Class Warfare Or Simple Fairness?
By Rich Miles
In his Feb. 22 column, David Brooks, usually a reliable shill for the Bush administration, delivers a rather harsh indictment of Bush’s most recent budget. He also manages to spread the blame around, including onto the victims by saying he is “offended by the horrendous burden seniors are placing on the young”. I goggled in disbelief at that sentence - at least one of our nationally-distributed pundits believes that our old people are a “burden” to be alleviated by some as-yet-unnamed champion of fiscal soundness.
There is, however, one bit of truth to Brooks’ diatribe – federal entitlements (ALL of them, and Social Security the least among them) are out of control, and have been for years. And one way to make a significant dent in that problem is the one way no politician will even bring to the table: means testing.
Let’s look at one of the basic tenets of the existing Social Security system: the wage cap. This number has risen steadily over the years until today, it stands at $90,000/year and rising. This means that, if you earn $90K or more, you stop paying Social Security taxes on any additional income for the rest of that year. The principle under which this idea has always operated is that there is a maximum SocSec benefit when you retire, and you should not have to pay into a system beyond what you can ever hope to receive in return. Thus, a wage cap.
But the failure in this principle is that you can still collect full benefits at retirement whether you need it or not, despite the fact that the wealthiest among us stop paying into the system when their income reaches the cap levels.
Due to an unintended consequence of the Senior Citizens’ Freedom to Work Act of 2000, which was intended to eliminate the benefits penalty for seniors who earn money, it is now possible for a 68-year-old person who receives $200,000 a year from unearned investment income to get the same benefit as a 75-year-old person who makes $12,000 a year bussing tables because she HAS to. These are just broad examples – plug in whatever numbers you like here, the above statement remains true.
But if anyone points this out and suggests that maybe it’s not quite fair for a millionaire to receive government payments, he’s accused of “class warfare”, of seeking to penalize those who managed during their working years to provide a comfortable living for themselves in retirement. Most of the people making such claims are the very people we’re talking about here, but never mind that for a moment; if the Social Security system is in “crisis”, how much would it be helped from that crisis by a graduated means test that would reduce benefits, eventually to zero, as one’s other earned or unearned income increases beyond a certain level?
I’m not talking about a return to pre-Freedom to Work days, where our McDonald’s worker gets her benefits cut as her income rises to $12,500. I’m talking about not paying benefits to people who genuinely and provably don’t need them. Surely our elected representatives, smart as they are, can come up with a formula for this that wouldn’t harm those in need, but would address this drain on Social Security’s resources?
To enact such a plan, whatever its details, would require two things: a willingness on the part of wealthy people to do something selfless in the interest of those who are just barely scraping by in old age, and a high level of political courage in Congress to go against the wishes of the people who pay for re-election campaigns.
Sadly, neither of those requirements seems to exist in our country today. No politician in his right mind is going to risk the political fallout of offending the wealthy with such a proposal. And “compassionate conservatives” don’t even seem to understand the question.