The myth of making Social Security more "Progressive"

[jtown1123]

TruthOut

Family Friendly Cuts to Social Security: The Myth of Affluence Testing
Monday 17 May 2010

by: Dean Baker

Billionaire Wall Street investment banker Peter Peterson has come up with a focus group tested term for his plan to cut Social Security. He calls it "affluence testing." The idea is that we will just cut Social Security benefits for wealthy people like Peterson who don't need their Social Security. We won't touch benefits for ordinary working people.

That's a great story. Unfortunately, it has nothing to do with the debate over cutting Social Security. The problem with the Peterson story is there are very few wealthy elderly. We can zero out the benefits for Peterson and his wealthy friends and nothing in the Social Security accounts would change. Social Security's maximum benefits are just a bit over $30,000. Taking away $30,000 from a few thousand families makes no measurable difference in a program that spends $700 billion a year.

The Rest: http://www.truth-out.org/family-friendly-cuts-social-security-the-myth-affluence-testing59556

[xchrom]

1. cutting SS off for some just opens a door to

cutting it off for others.

there's a reason why some programs include EVERYBODY.

[jtown1123]

3. Yes. While it would be wonderful to give the needy more, I fear it could

ultimately destroy what is now the most popular social safety net.

[dkf]

7. Look at the internal rates of return on various incomes.

The projected payoff at the high end is Minimal sometimes dipping into negative territory. It is often above 5% at the low end, which is a decent return, but nowhere near long term market returns. I think the longer term return for 90 day treasury bills is the best anyone will do under SS.

The only People who do pretty well are poor one earner couples


http://www.ssa.gov/OACT/NOTES/ran5/an2004-5.html

[Warren Stupidity]

2. SS is not welfare.nt

[jtown1123]

5. +1000

Yet, some will still say that regardless of the facts.

[badtoworse]

9. That is exactly why the program has been successful

Means testing would be a disaster because it is the essence of welfare. In my opinion, on overwhelming number of people view social security as a benefit they earned with their own money (paid into the system over their working lives). People are comfortable with that because everyone is treated equally. People view welfare very differently and if social security gets cast in that light, it would be much easier to destroy.

The changes to welfare that Bill Clinton made enjoyed public support. The same thing could ultimately happen to social security with means testing.

[dkf]

4. Not that many wealthy people around? I'm shocked!

Since we expect them to pay for all the rest of us you'd think there were enough of them to make a dent.

[jtown1123]

6. Not exactly. There are not a lot of wealthy seniors. There isn't a huge percentage of wealthy

but they hold a majority of the wealth.

[Pholus]

8. Wow! Did I just tune into Fox Business channel with that comment?

Please tell me there was a sarcasm tag or something in there so I misread that.

I just expect people to pay proportional to their benefits they derive from society.

And having money and priviledge means having more access to EXPENSIVE societal benefits than the rest of us.

Yet, my tax rate remains basically constant while I see the most affluent's tax rate dropping.

[customerserviceguy]

10. Reminds me of when they started to tax unemployment benefits

over thirty years ago. It was reasoned that two types of employees didn't "need" it as much.

The first type was the person who had seasonal unemployment as part of the normal course of the career path they had taken, such as fishermen and construction workers. The thinking was, "These people make megabucks in season, collecting UC is just frosting on their cake, and we should probably tax it like we do their wages."

The second type was someone who made a LOT of income in a calendar year, either from the job they had lost (or had regained) plus having a spouse with a good-paying job. Thus, the limits were set at $20,000 for a single person, and $25,000 for a married couple. When I was making a thousand dollars a month, that did sound like a hell of a lot of money to me.

However, once we broke the principle of not taxing UC, we could go anywhere. In the middle of the early 80's recession, Bob Dole and his committee took those levels down to $18,000 for a married couple, and only $12,000 for a single person. Then, years later, they decided to tax it all.

It's a slippery slope.