
Anyone in charge doing that? What’s being proposed is an optional shift to self-managed accounts. I’m not arguing that this is actually possible or desirable, I’m questioning whether the angst is justified. So far, it looks like it isn’t.
“so to call SS checks “welfare” with that same stigma attached”
It doesn’t matter what they call it;if it is only a program for the poor it is welfare and guarenteed to be attacked and killed.
Note the addition (or whatever, a horrible bill) of drug benefits to Medicare and the slashing of Medicaid as an example of the strategy.
Slashing of Medicaid and ending the inheritance tax. Amazing country in amazing times.
Objection, irrelevant.
Higher than what? What, exactly, do you find objectionable?
M. Scott,
“The best way to ensure the nation has a safety net (and keeps that safety in place when times get tough) is for everyone to participate, for it not to be seen as charity, and for creative solutions to be applied with sincerity (rather than disengenous attempts to dismantle it) when tweaks are necessary, as they inevitably will.
[my emphasis added]
So in other words, pretend it isn’t welfare for the first recipients, and stick the others with an entitlement that is inferior to what they probably could have gotten in the private sector all along.”
Or alternatively, to avoid it being incorrectly viewed as charity due to a campaign of misinformation.
. . . f the SS gap can be closed by giving folks like me* a smaller check come retirement time.
You’re always free to send it back, you know. Even subtracting out the administrative costs of having calculated the amount and sent you the check, I guess the rest of America would still come out pretty much ahead. I can’t imagine offhand that the administrative costs of means-testing SS based wealth would be much lower than the administrative costs of sending the checks to everyone who’s paid in and letting them send them back if they really don’t need them.
Slarti, But I do find it interesting that you’ve bought into the whole welfare=bad mindset.
He hasn’t. But the people at whom the rhetoric which Edward is declaiming is going to be targeted have, which is the point.
If we accept this “everyone hates welfare” premise, I think that ignores that younger people are probably not particularly enthusiastic about the idea of it being an “entitlement” either.
Given that this entitlement eats up about 12.5% of your pay, for a pretty lousy return, I’d much rather see SS be welfare and significantly lower payroll taxes.
Why don’t we redefine it as “insurance” instead of “welfare” if thats such a big deal? As in you are insured against having no money when you retire? Everyone participates, only some wind up collecting. Makes sense to me.
Or alternatively, to avoid it being incorrectly viewed as charity due to a campaign of misinformation.
Except that wasn’t what happened. FDR effectively decided that “calling this X will be unpopular, so I’ll call it Y.” Problem was, calling it Y didn’t make it not-X.
“It’s a power struggle, and one side is fighting to benefit rich white straight men at the expense of, well, everyone else.”
This is precisely why I can’t do this debate anymore. The liberal approach is one big circular argument. Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is.
Then we get back to the pension argument, suggesting that conservatives can’t dare attack a pension system because of well whatever reason. But if I dare to analyze Social Security as a pension, I get piled on. So then I try to analyze it as insurance against being poor when you are old. But that of course sounds like welfare. Which brings it back to a pension, which it only is when it helps your argument.
Jonas,
“As in you are insured against having no money when you retire?”
That creates an awful moral hazard problem. One would be encouraged to make risky investments, with heads I win on the investment and tails I don’t lose because I’d get social “insurance”.
Social Security is either an insurance program or a pension program with societal benefits, grimmy, but it’s definitely not a welfare program. I think it’s more like insurance…you pay in knowing that you’re guaranteed a return if do live long enough to need it.* In addition, you’re guaranteed that you’re not bothered by the hordes of old people sifting through your garbage looking for food in the morning. I know there are some people for whom that’s not a problem, but for others of us, it sort of throws a wet blanket over this whole “greatest nation on earth” thing we’re kind of fond of here.
*All this talk about hoping not to need it misses one important aspect of what it’s designed to be there in case of, financial catastrophe that falls AFTER one retires. The best planned portfolios or most “secure” nest eggs can disappear…and then what?
President Roosevelt “sold” Social Security as a retirement plan simply because it could not be politically sold as a welfare program,
My understanding has always been that the program was sold as retirement insurance, which is decidedly different from “a retirement plan.” Can you point to something which shows that FDR sold the program as “a retirement plan?”
M. Scott,
“Except that wasn’t what happened. FDR effectively decided that “calling this X will be unpopular, so I’ll call it Y.” Problem was, calling it Y didn’t make it not-X.”
Please read the post again if you think the campaign of misinformation isn’t what’s being done today by the Republicans.
Sebastian,
“Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is.”
No, as George Stephanopolous said, it’s properly viewed as cracking the code of the Republican gameplan.
Dantheman,
You are quite right, but I believe that this moral hazard would be quite small, reflecting the diminuitive nature of Social Security benefits. SS simply does not provide a comfortable enough retirement for everyone to feel comfortable playing roulette with their 401Ks.
Meanwhile, some moral hazard must already exist because of the mandatory nature of Social Security as it stands.
“If we accept this “everyone hates welfare” premise”
then welfare doesn’t exist. Given the broad appeal of welfare programs throughout the world and in the US, I think it’s safe to say humans in general like welfare programs. Perhaps they draw some measure of pride from living in a society that takes care of its own.
Please see:
http://www.pimco.com/LeftNav/Late+Breaking+Commentary/FF/2004/FF_December_2004.htm
Social Security is a welfare program, a real-time income transfer program between generations, not a retirement plan or an investment plan. It pays out on a progressive basis, (lower replacement ratios at higher covered income levels, known as the “bend points”), and taxes on a regressive basis (higher tax rate on aggregate income for lower income levels, which are all covered income, with no social security taxes at all – only Medicare payroll taxes, as imposed by law signed by President Clinton in 1993 – on income above the covered ceiling, presently $90,000).
I submit that Social Security is the most successful social program ever conceived, as a welfare program. Unlike the case with my grandparents, Jonnie’s grandparents don’t have to worry about a painful, destitute old age. I’m more than happy that my Social Security taxes – not “contributions” – are providing such a safety net for both Jonnie’s grandparents and other children’s grandparents. I’d do it personally if Social Security didn’t exist.
Which of course makes it fact, pure and simple.
Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is.
Two comments here:
1. While I have voiced some tentative support for means-testing SS in the past, it has not been convincingly demonstrated to me that the administrative costs of a whole new SS bureacracy for calculating the post-retirement wealth of individual retirees (something the IRS is not equipped to do), performing periodic audits to make sure people aren’t hiding wealth to collect SS, etc., would trigger a significant cost savings over what we have now. It also hasn’t been demonstrated to me that the cost of sending SS checks to people who are independently well-off after retirement is a significant portion of SS spending (especially considering that they couldn’t have possibly contributed beyond the FICA cap). (And I don’t even know how this would be calculated anyway, so I suspect most people who complain about are just making WAGs.) Do you have reliable data on these things?
2. Your first sentence is predicated partly on the trust held by the people to whom this plan has to be sold that such cost-savings and strengthening really is the desired end, and not that it’s step one in a longer-term program to dismantle the whole thing. For various reasons, a lot of people don’t have that trust, and I think the current administration, at least, is beyond the point where they can simply say, “Hey, trust us!” It’s a real proble, and you can’t ignore it away by accusing your opponents of arguing in bad faith.
To extend on my last point, I don’t like this argument that if SS is casted as welfare, it’ll get voted away because welfare is bad. First, it’s demonstrably counterfactual. Second, it’s unnecessarily cynical. Third, I fear it’s to some extend self-fulfilling. If you keep repeating it, people will assume it and exhibit it without thinking about it.
I think a better response is ‘so what if we start calling SS welfare. Americans support welfare.’
Slartibartfast–
“What, exactly, do you find objectionable?”
It was your misinterpretation of Edward’s reasons for not wanting to see SS considered a welfare program. It seemed to me that he had made his reasons perfectly clear in his post, and that they had nothing to do with his changing his mind about the justifiability of welfare, or with his suddenly signing on to an anti-welfare bandwagon that says that “welfare=bad”. He was not expressing a new-found moral condemnation of welfare; he was pointing out that anything treated as a welfare program is well on its way to phase-out, which is exactly what the Rove/Bush/DeLay gang wants.
So, when you took him to be saying that welfare is bad, instead of interpreting him in the way that seemed to me far more obvious from his words, it seemed to me that you were engaging in a kind of tendentious misinterpretation, an intentional twisting of words, that I think of as relatively rare on this site, and especially rare in its principals’ interactions.
If you simply and sincerely misunderstood him, then I have nothing to be offended at. But it certainly read as though you were taking a cheap shot at one of your co-authors.
Please read the post again if you think the campaign of misinformation isn’t what’s being done today by the Republicans.
The Republicans aren’t innocents here–far from it. That doesn’t change that Social Security was founded on a lie and that that original sin has contaminated all future discussion of the issue.
Slarti,
No, but I trust George S. rather than Sebastian H. to be both more in the know and willing to publicly say what the gameplan is.
Actually, this is your work, Edward. But I agree, low quality. You’re arguing from emotion, here.
Anyone in charge doing that? What’s being proposed is an optional shift to self-managed accounts. I’m not arguing that this is actually possible or desirable, I’m questioning whether the angst is justified. So far, it looks like it isn’t.
Actually, this one is simple. If it doesn’t happen, then fine. The pundits will have been wrong, I will have over-reacted, and life will go on. It happens.
If it does happen, however, if the pundits are right, then the consequences will be much more dire.
I’m convinced, as I have been for months, that Bush would like Social Security gone and is covertly undermining its popularity. Even there…EVEN THERE…I’m willing to entertain ways to do that (I think its foolish, but if that’s what the majority wants, or the minority can convince them they want, so be it). But NOT at the cost of American senior’s dignity. That is beneath contempt.
Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is.
Sebastian,
The problem, from my point of view, is that the kinds of means testing on the table is not very sensible. As I’ve said before, if you’re serious about it, and want to avoid the various practical and perceptual and political problems associated with means-testing, it ought to be done in a “soft” fashion, by increasing the income taxation of benefits paid to the well off, raising the cap on the payroll tax, and other things.
But raising the cap has been put off the table by Bush, and I seem to recall, though I haven’t been able to find any details, that Congress is or was proposing a reduction in the taxation of Social Security benefits. Does anyone have further information on this?
No, as George Stephanopolous said, it’s properly viewed as cracking the code of the Republican gameplan.
Which of course makes it fact, pure and simple.
Of course! It’s not like he was ever a professionial liar employed by a pair of congenital liars, or anything like that. I mean–Spin City wasn’t at all inspired by him, right?
You obviously missed all the angst about his father being cast as a leech on society; I suggest you read the entire thread for perspective.
I didn’t. I simply read what he wrote, which, you ought to give that a whirl before jumping in.
So, let’s see: you’re placing more trust in a guy whose entire job was (and still is, although in a different capacity) spin. I’m not sure where the wisdom is in this.
Others here have issues with the whole means-testing idea, though.
Sidereal,
I was just playing along here, you don’t need to sell me on welfare programs, I believe in them. I just think that a welfare/insurance oriented Social Security makes more financial and moral sense than a universal entitlement system.
Grimmy,
If I agreed with that assessment, I’d be prone to give up on the idea of welfare programs entirely.
I’d be happy paying SS taxes as well for exactly these reasons – if they merely provided insurance and the rate was reduced accordingly. But it’s not a safety net, it’s a hammock that everyone lays around in no matter how rich they are or whether they want to or not. It’s ridiculous.
M Scott
you’re really basing your rejection of speculation by Will, Krugman AND Stephanopolous on a TV sitcom?
When 50 pundits agree that’s the gameplan will you at least consider it might be then?
I really don’t want to bicker with you, Edward, but it seems like you’ve unleashed the heat when there’s no one at bat, yet.
A small but important quibble. Bush’s plan, as currently proposed, would *not* in fact amount to “means-testing” SS. Means-tested programs are those in which people above a means threshold get reduced, or no, benefits.
The progressive indexing change Bush is proposing does not do this. Rather, it transitions, slowly, toward a program which gives all retirees the *same* benefit, regardless of income level– in contrast to the present system, where people who need SS less get *higher* benefits. That is, it would push SS closer to a simple guaranteed minimum income for all retirees.
Whether such a guaranteed minimum should be called “welfare” is debatable, but there is no cause to call it “means-tested” or “a program only for the poor”.
“it seems like you’ve unleashed the heat when there’s no one at bat, yet.”
I’m reminded of a totally dissimilar argument about IVF and certain citizens’ averring that they had made arguments well in the past about the end result of having extra embryos and how it might lead to current predicaments.
You predicted event A would lead to event B, and argued against A on the strength of it. Are you denying Edward the same right?
Slartibartfast–
Okay, I reread the post, and I think I was in the wrong. The point that framing SS as welfare is a short cut to its phase-out is more central to Krugman’s piece; it is not central to what Edward_ said in his own piece.
There, the emphasis is on the contrast between welfare recipients and people who have earned their pension-insurance through their own hard work.
In my favor is the fact that this contrast does not say that welfare is always bad or that welfare-recipients are fundamentally undeserving; it only suggests that welfare recipients are *less* deserving than people who worked hard for what they are receiving.
In your favor is the fact that Edward_ certainly was casting welfare-recipients as less-deserving, (i.e. welfare=bad by comparison to earned pension income). And also that my reading of his point brought in material that was further from what he originally said (stuff from Krugman).
So–I apologize. I ought to have reread the original post before jumping in.
“Social Security is either an insurance program or a pension program with societal benefits, grimmy, but it’s definitely not a welfare program. I think it’s more like insurance…you pay in knowing that you’re guaranteed a return if do live long enough to need it.* In addition, you’re guaranteed that you’re not bothered by the hordes of old people sifting through your garbage looking for food in the morning. I know there are some people for whom that’s not a problem, but for others of us, it sort of throws a wet blanket over this whole “greatest nation on earth” thing we’re kind of fond of here.”
So we can’t be the greatest nation on Earth unless we aggressively protect people from themselves? And an old person in poverty is far worse than a young person in poverty? Must be, since we’re collecting money from the former to give to the latter, and it seems to be non-negotiable that your retirement is automatically more important than all other considerations even if you’re too dumb to realize that.
“So this frees them of their obligations? ”
Hell no. Although no one’s obligated to buy their steel, and if people don’t, they’ll go out of business. Paying the entire wage up front in cash would have completely eliminated the possibility that the company he used to work for going out of business would impact his present income, but enabled him to screw himself over by blowing that money rather than saving it. Do you think steel mills (or the Social Security Administration) should be surrogate parents, or not?
“I find it interesting that so many conservatives regard credit card debts as sacred obligations, to be honored no matter how disastrous the debtor’s circumstances, while they consider pension obligations, including Social Security, are simply “IOU’S,” and often “worthless” ones at that. ”
Calling it an IOU doesn’t make it worthless. It just makes it a liability and not an asset, at least if you give it to someone else. If you give an IOU to yourself, it still isn’t an asset.
I did? Where?
“Meanwhile, some moral hazard must already exist because of the mandatory nature of Social Security as it stands.”
As I said above, I consider this small degree of “moral hazard” an economic good as (or if) it leads the middle class to make slightly more risky investments in 401ks etc.
“it’ll get voted away because welfare is bad. First, it’s demonstrably counterfactual.”
One then has to explain the Medicaid cuts and the difficulties in providing Medical care to the poor in this country.
No need, Tad, but the thought is appreciated all the same. Whenever I go twenty-four hours without some sort of blunder, I want some advance notice so I can buy a lottery ticket.
I really don’t want to bicker with you, Edward, but it seems like you’ve unleashed the heat when there’s no one at bat, yet.
I don’t want to bicker either…sorry if I’ve been “emotional” about this…but I’ve seen this batter approaching the plate for months now, Slarti…having the pundits confirm he’s stepping up is alarming to me.
If anyone’s interested, this was inspired when I was talking with my father about the fact that the pencil-pushing pr*cks at his mill have found a way to cut off his health insurance. He was explaining to me that Medicare won’t cover my step-mother’s very expensive medicine and so they have to get supplemental insurance now. Not truly understanding the difference (I’m embarassed to admit), I suggested that Medicaid would be a safety net though, no?
My father was indignant. “Medicaid’s for poor people,” he insisted. That conversation was over. And he’s right to be offended. He worked very hard so that he could retire with dignity. It was a struggle, but he managed it…and now things beyond his control (things that shouldn’t have happened if others had lived up to their ends of the bargain) are changing the equation. The last straw would be for anyone to suggest that one of his sources of income was a hand-out he didn’t fully earn. He doesn’t deserve that. He paid in for forty years…he deserves the deal he was promised and deserves to get it stigma free.
Arguing that no one is saying it yet, when insiders who’ve been following this closely for years insist they will, gives me little comfort Slarti.
you’re really basing your rejection of speculation by Will, Krugman AND Stephanopolous on a TV sitcom?
No, I’m just saying that George S’s history does not cause me to trust him. Krugman is a liar and a hack. As for Will, I’ve disagreed with him before and I will again.
“I did? Where?”
Whoops. I searched and it was Sebastian. My bad. I should have kept with the third-person motif.
“One then has to explain the Medicaid cuts and the difficulties in providing Medical care to the poor in this country.”
Horrible leadership.
It seems self-evident to me that if welfare programs were inherently unpopular they would not exist in democracies. But I do acknowledge that you need leaders who are willing and able to frame the narrative. ‘Welfare queens’ is the wrong narrative.
Others here have issues with the whole means-testing idea, though.
Yes, but at least some of that seems to be with the notion of SS being viewed as welfare program. What I’m talking about would not, I think, be vulnerable to that criticism or that stigma. It would simply be a program that provided income to retirees based on their contributions. The income would be subject to tax – perhaps at special rates – just like other income.
I understand that mechanically this reduces the benefit for the better off, just like a straightforward reduction would, but I think the perception would be vastly different. I also think it would be a much more sensible approach.
And an old person in poverty is far worse than a young person in poverty? Must be, since we’re collecting money from the former to give to the latter, and it seems to be non-negotiable that your retirement is automatically more important than all other considerations even if you’re too dumb to realize that.
An old person in poverty has few options than a young person, so yes, it is worse. The rest of your argument sounds totally heartless. Tell me you’re old, please.
“All this talk about hoping not to need it misses one important aspect of what it’s designed to be there in case of, financial catastrophe that falls AFTER one retires. The best planned portfolios or most “secure” nest eggs can disappear…and then what?”
Why am I paying them before that point? Is this a welfare argument?
My problem with this is that you want to be able to portray attacks on Social Security as a class warfare attack on poor people while simultaneously not wanting to call cash payments ‘to avoid poverty’ “welfare”. You can’t do both.
If SS were a pension fund, it should offer a much better return. If it were insurance against being poor when you are old, it shouldn’t pay rich people. If it were insurance against living longer than the typical lifespan, it should have a sliding scale which goes up automatically with changes in life expectancy. If it were an anti-poverty program it shouldn’t pay billions to the well off.
The way you get around these objections is by hopping from justification to justification and never allowing any of the justifications to be analyzed on their own terms. As welfare, SS is paying lots of the wrong people. As insurance, SS is paying lots of the wrong people. As a pension, it has an awful rate of return.
I also hate the slippery slope argument here. Let us purely for the sake of argument that Bush WANTS to get rid of Social Security entirely. So what? Does that mean that we can’t means test? Does that mean we can’t make it a better pension? Does that mean we can’t do anything until only good Democrats are in charge? Ridiculous. Bush doesn’t always get what he wants. If he proposes good ideas as a first step to getting rid of Social Security, take the good ideas and then resist him on the bad ideas. It is not an inevitable slippery slope that saying yes to Bush on the good ideas means that everyone must say yes to him on the bad ideas.
And if you can’t convince people that we should keep POOR elderly people off the street you aren’t doing well in the argumentation sphere. The idea that we have to bribe rich people with billions of dollars per year in order to have an anti-poverty program is ridiculous. You all do realize that there are welfare programs right now in the US. Right? You do realize that welfare reform–pushed by Republicans was very successful at lowering poverty while still maintaining a safety net. Right? Or would someone here like to talk about how the welfare reform of the 1990s was awful?
Bernard Yomtov,
This idea of yours is rather ingenious. I’d fully support it as a compromise provided that the increased taxation of the retired rich was used to offset payroll taxes amongst those still in the workforce.
Scott:
I was going to note that Krugman’s views on SS have been delightfully inconsistent, but I’m not all that hard over on consistency.
Edward:
I’m not making light of your father’s problems, but it does sound like a) he’s got some real issues with his company, and b) for the purposes of part of the discussion, at least, he is in fact poor. Your dad, bless him, has pride. Sometimes the price tag on pride is within one’s means, and sometimes it isn’t. If you haven’t already done so, I encourage you to question the legality of the insurance termination; insurance companies make their bread and butter from people who cave in to things like that.
It’s not just my Dad, though, Slarti…there’s an entire generation out there this is going to hit.
“an old person in poverty is far worse than a young person in poverty? Must be, since we’re collecting money from the former to give to the latter”
It’s also worth pointing out that ever since the ’83 agreement, we have been collecting money from workers to give to the rich, in the form of endless tax-cuts.
My problem with this is that you want to be able to portray attacks on Social Security as a class warfare attack on poor people while simultaneously not wanting to call cash payments ‘to avoid poverty’ “welfare”. You can’t do both.
A non sequitur. How are those cash payments financed? Do people who have never paid in taxes currently receive retirement benefits?
If SS were a pension fund, it should offer a much better return.
You do not know the facts about the rate of return on SS if you believe that statement.
I also hate the slippery slope argument here. Let us purely for the sake of argument that Bush WANTS to get rid of Social Security entirely. So what?
So we will leave a successful program alone rather than trust someone who has shown he can not be trusted. It is as simple as that – Bush is not trustworthy. There is no pressing need to tinker with SS, there is only a pressing need to reduce deficit spending.
You all do realize that there are welfare programs right now in the US. Right?
And I believe the last time I saw you discuss one, you ranted about “crackheads”. That validates the point of Edward’s piece.
i realize that last comment needed some clarification, but I got to run…ignore it please.
That’s the part that kills me. The part that nobody who supports Social Security should ever stop talking about. Edward’s dad hasn’t been paying for his retirement. He’s been paying for highways and nuclear subs and 100 dollar paperclips and whatever else the gov wanted to spend his SS contributions on. He bought those because taxes were very progressive in the 70s, and the wealthy didn’t want to pay for them. So now that taxes are much flatter, they’re willing to let the middle class pay Edward’s dad back. Oh, and Bush says we don’t even have to do that. It’s just worthless IOUs. Silly paper. He event went and looked at them to make sure. Jackass.
Spare me. I have, after all, been sparing you the flipside of this. Max does note, does he not, that the top couple of deciles pay about half of the total income tax? Do you suppose that all of that money comes rolling back into the hands of those same people?
If it were insurance against being poor when you are old, it shouldn’t pay rich people.
Go ahead, Mr Holsclaw, think of it as insurance — that’s what the ‘I’ in OASDI stands for.
As to your question: 1) I’m a healthy guy, been paying for my own health insurance for several years (self employed) but can afford to pay for my glasses, allergy medication, and etc if I wanted to (and come out ahead). Why don’t I? Related, why doesn’t my insurance company prevent me from accessing their services given my general state of good health? 2) The program is already means tested, in a way — benefits are capped, just as FICA taxes are capped.
We could certainly make accepting the SS benefit voluntary — perhaps even allow beneficiaries to steer their checks into preferred programs or charities.
“The part that nobody who supports Social Security should ever stop talking about. Edward’s dad hasn’t been paying for his retirement. He’s been paying for highways and nuclear subs and 100 dollar paperclips and whatever else the gov wanted to spend his SS contributions on. He bought those because taxes were very progressive in the 70s, and the wealthy didn’t want to pay for them.”
Well, except they did pay for them to a far greater degree than anyone else.
“So now that taxes are much flatter, they’re willing to let the middle class pay Edward’s dad back. Oh, and Bush says we don’t even have to do that. It’s just worthless IOUs. Silly paper. He event went and looked at them to make sure. Jackass.”
Bush disputed the idea that Treasury bonds, in the hands of a government agency, were assets. They weren’t. Your own bonds are not assets, and they can never be assets. The Social Security Administration doesn’t have any “savings” – it has IOU’s from the treasury, which means that using those bonds to pay benefits to seniors is not an alternative to taxing younger people, it’s a mechanism for taxing younger people. The ultimate question is (1) should our children bear a heavier burden to support retirees than we do and (if yes), (2) why?
And Bush didn’t say anything about not paying your dad back. Your dad will get paid back no matter what. The contention is over whether you and I will collect enough from our children to place a far heavier burden on them than your dad is placing on us, and I’m voting no on that. Your dad’s payback is safe.
Max does note, does he not, that the top couple of deciles pay about half of the total income tax?
What percentage of wealth do the top couple of deciles own? And, as tax laws have become more regressive over the last few decades, has this proportion gone up or down?
Slartibartfast–
” Max does note, does he not, that the top couple of deciles pay about half of the total income tax?”
Hmm–it took me a bit to figure out who “Max” is, and then I tried to read *real* careful to make up for my past sins, but I still can’t see anywhere that he notes this. (Or are you asserting it on your own behalf, and criticisizing him for *not* noting it?)
He *does* note that the top quintile took in 48% of the income. But I don’t know whether that means that they pay about half of the total income tax or not. I would have thought in general that the wealthy have much better accountants than the rest of us, and so are able to avoid a greater share. Beats me–neither my prejudices about tax avoidance among the rich nor Max Sawicky’s references to their share of income are really worth as much as some straight numbers about their share of taxes paid.
Suppose that the top couple of deciles did in fact pay about half the total tax revenues. Would this change the fact that the last few decades saw repeated tax cuts on the top end of the scale, and that these tax-cuts were financed by dipping into the SS fund?
Actually, the best reform I can think of is simple: deregulate the living crap out of the medical system, including the complete shutdown of the FDA. Keep limited patent protection, strong in nature but with no extensions.
Then when the cure for aging gets cheap enough for most people to afford it, consign Social Security and Medicare to the dustbin of history. People can save up and take a few decades off, or keep working until accident or homicide does them in, and the rest of us don’t have to care because they’ll be able-bodied the whole time and their having to keep working won’t make us look bad.
The only way SS reform works is as a deal. Sebastian wants to make a deal, and if his side would hold up his end of the deal, I’d say it might be worth doing. The thing is, no one on “my” side thinks that his side will stick to the deal. That is, no one thinks that the people who’ve never liked SS won’t come back to the well in another decade looking for more cuts, and then again a decade later, and so on until the program is gone.
And as much as we might like Sebastian, and as sincere as he might be in making the deal, we know that he can’t bind his side.
The fact that his side keeps saying that they don’t need to make a deal, but that they’ll ram through the changes they want makes people on my side of the thing all the less trustworthy.
The good news is that there is nothing about SS that has to be done in 2005. We can easily wait for divided government — or maybe a Republican administration that can be trusted — and have a deal that does right by everyone involved. There is a real possibility that the low cost scenario will pan out, and we never needed to do anything. I’m not saying we should assume that there is no problem. I am saying that this issue, which affects everyone, need not be considered in the current configuration.
felixrayman, I don’t have the book handy, so I can’t just give you numbers, but a useful reference as well as a good read is Kevin Phillips’ Wealth and Democracy.
And, as tax laws have become more regressive over the last few decades, has this proportion gone up or down?
I think you already know the answer (or was the question rhetorical?) — we are seeing a strong flow of capital to the top, even the very top.
Actually, the best reform I can think of is simple: deregulate the living crap out of the medical system, including the complete shutdown of the FDA. Keep limited patent protection, strong in nature but with no extensions.
Then when the cure for aging gets cheap enough for most people to afford it, consign Social Security and Medicare to the dustbin of history.
Hey, without the FDA’s boot on our necks, I’m sure someone could market a fast-acting and effective cure for aging right away. I’ve got all the necessary ingredients under my kitchen sink as we speak.
Me, too! And you can buy into my new company for a mere $44 trillion.
I promise to spend it wisely.
Sorry, a behind the curtains sort of question. Why the handle change from Slartibartfast to Slarti?
“The thing is, no one on “my” side thinks that his side will stick to the deal. That is, no one thinks that the people who’ve never liked SS won’t come back to the well in another decade looking for more cuts, and then again a decade later, and so on until the program is gone.”
Funny thing is if the ‘deal’ involved Israel and Palestinian’s who won’t give up terrorism, many people here would be all for it. 🙂
Sorry, a behind the curtains sort of question. Why the handle change from Slartibartfast to Slarti?
Isn’t it obvious? With the movie coming out, the poor man’s trying to avoid being deluged with requests to autograph fjords. 🙂
Ted: “And an old person in poverty is far worse than a young person in poverty?”
Yes, this seems pretty obvious. The difference between a 22 year old guy living below the poverty line and a 72 year old guy living below the poverty line is rather dramatic. Moving across the state and hustling up a job as a cashier, a server at Chili’s, a janitor, a bookstore clerk… Getting into a cheap community college course and learning some new job skills, things like that… Those are things that the young can do that are not very realistic expectations of the elderly.
By the logic you seemed to outline, a 2-year old living at the poverty level should be left to fend for itself, too. Age doesn’t matter, after all…
The Social Security Administration doesn’t have any “savings” – it has IOU’s from the treasury, which means that using those bonds to pay benefits to seniors is not an alternative to taxing younger people, it’s a mechanism for taxing younger people.
No. This is incorrect. Suppose the SS surplus had been invested in private securities instead of government bonds. Then the government would have had to borrow that money elsewhere. Instead of owing whatever it owes to the Social Security Trust Fund, it would owe it to whoever had bought the bonds it issued. It would still need to collect taxes to pay these bondholders.
The need for taxes to repay the bonds has zero to do with the fact that they are held by Social Security. Zero.
wow, has this thread declined or what?
First, let’s stop the IOUs to yourself nonsense. If you believe that the SS ious have no value, go join the group grope over at Jane Galt’s site. The rest of us here understand that corporations can create special purpose entities and so can the govt. While the Congress could, in theory, eliminate the SSA with one stroke of the pen, the fact that it hasn’t done so for 60 some odd years is pretty good evidence that the Congress, and the voters, regard the SSA as a legitimate special purpose entity holding legitimate claims on the general treasury.
second, i have yet to see any private pension calculator that (a) folds in the cost of the original legacy debt; and (b) includes the disability insurance component; and (c) includes the linkage to wages. While the conservatives here may despise Atrios, Duncan Black is a competent and qualified economist, as is Brad DeLong. Both of them have torn to shreds the various CATO calculators purporting to show how bad of an investment SS is. To the conservatives here, I DARE YOU to prove them wrong; SHOW ME the alternative instead of bitching and moaning about how we liberals are mean to you.
third, if SS is such an awful program (based on a lie, according to M. Scott), why is it so difficult for the President to come up with a fix? Edward _ is out gunning for the Pres because he does nothing but attack the program, but is unwilling/unable to do better.
fourth, I have repeatedly asked what a “hard” means test would look like. Getting americans to pay income taxes is hard enough; do the conservatives here really expect them to stand for a program which inquires on an annual basis how wealthy they are? If I understand medicaid correctly (likely i don’t; this is anecdotal only), recipients must demonstrate that they are essentially utterly impoverished before qualifying. PLEASE, enlighten me as to how a means-tested program would work.
fifth, if the real complaint is that the young poor are paying for the old rich, isn’t the answer to increase the EITC, to offset more of the pension costs? Maybe the foregiven SSA payments should be carried as an imputed loan, so that the taxpayer can make up the payments when he can afford it. I think that’s probably unnecessarily cruel, but it’s at least an answer to a principal complaint that doesn’t involve destroying the program.
I wonder whether this wasn’t the plan all along, back in 1983 when Alan Greenspan engineered the trust fund.
I shudder when I consider that he (Greenspan) actually helped sell the first GWB tax cut by expressing his concern that we might be paying off the deficit too quickly.
No. This is incorrect. Suppose the SS surplus had been invested in private securities instead of government bonds. Then the government would have had to borrow that money elsewhere. Instead of owing whatever it owes to the Social Security Trust Fund, it would owe it to whoever had bought the bonds it issued. It would still need to collect taxes to pay these bondholders.
That assumes that the government would have borrowed as much money without the convenient sinkhole of the SS surplus to hide the size of the deficit–given the anxieties over the deficit in the late eighties that culminated in the 1990 tax increase that cost Bush the Elder his job, that’s not a given.
[for “deficit,” above, read “national debt.”]
Sebastian: not to threadjack here, or to deny your (very good) point about justification-hopping and SS, but– you do realize that a very similar justification-hopping critique can be made of the case for the Iraq war, right?
If he proposes good ideas as a first step to getting rid of Social Security, take the good ideas and then resist him on the bad ideas.
::::snort:::::
Assuming for a moment that there is a nontrivial number of currently-serving Republican Senators and Representatives, can you show me one single instance where they have in any way resisted any of what might be considered by a reasonably neutral observer to be a single one of Bush’s bad ideas?
That first part before the comma should read, ” . . . a nontrivial number of currently-serving Republican Senators and Representatives who might find any of Bush’s SS ideas ‘bad,’ . . . ”
That assumes that the government would have borrowed as much money without the convenient sinkhole of the SS surplus to hide the size of the deficit–given the anxieties over the deficit in the late eighties that culminated in the 1990 tax increase that cost Bush the Elder his job, that’s not a given.
True, and I share your implied disdain for the accounting methods that were used. But I want to see a stronger argument than that before believing spending would have been less. If you make that claim you are really saying there was never any intention to repay the money to SS.
S.S. is alot like welfare. You take money from people who earned it and you give some of it to people who didn’t earn it.
I don’t see the big gripe in framing the debate that way.
You take money from people who earned it and you give some of it to people who didn’t earn it.
Given that everybody who gets a paycheck pays for it, which people didn’t earn it?
Aren’t the people who caused the legacy debt, the first recipients, dead?
“which people didn’t earn it?”
The people who got more out over time than they actually paid in.
The people who got more out over time than they actually paid in.
Oh. Well, shame on them for not dying more conveniently.
The difference people seem to be ignoring here in defining SS as welfare is that welfare is assistance to people in need. SS is not based on need, and SS is not welfare.
Now there are those that would like to turn SS into a welfare program, by means testing it for example, and it is clear that some of those people are ideologues who want to do so as part of a plan to destroy the program.
But as for now, SS is not welfare, any more than flood insurance is welfare for people who end up having to collect on it.
There’s nothing wrong with SocSec that wouldn’t be fixed by lifting the salary cap.
You can dance around that all you like. You can repeat GOP talking points until you’re old enough to qualify for SocSec yourself. You cannot get around the fundamental point: SocSec is not in a “crisis,” and the projected budgetary shortfall could easily be corrected by an Administration that wasn’t hell-bent on eliminating the program.
Scratch a “SocSec reformer” and you find a SocSec eliminationist. It’s supporters have made that clear (“Hey, hey; ho, ho; Social Security has got to go!”). Bush’s “reform” is a lie. He’s been predicting that SocSec would go bankrupt since 1983, when he said it would be bankrupt by 1993; all he’s doing now is trying to ram through a policy that will make good on that prediction.
He has no good faith from which to make his argument. His record as a businessman is disastrous: every business he ever owned went belly-up, usually scandalously, and always with Bush walking away with a hefty payout. His Admnistration’s economic policies have been a disaster; a deliberate disaster meant to benefit the top 5% at the expense of everyone else.
His SocSec policy is more of the same: a con game.
“the projected budgetary shortfall could easily be corrected by an Administration that wasn’t hell-bent on eliminating the program.”
If you are hell bent on raising taxes you are quite correct but you are underinclusive. If you just want to raise taxes there is not only no Social Security crisis, there is no possible federal budgetary crisis.
BTW, dropping the cap would be the abandonment of the last bit of justification remaining in the “it’s a pension” game. The cap on the tax exists in response to the cap of the entitlement on the payout side.
There’s nothing wrong with SocSec that wouldn’t be fixed by lifting the salary cap.
CaseyL,
Actually, there’s not much wrong with Social Security regardless. The simple fact is that the scheme adopted in 1983 works, and will work well past 2041, and quite conceivably forever. It is crucial that that point be understood.
The relevant facts are these: The SSA prepares three projections of the system’s future, based on a variety of assumptions regarding the future of the US economy. The one most often cited is the intermediate projection. That’s the one that has the trust fund running out in 2041. But the intermediate forecast is very pessimistic. Even the “low-cost” forecast, the most optimistic of the three, is pessimistic in the light of recent economic performance. It is quite likely to be exceeded. Indeed, in one sense the “low-cost projection” is not a projection at all. It is a description of how the economy must perform for the trust fund ratio to remain steady, i.e., for there to be no problems with Social Security.
From the trustees’ report:
The low cost alternative is characterized by assumptions that improve the financial condition of the trust funds, including a higher fertility rate, slower improvement in mortality, a higher real-wage differential, and lower unemployment.
Why is there a potential problem? Because meeting the obligations to the trust fund imposes a burden on the Treasury that many people do not wish to bear. In other words, we do not have a Social Security problem, we have a fiscal problem, brought on in large part by the utter irresponsibility of the current Administration.
Now I am perfectly willing to address this problem by, for example, adopting measures such as I propose above. But I must say it is infuriating to hear people talking about a crisis in SS, and advocating all sorts of changes, and pretending to be hard-nosed realists, as they all the while refuse to acknowledge the true nature of the problem.
Great post, Edward. I don’t want to marry you, but I will pledge myself to the guerilla war.
And, by the way, when Sebastian and Von are named eternal caretakers of a means-tested Social Security (and Medicare) program, I will consider negotiations at a posh venue in Paris.
But, I’ll live in a tunnel during the rainy season before I compromise with the crowd in control now. Never.
Mr. Holsclaw–
“dropping the cap would be the abandonment of the last bit of justification remaining in the “it’s a pension” game”
Well, no; I should think that making SS payouts available to people who had never worked or paid in any contributions at all would be “the abandonment of the last bit of etc.”
I.e., *one* reason to think that “it’s a pension” is because *you don’t get anything if you didn’t pay in*. (Note the connection between this point and Edward_’s insistence that his father is not going to be collecting welfare).
I haven’t yet understood why you feel that the SS system should map directly and uniquely on to the set of options {pension, insurance, welfare, anti-poverty}. What is the problem–politically, intellectually, analytically, whatever you like–with it being a program that incorporates various features of all of these kinds of programs?
It sounds as though you feel that your opponents are being dishonest or inconsistent somehow. But I’m not seeing it. So I say it has some features of a pension system (e.g. you have to pay in to get back out), and then later I say it has some features of an insurance system (e.g. risk is spread out over the whole working population).
Did I ever say “p and not p” there? Did I first say that it has some features of a pension system, and then later deny that it has any features of a pension system? That would certainly be a contradiction, but I don’t see where the people protecting SS from phase-out are committed to it.
Accidental, and it stuck. Kind of like some other commenters here, I suspect. See, I changed it back. Happy?
Yes, do. Please be sure and actually address the argument, when there.
But, I’ll live in a tunnel during the rainy season before I compromise with the crowd in control now. Never.
John, given that crowd, you may in fact find yourself living in a tunnel during the rainy season. At which point I guess you’ll have time to consider how long “never” is.
By this logic, any federal budgetary issues at all can be dismissed with “many people do not wish to bear”. Not smart/not smart, or good/not good, but wanna/don’t wanna. I’d offer some more analysis, but I don’t wanna.
I think that stigmatizing a twenty year old welfare recipient who has never worked would be an easier task than stigmatizing a 70 year old retiree who has paid into a retirement program for fifty years.
However, Democrats have made a career of identifying the latest Republican scheme to dismantle Social Security. Or, as we say, “there you go again”.
And frankly, I am dismayed by the lack of faith the liberals here have in their fellow man, and fellow members of the working and middle class. Is there really general agreement with Krugman’s adage that “programs for the poor always turn into poor programs”?
Can’t a program that burdens 80% of the population to provide benefits to the bottom 20% survive? Or must we structure the program so that 20% are burdened to pay benefits to 80%?
And what is “liberal” about that?
P.S. And when was welfare phased out?
slarti, you’re welcome, really truly welcome to debate the issue here with me. Personally, i comment here to avoid echo chambers. i’ll note that you haven’t responded to any of my substantive points.
try this: IF SSA is a SpecialPurposeEntity THEN ious have economic value.
characteristics in support of “spe”:
1. 60+ years of separate existence.
2. until just recently, presidential, congressional and mainstream press recognition as a spe.
3. 14th amendment, section 4.
4. dedicated revenue and obligation streams.
5. in the mid-80s, a major campaign to pass laws to “overtax” a certain group, so that “funds” would be available on their retirement.
so the Congress can change laws. So what? The Congress can do all sorts of stupid things that would fundamentally change american tax laws. Mostly they don’t. IBM could dissolve its spe’s and merge them back into the parent corp. Mostly it doesn’t, for essentially the same reason: it made a promise.
As I recall, you had an issue with AI; I suggest you take it to the source. I know it’s hard to notice, but there’s a fairly even split betwen those supporting the thesis and those dead-set against.
Relevant to the I-owe-me issue? I must have missed them.
IOW, francis, if you’re not engaging those making the points you’re objecting to, you’re simply abusing them in effigy. Maybe fun, but fairly useless.
slarti, virtually all blogging is useless. (i keep hoping katherine makes a difference.) but a careful review of myupthread posts shows that i was, in fact, responding to those who were posting HERE about the IOU issue. i was encouraging those idiots to join the group grope at Assym Info; i was not addressing mindles’s post here.
Ah. Well, neither am I, so what the hell were we talking about, before the IOMe thing came up?
See, I changed it back. Happy?
Only if you are. I just wasn’t sure if someone was playing a trick or not. Remember, people have been put on the terrorist watch list for less…
Fascinating.
And frankly, I am dismayed by the lack of faith the liberals here have in their fellow man, and fellow members of the working and middle class.
You both deny it’s likely to happen and then demonstrate it’s already happening, Tom Maguire:
Can’t a program that burdens 80% of the population to provide benefits to the bottom 20% survive?
If SS gets framed this way, and clearly to some it already has, it’s next to “welfare” already.
The problem with this nonsense is that in all reality my father is not likely to recieve anywhere near as much back from Social Security as he paid in over the 40+ years paid into it, so the “burden” you’re describing was his burden and the “bottom” 20% you describe so derogatorily are in the exact same position anyone in what one must assume you’d label the “top” 80% are in, in that possibly, just possibly, they’ll live long enough to receive more back than they paid in. But so will the top 1% or top 0.01% (in fact, given tht they’re more likely not to have the health problems working in a steel mill cause, they’re more likely to live long enough to earn back more than they paid in).
Juggling Chainsaws, 2nd Edition
(Ed. Note: In December, I wrote what amounted to an “end of the year review” for 2004, and opined that the Bush administration was severely overreaching. It’s hard to find a time in…
Which neatly sums up the Republican position on SS. One of them, anyway.
“one of them”
and Sebastian criticizes the Liberals for moving the argument all over the place.
If my father does outlive his genetics and family history, though Slarti, he still deserves to live comfortably and with dignity. That’s what he was promised. That’s the the US government owes him.
Slartibartfast–
I’m not sure Edward_’s numbers are right here–whether his father will receive more or less than he paid in depends on too many factors (age at death, income history, inflation changes, etc.).
But *this* Democrat’s position on SS is that any loss I personally take on the deal will be more than made up for by the benefits I reap by living in a country with a national system of Old-Age and Survivors’ Insurance and Disability Insurance.
That’s a Democratic position on SS. One of them, anyway.
Slarti: Which neatly sums up the Republican position on SS. One of them, anyway.
Possibly. But certainly not George W. Bush’s position.
By this logic, any federal budgetary issues at all can be dismissed with “many people do not wish to bear”. Not smart/not smart, or good/not good, but wanna/don’t wanna. I’d offer some more analysis, but I don’t wanna.
Big difference, slarti.
This is not, “I don’t want to spend that much on X,” or even, “I think it would be unwise to spend that much on X because…”
This is “I don’t want to meet financial obligations that were agreed to. I don’t want to repay borrowed money. ” It is no different than refusing to repay other treasury obligations because we just don’t want to.
Remember, this deal had real consequences. Workers paid increased payroll taxes on the understanding that the purpose was to shore up Social Security, not to eliminate the estate tax or reduce taxes on dividends. Now suddenly Bush is saying precisiely “I don’t wanna pay – worthless IOU’s, blah blah blah.”
We hear a lot from the right about morality, but it apparently doesn’t extend to honoring financial obligations.
Abuse of the word precisely aside, just where is he saying anything resembling that?
Which simply indicates that you’re not listening to what he’s actually saying, Jesurgislac. Go read the transcript of his last press briefing, and then tell me how your position is justified. Hey, justify your position with anything at all that Bush has said.
We hear a lot from the right about morality, but it apparently doesn’t extend to honoring financial obligations.
Bernard, it’s just a matter of definitions. “Faith,” for example:
Sometimes I wonder whether words have any meaning.
Apropos of what, exactly?
ral–
“Sometimes I wonder whether words have any meaning.”
Don’t despair–political discourse has not always been so thoroughly poisoned as it is right now, and political leaders have not always distorted and lied as much as they do now.
Like people, countries do not alway show their best sides in crisis. This country took a big whack to the head on 9/11, and it will take a while for it to regain its equilibrium and sense of traditional values. A few opportunists realized that they could maximize their own power by keeping the country destabilized and afraid, but as time goes by America will come to its senses.
Wait. What is no different than refusing to pay other treasury obligations? Antecedent, please?
Wait. What is no different than refusing to pay other treasury obligations? Antecedent, please?
Slart, I added emphasis above, wasn’t it clear? The securities held in the trust fund are U.S. Treasury securities, no different from those held by individuals, pension funds, and other governments.
For the President of the United States to say “[t]here is no trust fund just IOUs that I saw firsthand,” is a breach of faith.
Sometimes Wiki has the answer, if you only look hard enough. Search on “negotiable”.
Tad, thanks for the kind thoughts. I am by nature mostly optimistic, but every so often I have a flash of despair.
I write a lot of words, here and in my professional life. I like to think they mean something. I sometimes act as an expert in litigation, and I once heard a lawyer in a patent case I was involved with make the comment “it’s all words.” I wasn’t sure of his meaning at the time, whether it was dismissive of the value of expert knowledge. But it brought to mind the line from Hamlet
Search on “negotiable”
Would you argue that were Congress to make the securities negotiable, no one would buy them? Because if you wouldn’t you are being irrelevant, and if you would, you are being incoherent. Assuming we take Wiki as a reliable source, the bonds are backed “by the full faith and credit of the government”. What does this mean to you? Nothing?
Also, the article you linked to points out that Bush claims that SS will go broke in 2042. What happens to SS in 2042 that Bush is referring to?
So many contradictions, so little time. What remains unobscured is that a deal was made with taxpayers to raise SS taxes in order to preserve the system, and that the only real question is, “Should we break that deal in order to finance tax cuts for the rich”? My answer is no, yours is yes. Let’s at least be clear about that.
Abuse of the word precisely aside, just where is he saying anything resembling that?
You’re murder on my adverbs, slarti.
West Virginia?
Bush has repeatedly complained of the cost of meeting the obligations to the trust fund. He has said there is no trust fund, just “IOU’s.” That sounds to me like he really doesn’t want to pay, especially since, in the face of what he sees as this terrible burden, he insists on continuing his tax-cut madness. If you had borrowed a lot of money, and were seriously concerned about repaying it, would you quit your job to live on the beach?
In any case, all we really need to note is that he is proposing benefit cuts. This changes the deal. It effectively reduces the treasury’s obligation to the trust fund. Is it really unreasonable to conclude that he doesn’t want to meet the obligation?
Hadn’t even thought about arguing that, thanks.
It means precisely what it says. What’s it mean to you?
You know, I absolutely loathe having discussions with people who make up my position on X and then swat it as if it were anything other than straw. Grow up, felix, this is an adult conversation.
There’s a key aspect of that sentence that you might want to reconsider.
Good grief, is anyone at all paying attention? No, he’s saying it’s going to be either benefit cuts, a tax hike, or some combination of the two. Of course we could just pack it all away in more debt…
“This is “I don’t want to meet financial obligations that were agreed to. I don’t want to repay borrowed money. ” It is no different than refusing to repay other treasury obligations because we just don’t want to. ”
No one’s talking about weaseling out of financial obligations already agreed to. What we want to do is limit the new financial obligations we’re agreeing to for the future. Your dad will be paid what he was promised. I want to be promised lower benefits for when I retire so I can plan accordingly, and so my kids and grandkids won’t carry even greater Social Security burdens than I do.
“The rest of us here understand that corporations can create special purpose entities and so can the govt. While the Congress could, in theory, eliminate the SSA with one stroke of the pen, the fact that it hasn’t done so for 60 some odd years is pretty good evidence that the Congress, and the voters, regard the SSA as a legitimate special purpose entity holding legitimate claims on the general treasury.”
But as far as the taxpayers are concerned, those “legitimate claims” are liabilities, not assets. There’s no savings there, only a promise to tax future taxpayers to pay off the bonds. Both the “special purpose entity” and the “general treasury” have no income other than taxes. The question is whether the future taxes already pledged to be collected to redeem those bonds will be enough to cover promised future benefits. If we promise lower future benefits, it might be. If not, then future taxpayers will have to cover those bonds (which they would anyway, as soon as they were redeemed) plus kick in additional money to fund the shortfall. I don’t want to see that happen.
Hadn’t even thought about arguing that, thanks.
The irrelevance option. Nice.
It means precisely what it says. What’s it mean to you?
It means you can count on the government to live up to the deals it makes, for example the deal that SS taxes would be raised in order to preserve the current system.
You know, I absolutely loathe having discussions with people who make up my position on X and then swat it as if it were anything other than straw. Grow up, felix, this is an adult conversation.
I loathe having discussions with those who refuse to accept the implications of their arguments, yet, as an adult I know it is necessary. So grow up yourself, kid.
If you see me arguing otherwise, please let me know.
You know, on second thought: don’t bother. You seem to be having a wonderful time whacking the strawman, and you don’t need me for that.
No one’s talking about weaseling out of financial obligations already agreed to
Yes, they are. Benefit cuts to taxpayers currently paying in to the system amount to weaseling out of the deal made to raise SS taxes in order to preserve the system. And every plan Bush has come up with so far involves benefit cuts.
The rest of your post is simply a non sequitur. Whether and when taxes will need to be raised to continue the current level of benefits depends on the assumptions made. Using the assumptions Bush has made when advocating his plans, SS will be fine for a very long time, allowing the government to work on more pressing matters.
Benefit cuts to taxpayers currently paying in to the system amount to weaseling out of the deal made to raise SS taxes in order to preserve the system. And every plan Bush has come up with so far involves benefit cuts.
Actually, I agree with that. Although I’m socking it away for retirement, I have been working nearly fulltime since I was 16-years-old and without revealing my age (gotta have some secrets), let’s just say that adds up to quite a bit of SS tax money I had assumed would be there for me when I retire. I don’t like the sound of benefit cuts at all.
Two comments, one a retread and one (I think) not, each with a question.
Retread: I agree with those who say that any analysis that leads to Social Security being in crisis leads to lots of other things being in much worse and more immediate crisis. Is there any summary of what happens when you apply the same assumptions and techniques to a whole bunch of other agencies?
Not so retread: I have myself dealt with SSI, and know others who have, and have seen that it leads not just to incentives to lie (thanks to weirdly constructed definitions of assets and needs) but to a great deal of probably avoidable expense – monetary, administrative, time – in evaluating appeals. I am frankly skeptical that when the full costs of means testing as the federal government practices are considered, there is any significant savings in means testing versus a wider-ranging “you’re all covered” policy. Has anyone actually tracked down what means testing costs (and what sort of social deformations it creates near the margin), before asserting that it would be a gain?
Has anyone actually tracked down what means testing costs (and what sort of social deformations it creates near the margin), before asserting that it would be a gain?
That is a very good question.
One of the original virtures of Social Security Insurance is its relatively low administration costs. Add in means testing, and inspectors to catch cheats, and you’re undoubtedly increasing those costs. What are they estimated to be?
I should make it clear here that I don’t know what means testing actually costs for SSI, Medicare, and the like, either. No assertion by obscurity here, just a genuine request for information, along with the expressed suspicion that some of its advocates may know o more or even less than I do about it.
Good grief, is anyone at all paying attention? No, he’s saying it’s going to be either benefit cuts, a tax hike, or some combination of the two. Of course we could just pack it all away in more debt…
Yes he is saying that, but his choice seems to be strictly benefit cuts. Am I wrong about this? Has Bush suggested that a reasonable solution is to increase taxes and use the proceeds for Social Security? If so, I missed it. Sorry.
Bruce and Edward: I asked the same question re: the cost of means testing to Sebastian upthread in my May 2, 2005 04:08 PM. I assume he no longer reads my comments, but maybe he’ll pay attention to you.
On a much earlier thread about Social Security, my recollection is that Sebastian was challenged to prove that a means-tested system would be cheaper than the present system, when other countries who had introduced means-tested systems had found them much more expensive.
As I recall, he failed to do so then. I don’t anticipate him doing any better now.
without piling on Sebastian, who does not work for the administration (…I think…), has anyone seen any estimate of what means testing would cost?
Current administrative costs are about $3 billion a year, FYI. This is not intended to answer the means-testing question, it ought to go without saying.
“One of the original virtures of Social Security Insurance is its relatively low administration costs. Add in means testing, and inspectors to catch cheats, and you’re undoubtedly increasing those costs. What are they estimated to be?”
It depends on how you choose to means test. Rough income testing could be done using the already existing IRS data which is collected every April 15.
Hmmm…means-testing doesn’t have to be all that smart, now does it? Here I was thinking that means-testing would have to consider assets, but who on earth would take a relatively meager income from SS when they’ve got a couple tens of millions of dollars in a 401k? And if they do, you can always hammer their estate for the outlays (plus a penalty, natch) after the fact.
In the case of means testing for SSI and Medicare, at least, the detailed determination is really detailed. And really harsh, and subject to tweaking whenever there’s a scandal (however statistically unusual the nature of the alleged ripoff), and it all comes back to someone saying “Well, $X of assets isn’t really needy, now, is it?” So honest poor people end up divesting themselves of more than dishonest ones, and suffering through more hassle to prove that they are indeed needy.
That moral skewing is one of the reasons I gave up my own support for most means testing, actually. It rewards the manipulation of facts and their presentation anywhere at all near the margin of eligibility, whereas I want to…if not actively encourage honesty, at least not discourage it or make it economically disadvantageous.
Sebastian, income testing would obviously not be enough for Social Security purposes, or at least if it would it’s wildly unlike SSI, Medicare, and the like in that regard. You will have to evaluate the worth of assets, and I don’t believe that can be done in a way that combines fairness, efficiency, and reward for honesty. Making an entitlement or social insurance measure universal gets the government out of the business of caring about the details, and of engaging with them in ways that will necessarily be subject to the usual political manipulation.
Jesurgliac, do you happen to have a pointer handy? The experience of other countries would at least be indicative.
The experience of other countries would at least be indicative.
Arghh…has Justice Kennedy’s experience taught you nothing, man? 😉
later all…
Heh -> Edward.
In the case of means testing for SSI and Medicare, at least, the detailed determination is really detailed.
Medicare? Do you mean Medicaid? There’s no means-testing for Medicare that I know of, although starting in 2006 there will be some sort of qualification process for receiving a subsidy for the new drug benefit.
Bruce: The experience of other countries would at least be indicative.
I did find a couple of articles at the Citizen’s Advice Bureau website: Means testing undermines long-term viability of Pension Credits system and Means testing failing poorest pensioners.
For what it’s worth, also, a Conservative party spokesman arguing against means tests.
Rough income testing could be done using the already existing IRS data which is collected every April 15.
Um, no. Not so much. Income has nothing to do with wealth, assets for the purposes of means testing, since, without wealth or assets, income can vary wildly from year to year. Unless you’re proposing that we constantly bump, re-add, and re-bump people from the SS rolls based on their 1040s every year, the administrative costs of which I’d imagine would put the current costs to shame.
Jesurgislac, I’m not willing to count people who fail to apply for a benefit under ‘means testing failing poorest pensioners’.
“Income has nothing to do with wealth, assets for the purposes of means testing, since, without wealth or assets, income can vary wildly from year to year.”
Income CAN vary wildly from year to year, but for a retired person it typically won’t. And for a poor retired person (the ones we are protecting remember) it is even less like to vary wildly from year to year.
If you must you could count trust income as ‘income’ without much trouble. Really the only income area that I suspect would be a large problem would be house wealth from a wildly appreciating housing market. If we chose, we could exempt it. Or not.
I really don’t think the objection that means testing won’t perfectly filter out all the rich people makes sense when the proposed alternative is to let all rich people get Social Security.
Each of the proposed “fixes” make the system more cumbersome, more expensive, and more vulnerable to manipulation.
Rich people getting SocSec doesn’t burn me nearly as much as middle class people not getting SocSec. And the latest version of Bush’s phase-out really does earn the name phase-out, because that’s exactly what he’s proposing.
Sebastian, the most persuasive argument against means testing is that the deal won’t stick. Can you think of a way to set up the system so that future Congresses can’t reduce the benefits?
Sebastian, I find it odd that anyone would think of means testing as just applying to income, and I want to make sure i’m not misunderstanding. (I’m tired and my allergies are in high gear, so the probability of me misreading is quite high.) Do you mean to say that you don’t think of accumulated wealth as very significant in your consideration of who deserves Social Security? And do you think that those in or near power in favor of means testing agree? I’m certainly prepared to be surprised here, but that would represent a really significant break in the practice of means testing as I understand it applied in, well, pretty much any other case.
(As long as I’m writing about efficiencies…it would be a significant savings in time and effort for government benefits not to be taxed. It is frankly stupid for one agency to write a check and then have another collect part of it right back. Set the benefit amount to be what you want it to be after taxes and pay that. A smart congresscritter of either party could pitch this on grounds of both fairness and efficiency, but I don’t expect anyone to.)
CaseyL, well put. I would much rather have a fair number of people who don’t especially (or even at al) need it get Social Security than have anyone who would really benefit from it do without.
“Each of the proposed “fixes” make the system more cumbersome, more expensive, and more vulnerable to manipulation.”
I honestly do not understand this objection. If we are positing that Social Security is supposed to keep old people from being poor (which apparently we mostly do when it can be used as an attack on those who question the Social Security orthodoxy) “more vulnerable to manipulation” would mean that some rich people who don’t need it get it any way. But your alternative is that the manipulation go on at the government level (apparently as $6 billion or more bribe to keep Social Security popular) such that 100% of all rich people get it. That doesn’t make sense as an objection. It makes no sense to say “Sebastian your proposal would let some rich people get Social Security, that makes your proposal bad therefore we need to give the money to all rich people.” That makes no sense.
Charley, you write:
Of course I can’t. But A) the system will be much cheaper so people will be less interested in cutting it. B) The system will be fairer so should still have lots of support in that form. C) The system has no guarantee that Congress can’t reduce benefits now. In fact it has done so repeatedly by raising the retirement age with far less notice than any changes than I would ever propose.
Sebastian: Jesurgislac, I’m not willing to count people who fail to apply for a benefit under ‘means testing failing poorest pensioners’.
Then you are not looking at one of the major ways in which making a benefit means-tested fails the people who need it: inevitably, some of the people who are entitled to the benefit will not apply for it, either because they think of means-testing as for “poor people” and they’re convinced they are not poor enough to deserve it – or are too proud to define themselves as “poor” and will not: or because they cannot face the complications and embarrassment of means-testing. This is a serious problem with all means-tested benefits, and inevitably results in a fairly significant number of people who are not served by it.
And (supposing you were running Social Security) if you were “not willing to count” such people, it would mean that the program you were running would inevitably be a failure, in that people you weren’t willing to count would be entitled to receive means-tested Social Security but wouldn’t get it.
Sebastian: ) the system will be much cheaper so people will be less interested in cutting it. B) The system will be fairer so should still have lots of support in that form
I can guarantee that a system which does not look for the people who are not applying for means-testing to receive Social Security (as you suggest) will not be a fairer system.
And you have not yet done anything to prove that your means-testing system will somehow manage to be less expensive that not means-testing. You were challenged on this last time: have you done any research on it since?
I really don’t think the objection that means testing won’t perfectly filter out all the rich people makes sense when the proposed alternative is to let all rich people get Social Security.
You have yet to demonstrate that means testing will result in a savings to the system of even one shiney nickel, let alone anything significant, despite being asked to do so by me, Bruce, Edward, LizardBreath, Jesurgislac, and someone else, I believe. So let’s get there first before we proceed to anything else, no?
“But A) the system will be much cheaper so people will be less interested in cutting it. B) The system will be fairer so should still have lots of support in that form. C) The system has no guarantee that Congress can’t reduce benefits now.”
And here is where we hit the rocks. Over on my side of the big ditch, we don’t think that the desire to cut benefits is primarily motivated by the cost, but by the principle that SS is wrong. Not “wrong” because it is unfairly giving too much money to rich people, but wrong because it’s a government run program. Thus, it seems from where we sit that A and B are not just unlikely, but dangerous illusions. Baits and switches.
C is right, of course, but as you have yourself often pointed out, the reason we pay benefits to some who don’t need them as much as others is for political insurance. The broad base of stakeholders prevents major reductions, although, as you say, some are made at the margins.
The current debate illustrates all these points well. That the Admin is focussing on this rather than Medicare, or federal spending in general, shows that the cost is not the main motivation. There are way bigger cost items out there. That the efforts are so far not gaining traction shows the wisdom of keeping everyone in the program, and the lack of a widespread perception that the current system is unfair.
I understand that you don’t like paying what you consider a bribe. I don’t like paying a bribe either, but the fact is, we’re getting good value for what we’re paying. When you stop bribing someone (or cheap out on it), they don’t thank you for your intellectual honesty. They stop forgoing what you’d been paying them to forgo.
Sebastian,
“But A) the system will be much cheaper so people will be less interested in cutting it. B) The system will be fairer so should still have lots of support in that form. C) The system has no guarantee that Congress can’t reduce benefits now.”
Are you sure that you listen to the rhetoric at all of the Republican dinners you’ve said you attended? I’ve attended a few, and always came away the message that eliminating Social Security is an end of itself, because it makes people dependent upon government. Why would that change after a partial success?
Similarly, if wealthy people no longer receive Social Security benefits, how would that possibly increase support? Even ignoring the near-certain stigmatizing of benficiaries as welfare recipients, it would ensure that the wealthy have no interest in preserving it and instead would prefer to cut it to create larger cuts for themselves.
As examples of how Republicans have always wanted to eliminate Social Security, see Wall Street Journal, as cited in Talking Points Memo and Cato Institute, as cited in zfacts
First cite, no link to the actual article, but it’s on the editorial page; do you suppose it’s a snippet of the view of one person, the entire WSJ editorial staff, or the GOP? Second cite doesn’t support your claim.
Slarti,
On the first cite, it sounds like the position of the editorial page. In what way does the second cite not support my claim?
As long as I’m writing about efficiencies…it would be a significant savings in time and effort for government benefits not to be taxed. It is frankly stupid for one agency to write a check and then have another collect part of it right back.
I don’t think so. The SSA is going to write the check whether it’s taxed or not, so that doesn’t matter. And the taxpayer is going to fill out a tax form and pay taxes anyway. Only the amount on the check changes. The only time extra effort would be required would be when a recipient who would otherwise not have a tax liability incurs one because of SS payments. Since the idea is that only high-income individuals would have their benefits taxed, this extra effort will be between negligible and non-existent.
There are some good points about wealth vs. income being made, I think. One way to deal with this is through estate taxes.
Impossible to tell, without the actual article.
Well, given that your claim was Republicans have always wanted to eliminate Social Security, and that your cite linked to an article endorsing changing SS, it’s hard for me to see there’s any support there at all. And, you know, Cato doesn’t speak for “Republicans”. Just some Republicans.
I mentioned this upthread. The idea that wealth is important in figuring out SS eligibility sort of neglects the fact that the wealth is there to generate income, among other reasons. Anyone willing to live on a SS stipend who has millions in wealth accrued simply to pass it on to heirs can be discouraged by some judicious application of estate tax. And I submit that those that indulge in such behavior will be the exception in any case.
Serious problems can arise in the case of things such as VUL policies, which effectively supply income that is, under current law, exempt from taxation. But there are lots of people smarter than me in both tax law and estate law that can probably speak better to this sort of issue.
Just thought I’d point out (again) that starting in 2006, some fairly simple means-testing will be used to determine eligibility for the “low-income subsidy” for Medicare part D coverage. It accounts for both income and assets (% of federal poverty level in the former case, and a couple of different ceilings for the latter). My understanding at this point is that unlike with Medicaid, where the beneficiary needs to submit documentary evidence, the Medicare benefit will be granted based on the bene’s signature and periodic audits will be done.
So, we’re about to get a good chunk of evidence regarding the viability of means-testing seniors. Obviously not 100% equal to the proposed SS situation, but may be educational all the same.
Slarti,
“Well, given that your claim was Republicans have always wanted to eliminate Social Security, and that your cite linked to an article endorsing changing SS, it’s hard for me to see there’s any support there at all.”
Please read the article cited therein. It’s in pdf, so I can’t cut and paste, but the “changes” they are looking to promote are to go to an entirely privatized benefit.
The idea that wealth is important in figuring out SS eligibility sort of neglects the fact that the wealth is there to generate income, among other reasons. Anyone willing to live on a SS stipend who has millions in wealth accrued simply to pass it on to heirs can be discouraged by some judicious application of estate tax. And I submit that those that indulge in such behavior will be the exception in any case.
But note a couple of things.
The choice of how and when to convert wealth to cash is up to the individual. That means that there is considerable scope for manipulation of income, including which assets to sell, and what year to sell them in.
One important source of wealth actually provides income that is not reported on income tax forms. That’s housing, surely the largest component, on average, of the wealth of retirees. What I mean is that two retirees may have identical income from various sources, but the one who owns a home will be much better off, usually, than the renter. Even if there is a mortgage payment, it will often be small relative to comparable rents, if the house was bought some time ago.
Hence, language like:
I looked to see if employer contributions are on the chopping block, but not a mention of that. Nor is it advocated that the program be terminated entirely. Still not seeing your point. If doing anything at all to Social Security equates to total eliminattion for you, than I’m all for total elimination, too.
“If doing anything at all to Social Security equates to total eliminattion for you, than I’m all for total elimination, too.”
Try again, but guess a different country. Or else try to square your view that it is not advocating privatizing the Social Security program with statements in the article such as:
“In doing so, we will strengthen the coalition for privatizing Social Security and we will weaken the coalition for retaining or expanding the current system.”
and
“Under the Ferrara plan [a phase out plan discussed in the article], workers would be allowed to invest part, and eventually all, of the money they now pay into Social Security in expanded IRA’s in return for a corresponding reduction in their future Social Security benefits. Under our proposed modification, workers who choose to opt out of the system would not only lose their corresponding benefits, but would even have them reduced somewhat further for the privilege of getting out of Social Security.”
Their proposal is actually worse than merely privatizing Social Security; they expect people to pay for the privilege of doing so.
If doing anything at all to Social Security equates to total eliminattion for you, than I’m all for total elimination, too.
A few excerpts from the document Dan linked to:
…
…
You very inaccurately describe the content of what he is linking to. The changes being discussed are not minor, and the clear goal is the elimination of the current system. Your comment above is inconsistent with reality, to say the least, as anyone who would read the original PDF would see.
This may have made sense to you, but not for me. Perhaps a clarification? Thanks in advance.
Inaccurate; it’d be more accurate that they propose that people pay for said privelege. Only those people who are making use of it, though. This is objectionable why, exactly?
I’d like to suggest that there’s more than a little difference between privatization and elimination.
felix, you’ve not yet earned the right to any kind of reply, save that your reading comprehension skills are still awful. Until you’ve rectified the situation, don’t even bother addressing me.
I’d like to suggest that there’s more than a little difference between privatization and elimination.
Not when there are nontrivial numbers in the Republican party who are using “privatization” as a smokescreen for or stepping stone to elimination. It makes it difficult or impossible to have any faith in those who might be genuinely in favor of privatization as a real option.
A little detail might be in order, here. Who, and how do you know it’s a smokescreen?
felix, you’ve not yet earned the right to any kind of reply, save that your reading comprehension skills are still awful.
My reading comprehension skills are fine thanks, it is your misrepresentation of the article that is awful, as anyone who reads your comment and then looks at the PDF Dan linked to can verify. Not only awful, completely inaccurate.
Again. I don’t care what your response is, if this was just a debate between yourself and me, it would be a waste of my time to continue, obviously. But as others read this site it is important that they not be misled by your inaccurate statements.
“Try again, but guess a different country.
This may have made sense to you, but not for me. Perhaps a clarification? Thanks in advance.”
I know you like making Monty Python non-sequitirs on occasion. This was one.
I agree with Catsy on the lack of difference between privatization and elimination.
Oh, belatedly…yes, Ken, I got tangled on Medicare vs. Medicaid when it comes to means testing. Thank you for the gentle prod of correction.
Social Security Poll – All In
A USA Today/CNN/Gallup Poll taken Friday through Sunday seems to have addressed this hot button issue better than the more politically slanted efforts of recent weeks.A solid majority of Americans predict that their benefits will have to be cut or th