The trouble with means testing Social Security. Which Bush was right on Iraq? Plus more.
Re: Ross Kaminsky’s The Means Testing Temptation:
Kaminsky’s arguments about means testing of Social Security benefits are on target. But what he does not say is that means testing may be the lesser of two evils for those with high incomes and net worths. The other evil is completely uncapping the income of which SS taxes are levied, which is being discussed as a way to increase SS taxes massively.
If I have any sense for how the so-called “rich”
would vote, I’d bet that the majority would opt for means
testing if it meant that they would be assured that little more
than what part of their incomes are now taxed would be taxed in the
— Richard R. West
I’m not sure I understand Ross Kaminsky’s point. For
almost 75 years Republicans and conservatives have tried to get
SocSec means tested; for just as long Democrats and leftists have
violently resisted, because they know that as soon as it becomes
apparent that SocSec is not insurance but is just another welfare
program, the support for it will plummet and it will cease to be
the third rail of U.S. politics. For once the Dems and leftists are
correct, which is why we should means test it immediately. Then
we’ll be able to raise the retirement age and stop increasing the
benefits such that the program will become solvent again.
— Scott M. Freeman
New York, New York
There has already been “contamination” of the Social Security benefits through the public pension offsets. Not every government worker is covered under social security. I find it is no coincidence that some of the states where government workers without social security are the more numerous, California, Ohio and Illinois, for example, are the same ones who are also in great financial trouble currently with regards to public pensions.
Over 66,000 retirees yearly in 2009 in California were denied all Social Security benefits on a spousal record because of the Government Pension Offset (GPO), which offsets two-thirds of the amount of a worker’s uncovered government pensions. More than 11,000 others were partially offset. The offset in reality is even more than that because of the difference in taxation at the federal (and also the state level in California) so that it potentially becomes a three-fourths offset. Of those offset, 79% are women, who are more likely to have stayed home to care for a family and have a shorter work record.
I am typical of these: I was mostly a stay-at-home wife and mother of four children for most of my 31 year marriage. After my husband died suddenly, I went to work at age 52 full-time as a librarian in a public library. The pension I received when I retired at age 70 caused me to lose all of my spousal Social Security benefit. In other words, my pension only amounted in reality to about $7,000, if you consider the Social Security I lost and the tax consequences. Additionally, I had worked part-time at public libraries after my children were grown, but received neither Social Security coverage, nor a pension.
The other offset, the Windfall Elimination Provision (WEP), rewards a woman (or man, his) who puts her children in child care with “child care credits” on her income tax. If she works 30 years under Social Security, she is “grandmothered in” and can work under an uncovered by Social Security job without any offset penalty. For those with less than 30 years coverage, a sliding scale exists, but does not completely eliminate a benefit.
When one considers the role of Social Security, this issue needs to be examined. The rationale for the offsets is that the public pension is the “same” as Social Security and then the “dual entitlement” rule is quoted. However, in reality it is not so, because in a community property state, one spouse under Social Security can be awarded half of the other spouse’s government pension, yet the latter probably won’t be able collect any spousal Social Security.
There are many other ways in which theses offsets are unfair. If they can deny us, they can deny you too.
To Mr. Richard West: Mr. West makes an excellent point that most “rich” Americans would probably prefer means testing to removing the cap on income subject to Social Security tax. That said, I think the political ramifications would be roughly similar, or perhaps even more dramatic. Those Americans who make more than the cap — and who therefore have dollars to put behind their political inclinations — would feel more than ever that they’re having their economic blood drained from them by people who chose not to save enough for their own retirements (or were prevented, perhaps by the very high Social Security tax, from doing so).
That said, going the route of raising the cap in the hopes of a rebellion of the non-poor is a very high-risk strategy — just as allowing aggressive means testing would be. The decision on which of these to try, if any, will be made by politicians who will weigh the likely economic outcomes of the choices — sometime after they weigh the likely impact on their own careers.
To Mr. Scott Freeman: I disagree that Republicans have been champions of means testing of Social Security. Sure, they understand the potential political gain — which was one point of my article — but they also understand that in politics you often must be careful what you wish for lest you actually get it. Another point of my article is that the current budget situation makes the political impact, namely the lessening of support for Social Security overall if it were more aggressively means-tested, less clear than it had been in the past. In other words, the necessity to slash the federal budget might make enough people on both sides willing to means test the program that it actually happens. And once it does, I would suggest there’s no going back and there’s no way unhappiness with the new situation will be enough to cause the political will to massively reform Social Security into its original intent as a safety net rather than a hammock.
We should raise the retirement age and over time reduce benefits so that Americans not yet particularly close to retirement know they should not and cannot rely on Social Security as their primary source of retirement income. I will continue to strongly object to making Social Security a “horizontal” welfare system in addition to its current “vertical” transfer of wealth, which a friend of mine rightly likened to a “reverse inheritance” from the young to the old. Any changes to the system must recognize the reality of having gone to a world with 8 workers supporting each retiree (in the 1950s) to just over 3 workers per retiree today, and projections of 2 workers per retiree in just over two decades. We’ve reached the point where the Ponzi scheme of Social Security should be called what it is rather than continuing to find more sacrificial lambs to feed its ever-ravenous fiscal maw.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?