Sunday, October 26, 2008

Throw Rich People Off the Social Security Rolls

by Libertarian Girl

Everyone’s been worried about Social Security for a long time and how to make it “sustainable” in the long term. We could cut spending on other programs and try to make a go of it, or we could cut benefits, or just watch the whole thing collapse. Or…
Why not make it means-tested?

Why should rich people get Social Security? When I ask people this, they reply that “We all pay into it, we should all get something out of it.” But we all pay taxes and we don’t all get food stamps, day care subsidies, Medicare or government kickbacks like some people do, do we? Why should we all get Social Security even if we all pay into it?

Any time I hear an argument for keeping Social Security, it involves helping poor elderly people, not sending checks to Robert Redford or Clint Eastwood.

So why should a rich person get Social Security? They’re rich. They don’t need it. Money is going from poor kids fresh out of college– and even teenagers working hard to buy their first car, or save up for college– straight into the bank accounts of Warren Buffett and Carl Icahn and that rich kid you knew in high school’s grandma down the road. In many cases, it’s going from a middle-class grandchild straight to their affluent grandma in Florida.

If you don’t think
Social Security is in trouble, take a look at one of the Democrats’ plans for fixing it that failed in 2004-2005, because people don’t want to face up to reality:

I believed Social Security wasn’t in much trouble at all–just needed a few “tweaks”–until I looked at the tweaks the Two Peters were proposing. In addition to the benefit cuts outline above, Diamond and Orszag have the current 12.4 percent Social Security payroll tax rising to 15.4 percent in 2078 and continuing to rise “slowly over time thereafter.” Even if the Medicare tax is kept at its current 2.9 percent (a seeming impossibility) that means total FICA payroll taxes in excess of 18%. You want to try to finance universal health care on top of that? I don’t.

If Democrats want to know what a benefit cut that really zings the rich looks like, they should go to Australia, where (last time I checked) the top quarter of recipients gets no benefits at all. Zero. The bottom half gets full benefits. The people in between get in between. Now that’s a means test! Not coincidentally, after means-testing was introduced in the 1980s, Australia’s pension system cost a little more than half what ours costs, in terms of GDP.

Some people are dead-set against this idea. For instance, according to the “misguided demagogue” Saul Friedman, Max Skidmore wrote in his book, Securing America’s Future:

Means-testing Social Security would change its nature and destroy the system. Universal coverage, regardless of need, is one of Social Security’s strong points. Millionaires do receive benefits, but they also pay into the system. Their benefits represent a smaller return on what they pay than do the benefits of lower-paid workers… Building in ‘need’ as a criterion to qualify for benefits would require the majority of Americans to contribute for a lifetime to a program from which they could draw no benefits.”

In other words, they don’t get back nearly what they paid in, but if we didn’t send checks to these millionaires, the system would be destroyed? How does that make any sense?

They’re already getting a bum deal by not getting back what they paid into the system, and they already pay far more in taxes above and beyond that for things they’ll never use– Medicare, state taxes for welfare and public transit and all those things that rich people have no need for. Is Medicare destroyed by not giving it to everyone? Is public trasit destroyed because more people pay for it than use it? I don’t follow this argument.

Skidmore also wants to lift the income cutoff for paying Social Security taxes and dedicate death taxes to the Social Security fund… so he wants rich people to still get their “benefits,” but pay millions more dollars more into the system. How is that more fair to rich people than just telling them they won’t get benefits at all?


jcheney said...

I couldn't agree more with this article. When my own parents went to collect their social security benefits I thought it was wrong. They do not need the benefits since they have plenty of retirement money, a million dollar home in California, three vehicles and a vacation home in Palm Desert California. The system is so broken and it is outrageous that people like my parents get benefits when they clearly don't need them.

They feel they are entitled to these benefits simply because they paid into them, when the excellent point in this article is made that they don't collect in food stamps or other welfare benefits.

I hope this issue gets more attention. I will do my own part to get this message out. Now it will be up to the media to do their job. Sadly the majority of the media will not consider this issue important enough.

Anonymous said...

This might not be a bad idea; you have to look at it from a different point of view. Look at it as if the wealthier in our community pay insurance for two things, #1 insurance against being poor, nothing is ever guaranteed and the rich today can be the poor of tomorrow, second insurance against increasing other taxes. When folks in the community can’t afford certain basic needs we all pay through higher taxes in other places. LETS MAKE SURE WE INDEX WHATEVER WE DO TO INFLATION SBM

Paul Hue said...

I suppose I agree: the only thing worse than welfare for poor people is welfare for rich people. Privatizing is my first choice, but this is my second.

Anonymous said...

I like the basic idea. The problem is that Social Security has been billed all these years as a personal retirement scheme--not a government transfer payment. Thus, it's like not giving one the money that one has put into his bank account--only, of course, it's not a real account. Still, that's the way that it has been sold over the years.

For me, and I hope I really do have the resources to carry through with this, I view Social Security as an unconstitutional Ponzi scheme (the Constitution does not give the federal government that power to run a mandatory retirement program), and shall have nothing to do with it further than they compel in taking away tax money.

Anonymous said...

Wow, just when I thought I'd heard it all I hear a liberal nutcase suggest that the rich (just what exactly is "rich" anyways) suggest that people who are well off shouldn't collect any of them money that they've been putting in SS their entire life.

Has it ever occurred to any of you idiots that the reason some people may be rich (I promise you, the government will not define rich as being at Paris Hilton's level) is because they've made wise choices throughout their lives and made smart career and investing decisions?

So now, let me guess, we take from the people who've made the right choice and give to the looters who haven't.. That's a recipe for disaster and it is totally lame.

I think all the liberals should start their own country in California and see how long your entitlement programs and fantasy land will last without the evil rich republicans and all their evil jobs, production and rationality.