Wednesday, March 23, 2011
Washington Post's "Left Leaning Opinons":Have someone advocating cuts to Social Security. For an overview, there's Media Matters. For some detail, there's Dean Baker. There are several objections to the essay, but here's one particular element that deserves scrutiny: (emp add) Moreover, the progressivity of Social Security should be looked at in the broader context of federal support for retirement savings. The federal government confers more than $100 billion in tax benefits each year on participants in employer-sponsored retirement programs. These benefits flow almost entirely to middle and high earners, who generally participate in their employers’ retirement plans. By contrast, the employers of many low-paid workers do not offer retirement plans — and if they do, more low-wage workers do not have the financial leeway to make the necessary contributions.
Because of the differential impact of these tax benefits, the overall federal approach to retirement is regressive. For Social Security to become both solvent and progressive, Congress should maintain existing benefits for low earners while slowing the growth of these benefits for middle and high earners. Got that? Because of policies in a different area, with impacts that are a statistical average, there should be cuts to everyone of a given category (middle income) in Social Security. The essay has other propagandist tricks, such as ruling out solutions by saying that "As a practical political matter, it is doubtful that Congress would" increase taxes. Leaving us with the only "practical matter" of cutting benefits. Anybody can play that game.
posted by Quiddity at 3/23/2011 10:35:00 AM
3 comments
How does it make any sense to provide equal welfare payments to wealthy old people and poor old people. And yes, they are welfare payments. No one "chose" to "invest" in Social Security. It was a flat tax on employment, and the "surplus" was spent, not invested, just like any other government tax revenue.
Besides, now that the "trust fund" is being repaid from the general fund, there is no connection remaining between the payroll taxes collected and the disbursals from the general fund.
We need to cut welfare to rich people. Means testing for Social Security is one of the places to begin.
Social Security already is means-tested under the IRS code, it's known as 'taxable social security' when the recipients' other income for the year reaches a set amount based on their filing status.
No one "chose" to "invest" in Social Security. It was a flat tax on employment, and the "surplus" was spent, not invested, just like any other government tax revenue.
It's a form of insurance, not an investment with a guaranteed rate of return.
No, insurance uses actuarial methods to balance the amount being paid out in benefits with the amount being taken in in premiums. If you want to make Social Security into a true "pay as you go" system, that would at least be honest. It would mean that benefits would steadily decrease as the retired population rose and the working population shrank, which is politically unacceptable, which is why it will not happen.
Also, "taxable social security" is based on the recipients' other INCOME, not their existing assets. It's hard to realistically characterize Social Security as old-age poverty insurance when your poverty or lack of poverty is not taken into account.
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