This is grand, from Sherrod Brown:
“There are two fundamental numbers that make this a moral case for Democrats to make,” Brown told me in an interview today. “One is that a third of seniors rely on Social Security for virtually their entire income. The other is that more than half of seniors rely on Social Security for significantly more than half their income.”
Brown is endorsing Tom Harkin’s bill to expand Social Security benefits, which would boost benefits for beneficiaries by $70 per month, change the cost-of-living calculation to keep pace with rising costs of things seniors need, and scrap the payroll tax cap to strengthen the program over the long term. The crusade to expand Social Security got started with liberal bloggers such as Atrios began pushing for it, and gained some momentum when liberal groups such as the Progressive Change Campaign Committee began mobilizing behind the idea.
A bargain where a McDonald’s worker pays FICA on all their income, and rich folks only pay on the first $113K, is not so grand.
The grandest bargain would create a gap between $113K (or some lower number) and some other number that sounds like a lot of money (say $250K). In other words, a bargain where we raise taxes on the wealthy.
cleek
except that, by law, SS requires its own dedicated income stream, and can’t be paid out of general revenues.
Belafon
@cleek: That wouldn’t apply in this case. What mm is arguing is that we all pay into SS on our salary up to $113K, then, if we make over $250K we pay on that additional amount into SS.
Mudge
Don’t they want to scrap (eliminate) the cap? I have read they want to tax all income, not just the first $113k.
MattF
Whoa. Taking from the rich and giving to the poor. That’s gotta be unconstitutional.
Sugar Daddy
Of course, let’s just raise taxes on everybody, government always knows better what to do.
kindness
Eliminate the cap, period. What is truly fair is if everyone pays the same rate no matter what their income is.
James E Powell
We can’t have that. Those seniors would just take that 70 bucks and blow it on bingo. Why just the other day, I saw an old guy buying lottery tickets. Obviously, he doesn’t need any more money.
White Trash Liberal
Obama brought up eliminating the cap as a candidate. Nice to see it gaining a little steam, but once again it will break against the tea party rocks in the House.
NorthLeft12
It does not sound like the Democratic leadership, especially Obama, is taking this very seriously.
Sounds like an issue that Dems should be forcing him to support. Isn’t that what he wanted a few years ago?
mai naem
I think this would be really good for Dems electorally but not so “fair.”
What you need is short term investment income being taxed at a higher rate or some kind of transactions tax which would hit the people who trea tWall Street as a casino.
Belafon
@Sugar Daddy: Except that’s the beauty of this. It won’t raise taxes on everyone. Just those that make more than the current cap, you know, the top 5-10%.
White Trash Liberal
@Sugar Daddy:
What’s truly fair is a sliding scale where the deduction increases along with your income. A few percentage on taxes means a lot more to working poor than to the leisure class. It makes the difference in groceries and bills.
Removing the cap just creates a flat tax that, while helping strengthen the SS system, leaves in place a regressive process.
Matt McIrvin
@Sugar Daddy: Right now, the tax that funds Social Security is higher on a poor or middle-class person’s dollar than a rich person’s, because income above the cap isn’t taxed at all. The existence of the cap is the one sole reason that people can make noises about Social Security becoming insolvent at some point in the future.
And there’s no reason for it. It isn’t as if “raising taxes on everybody” is some kind of out-of-control process. We’ve been lowering taxes on really rich people and slashing spending on poor people for decades with apparently no social benefit to show for it.
White Trash Liberal
@White Trash Liberal:
That reply was meant for kindness, not for the obvious GOP troll.
My apologies.
Belafon
@MattF: Actually, there’s a great argument for this anyway. Life expectancy since the creation of SS has only gone up for the top quarter of earners, and the largest life expectancy increase has been in the top 1%. So the takers in this case – or possibly in a lot of cases – are those whose salaries go over the cap.
cleek
@Belafon:
ah. ok.
misreadings are great.
Michael
I like the donut hole idea personally. To be honest, given stagnation in wage growth for the vast majority of the country over the last few decades, I think what would make the most sense would be lowering the cap to something closer to $85K or even less and then creating a donut hole and taxing all income over $250K (or $300K or whatever)
Keith P.
@MattF: Expect to hear “extortion” a lot from the GOP on this one. It will be their presumed reason for refusing to negotiate after complaining that the president wouldn’t negotiate.
ranchandsyrup
@Sugar Daddy: You only put half of the false choice up there…….don’t half ass fallacies, please.
jonas
@MattF: Also completely un-Christian
Sly
That’s not the grandest bargain.
The grandest bargain would be to (a) increase the progressivity of the tax code and (b) allocate that additional revenue, in whole or in significant part, toward liberal spending priorities. Which is what Harkin’s proposal does.
(a) is meaningless without (b), because (a) is temporary due to political constraints while (b) is far less temporary due to those same constraints. If the past half century or so is any guideline, we should assume that the desire to retain progressivity in taxation decreases over the long term while the desire to retain liberal spending priorities remains relatively steady in comparison. Democrats shouldn’t get caught up in the tax half of the equation and pat themselves on the back when they get minor increases in taxes on the wealthy because the next Republican Congress/President will just get rid of them, deficits be damned.
The Dangerman
All that has to be done for that to happen is win back the House and keep the Senate and go nuclear on filibuster. In other words, try again.
maya
@mai naem:
Short Term Capital Gains Tax, which used to be set at a much higher rate than the 28% max it is now – 50%+ when I worked on The Street ( late 60s-early 70s). Long Term CGT was also higher than 5-15% now.
Mitt Romney’s $220M income on the only tax return he revealed was almost all CG. The mofo hasn’t worked a job in years. His nominal tax rate was 13% on all that. Half what the working slobs pay in income tax. And that was the highest rate he ever paid most likely. This is what needs to be fixed. This is where the greatest transfer of wealth to the uber-rich is taking place. You have to go after The Sacred Cows. Kill them and grind them into burrito filler.
Gin & Tonic
I never understood the reason for the cap in the first place.
piratedan
@MattF: nah, more like institutional….
BobS
@mai naem: While not as fair as a progressive tax to fund Social Security, removing the cap would be a helluva lot more fair than what we have now.
And it doesn’t have to be remove the cap or a transactions tax- it could be both.
EconWatcher
@The Dangerman:
I don’t think it’s feasible to pass this legislation now. But this is a great way to frame the issue on our terms. Rather than merely rebutting their nonsense that social security is bankrupt (pure defense), go on offense and show that a tweak to payroll taxes would not only assure solvency for the forseeable future, but also allow for some much-needed additonal help to some of the poorest among us.
Sherrod Brown seems to recognize that the best defense is a good offense. Good for him.
Matt McIrvin
@White Trash Liberal: I like that even better! FICA should be a progressive income tax.
But it’s not. And the separateness of it allows Republicans to conveniently ignore it when they bloviate about the takers who pay no taxes. Can you imagine the squealing if we tried to make it one?
polyorchnid octopunch
@White Trash Liberal: Which will be fantastic. Should be just in time to drive the wedge between the Tea Party and a big chunk of their constituency at the midterms.
cleek
IIRC, eliminating the SS cap would amount to the largest tax increase in US history (based on the amount of new revenue it would bring in).
i’m not sure Dems are going to want to own that one…
Violet
@EconWatcher:
Agreed. This applies to all sorts of things. Dems seem to play defense or argue over the details of what is a Republican plan to begin with. We’d be doing a lot better if the Republicans were arguing over the details of a Democratic plan.
dpm (dread pirate mistermix)
@The Dangerman: This is 2014 election planning – and I think it’s a winning message.
Greg
@Gin & Tonic
It’s part of the (illusory) idea that SS is an arrangement where you pay your money in during your working years and get it back during your retirement years. The maximum benefit during retirement is capped, thus so is the pay in. How SS _actually_ works is nothing like this, of course, but it was built to look like it does…
? Martin
@White Trash Liberal:
That’s a dangerous argument. The counter-argument will be that SS is a safety net program and that benefits should be flat – everyone will get what the bottom of the SS scale is now in exchange for keeping a flat contribution rate. The folks at the top with their 401Ks won’t give a shit about losing that benefit, and now you’ve provided the rationale to reduce SS benefits.
Jamey
Not humble-bragging (especially after nearly 18 months post-layoff of hustlin’ for freelance and consulting with/for insane and/or marginally competent clients), but my new gig puts me over the FICA cap and, frankly, I would be happy to pay more.
Am not talking about JGC-type money, but I am nonetheless thrilled by this prospect–both of being fortunate, and of working to ensure that fewer people my age get fucked over by the grand 401 (k)/defined contribution-retirement/no-retirement-fuck-you-very-much boondoggle.
To object to a lifting of the FICA cap betrays an utter lack of what the “Insurance” part of SSI means. And it’s downright Un-American, also … too.
Raise the cap. Raise the benefit. Make benefits work on a sliding scale. To have others living comfortably should be a comfort to ALL. Damn!
? Martin
@dpm (dread pirate mistermix): Agreed
Skipjack
Has anyone run the numbers on how much of a tax increase removing the cap would be? People like to pick $250k as a target, how much of a tax hike would removing the cap be on someone making $250k/yr? And if it would only be going to Social Security, shouldn’t it be an income tax hike instead for general revenue? My envelope calculation results in an extra $3200 per person making $250k, my formula could be off.
What kind of benefit trade-offs are we willing to make for someone putting in more to Social Security? I suggest removing the cap would be unfair if benefits aren’t going to go up at all for those people, while hiking the income tax would be perfectly fair if it is spent on the whole of the country.
We need more money for Social Security, but we need even more for the wealthy to pay higher taxes to the general fund.
PS. I recognize that we don’t expect to get either, and this is a messaging thread. But we have a way of buying into our own formulations over time. I’d rather ask for what we really want.
Jay C
Also, too, be prepared (should this excellent idea ever even make it to the floor of the House) for a tsunami of anguish from the starboard-listing media on behalf of those “middle-class” professionals and small-business people who think $250K in annual income is scarcely above the poverty-line. Remember a couple years back when they were (quite minorly) tweaking the tax code, and that U of Chicago professor penned some online screed about how he and his wife took home $350-400K or so, and how that paltry sum was barely enough to stay alive on in his tony neighborhood (where the Obamas used to live, IIRC)? I recall the tsunami in that case was a online outpouring of scorn on his stupid greedy ass for griping about their paupery while making six or seven times the average national income. But that was back in the Olden Days pre-Tea Party: today, I think a serious re-ordering of SS taxes will bring out the resentments in spades (probably framed as hideous “class warfare”)….
Jay C
@Jamey:
What are you, some kind of Communist??
This is AMERICA !!!
Matt McIrvin
@? Martin:
My knee-jerk response is that it hardly matters anyway, because I already encounter people who insist that even a flat tax is unfair to rich people, and the only fair tax is a Thatcher-style per-capita charge for government services. Why should I pay X percent on every dollar when I don’t get more government than a poor moocher? Etc.
Jebediah, RBG
@Jamey:
Congratulations on the new job!
and –
-couldn’t agree more.
Matt McIrvin
@cleek:
If “the largest tax increase in history” is undoable even if it’s exclusively on rich people (and I speak as someone rich enough to actually sometimes be affected by the FICA cap), then we’re just screwed, because without the largest tax increase in history things will never get better. We’ve been nibbled to death by little pieces.
jonas
@Skipjack: As I understand it, SS gets more redistributive as income increases. In other words, people making over about $50k a year don’t really get back much in future benefits compared to what they pay in, whereas someone making $20k will eventually get something close to their monthly income in future SS benefits. The question is, if we raise the cap to, say, $250k, do we keep the same credit/distribution scheme that will eventually curve towards zero as you hit that $250k point or something? Then you really do have people paying in and knowing they will get nothing back, which is a tough sell. Or do we shift everything up, namely that someone making upwards of $75-100k will now see a substantial increase in future benefits? If so, doesn’t that just produce the same funding problem as we’re seeing now?
cleek
@Skipjack:
there are a lot of studies out there : Google “SS admin removing cap report”. lots of PDFs come up (which are hard to link to thanks to Google’s stupid URL redirection )
kindness
Social Security actuaries have publicly stated that if the cap was removed, Social Security would be fully funded for the next 95 years.
I see no reason not to do exactly that. As far as ‘class warfare’ goes, I pay the full amount on every penny I make. I would not feel bad if those making more than $109K or $113K (which ever it is) would have to pay the same percentage that I already pay and have since I left my parents home back in the 70’s.
? Martin
@Matt McIrvin:
People you encounter aren’t who matter here. Elected representatives are who matter. They aren’t offering the argument you suggest. They are offering something in the ballpark to what I am suggesting.
Gin & Tonic
@jonas: You don’t get “nothing” back. Somebody who retired at age 70 this year could be getting just about $40k/yr. Yes, if you were earning $700k/yr that’s not a lot in comaprison, but it’s also far from “nothing.”
Another Holocene Human
@Belafon:
YES!!! THIS IS WHY PENSIONS ARE BROKE/BROKEN! Well, Romney raids. But! Also! Long-lived “makers” in the pension pool FUCK IT UP. When the pensions are by/for blue collar workers… huh… they’re funded… b/c blue collar people don’t ever hit “average” life expectancy. Funny how beating your body up for years will do that.
It’s the same thing with retirement age. What a laugh to have executives taking SSI. They live fucking forever. While poor blokes can’t even make it to retirement age. Geezus.
Occupational life expectancy or a reasonably good proxy would really enhance the system.
nanute
Be careful with the notion of raising the cap. As Dale Coberly and Bruce Webb at Angry Bear have been saying is that raising the cap changes the system from an insurance program to a welfare program. And don’t get confused about the bullshit argument that you never get back what you paid in. Raising the level of withholding is the most logical way to keep the system sound and solvent. From Coberly’s latest piece at AB: The bi-partisan expert liars like to confuse you with numbers they made up in a special way… called “net present value” which can be manipulated to look like you will get less back than you paid in. That is a lie. What they are saying is that you MIGHT (it depends) get back less than you would get back from a magic present value bank that ALWAYS pays a (made up) “return on investment” and has no risks and doesn’t have to pay any insurance benefits. Be careful what you listen to. – See more at: http://angrybearblog.com/2013/11/how-to-sound-insane-by-talking-like-a-bi-partisan-expert-on-social-security.html#comments
catclub
@jonas: “do we keep the same credit/distribution scheme that will eventually curve towards zero as you hit that $250k point or something?”
I think this is a fallacy. Even though the richer get less out as a fraction of what they put in, they still get more out than those who put in less, so it is not going to zero.
? Martin
@nanute:
It does, but the cap is arbitrary. It wasn’t when it was first set, but it’s become arbitrary over time. As a compromise, we could raise the cap and create another tier above the current top one for those people, which would still be worth it because raising the cap would bring in far more revenue.
liberal
Yawn. I’m over the cap, and so is my wife, but the idea we’re rich is ludicrous.
Yes, as I’ve posted here many times, my life is much, much more comfortable than that of someone who lives paycheck to paycheck.
But the truly rich aren’t going to contribute more to SS by raising the cap; to the extent they haven’t already done so, they’ll just take capital gains instead.
Another Holocene Human
@jonas: Well, let’s not forget that it IS insurance–plenty who have had it all have lost it all, too.
BobS
@Matt McIrvin: It would be incumbent on the Democrats to educate the electorate on the subject. My experience has been that many people who make less than the Social Securtiy cap are not even aware that one exists. I’ve also encountered people whose income exceeded the Social Security cap who argued (whether out of ignorance or disingenuously I can’t say) they did pay FICA on all their income, which is half true due to the fact that FICA is actually two different taxes- Social Security, which is capped, and Medicare, which is not- something that a few here may not understand based on my reading of the original post and some of the subsequent comments.
liberal
@? Martin:
The decision to levy the SS tax on wage but not capital income is, by the same token, arbitrary. For that matter, the decision to levy it on income and not wealth is also arbitrary.
liberal
@jonas:
Yes, it’s kind of a mixture of “insurance” and “welfare”. “Not that there’s anything wrong with that…”
Elmo
@Jamey:
100% totally agree. I went over the cap for the first time last year, to my great surprise. My paycheck jumped a little toward the end of the year, and I went to payroll – WTF? So they explained what had happened.
If there had been no cap, I wouldn’t have noticed or missed the money – my paycheck would just have stayed the same. I think most folks who earn a paycheck that puts them over the cap would be about the same – it’s a nice surprise when the extra money hits, but you don’t budget based on it.
Get rid of the cap!
Another Holocene Human
@liberal: that’s true. That’s why transaction taxes and short term capital gains taxes need to happen.
We really got fucked when inflation indexing of cap gains fell through. The “compromise” was to just slash the rates. Oh yeah, they talked about granny with her 1960s blue chips but it just let to the bad behavior we see in the market today because it’s too lucrative not to chase ‘churn’.
You tax the shit you want to go away. Churn sucks. Tax the everliving FUCK out of it. Hello.
MomSense
Ok, I am going to say that I would not support just lifting the taxable income cap on social security because that would mark the beginning of the end of the program. When FDR was setting up Social Security, one thing he was adamant about was that the Social Security (and unemployment) benefit be directly tied to what the worker pays in because he felt that this would give the workers the legal, moral and political right to collect that pension and to prevent politicians from taking it away.
I would support a minimum benefit for people below a certain income level to keep all Seniors out of poverty.
PeakVT
I think raising the cap so that SS taxes 90% of all labor income again is a no-brainer. Raising it beyond that, to 95% for a number of years, in order to recapture some of the revenues lost when the cap wasn’t high enough, is probably a good idea. Eliminating the cap altogether would substantially change the nature of the program. This may or may not be a good idea.
liberal
@BobS:
It’s actually a very complicated topic. For example, the fact is that most economists consider that the portion of the tax that is nominally paid by the employer is actually born by the employee, due to (empirical claims) about the tax incidence, which is ultimately a matter of elasticity of supply and demand for labor.
nanute
@ Martin, I can see raising the cap to a certain level. I don’t think it is an arbitrary number; it’s outdated and should be raised to reflect current income level disparities. The problem with raising excessive amounts of revenues is the same as it is today: Congress will just continue to borrow from the fund instead of raising revenues through general taxation mechanisms. Raise the capitals gains tax, add a financial transaction tax on high frequency trading for a start and see where that gets us.
Matt McIrvin
@BobS:
Honestly, I’d forgotten that myself. I think I only knew about the cap because of the years when I overpaid because of a change of employment, and got a refund calculated on the 1040. But, come to think of it, the form specifically said Social Security tax, not FICA.
Another Holocene Human
@nanute: Not so long ago there was no cap. When did all of America’s rich become America haters? Income tax used to be assessed on surplus income, also, too.
In fact, the meanest incomes were exempt from FICA.
Raising payroll on the bottom 40% hurts all of us because it hurts the economy.
But go on… maybe that French aristocracy shit will work the second time around…
liberal
@Another Holocene Human:
I think it’s better to just completely abolish the distinction between wage and capital income, for tax purposes, except for the indexing of capital gains for inflation. None of this “long term gains get preferential treatment” bullshit.
Furthermore, a huge fraction of so-called “capital gains” isn’t really capital gains at all; it’s increases in site value in real estate. It’s capital only in the sense that it’s a capitalized asset. It’s not capital, in the sense that the owner hasn’t done diddly to contribute to the economy, but rather just sits there as a toll collector. That crap could be taxed at 100% with no ill incentive effects, if it were practicable.
To make matters more ludicrous, from what I’ve heard, owners are allowed to depreciate improvements to zero, and then later after it’s sold a new owner can do so all over again.
liberal
@Another Holocene Human:
It’s always been f*cked up. I remember trying to learn about the “true” (effective) federal income tax rate, and for a long time, there was some fundamental thing about capital gains, where maybe the rate was the same, but only 60% of the gain counted towards AGI. Or something like that.
nanute
@Another Holcene Human,
No, there has always been a cap: http://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html
If you look at what Dale has proposed, it is a gradual increase of around 40cents a week from the employee. You honestly believe the bottom 40% would miss that? No need to be flippant, but go ahead.
BobS
@liberal: I don’t think making people aware of a cap that means people making > $113,700/yr pay a lower percentage of their income in taxes than those making less is too complicated.
liberal
@Matt McIrvin:
The problem is that most of the rich aren’t actually producing anything; they’re just skimming economic rent.
The political problem is that very few people understand economic rent, including many commenters here who were not capable of being convinced that urban site value is capitalized land rent.
We all know that there’s something amorphically unfair about the huge salaries of the truly rich, but if someone really understands the various forms of rent, they understand that rent collection really is legalized theft.
cleek
@liberal:
so, Mr and Mrs Hypothetical buy a house for $100K in March. by November they’re divorced. they sell the house, which has increased in value, thanks to the completion of a nearby high school, to $120K.
you’re saying that $20K should all go to the government ?
liberal
@BobS:
Sorry, it’s pretty complicated—are you including the employer side in your calculation? If not, why not.
liberal
@cleek:
Absolutely. The government caused the increase in the value. Why should the couple pocket any of it?
If you’re saying that it’s fair and just that the couple retain the windfall for doing nothing, you’ve got absolutely no understanding of fairness and justice.
FlipYrWhig
@nanute:
IANAEconomist, but I have never liked this argument at all. It negates the possibility of ever giving people who have been badly paid their entire working lives better benefits. And that’s who needs benefits! Yes, welfare-type benefits–direct aid because they’re poor and can’t get by without it. Do we really need to boost Social Security benefits across the board? I doubt it. I would happily put a much higher floor under the poorest beneficiaries, but I don’t think people already at the top need a raise, and the only reason to do it is because politically they’re a bunch of squeaky wheels.
Chris
@Jay C:
Once again with feeling (wish I could remember which of us said this first); it’s an incredibly fucked up mindset that holds that people on minimum wage are fat cat union employees, but people earning $250,000 a year are barely getting by.
Mark B.
The gap idea is dumb. If you remove the cap, it becomes a perfectly flat tax, which is exactly what the right wingers have been clamoring for. I don’t see how they can be against it, and still be logically consistent.
Ah ha ha ha .. I just cracked myself up. Logically consistent … heh.
burnspbesq
@Gin & Tonic:
The theory underlying the cap was the “three-legged stool.” Retirement income security was supposed to have three components: Social Security, private pensions, and non-pension saving. Social Security was only intended to “replace” part of wages, so the tax was only imposed on that part. People making more than the Social Security wage base were presumed to have the ability to save outside SS and private pensions.
Stop laughing, dammit!
Belafon
@MomSense: As I said above, the wealthy are living longer now than they were in the 30s. Not so, with the middle class and poor. If nothing else, the cap needs to be adjusted for this.
Suffern ACE
@burnspbesq: It’s the same reason that hedge funds and PE funds could exist without much oversight from the SEC. The SEC was supposed to be protecting grandma who was living off her AT&T dividends and GE bonds, while those hedge funds were for sophisticated investors. Unfortunately, just because you make 250,000 a year, your sophistication doesn’t improve. As those Maddoff investors proved a few years ago.
hoodie
It might be more politically viable if funded from economic rent income. Supplement with some sort of cap gains/transaction tax. The model would be employee benefits, FICA is the employee contribution, the owners pick up the rest to buy social peace. “Social insurance” cuts both ways, and everyone, including liberals, tends to fixate on insurance of the poor from circumstance, and not insurance of the rich from pitchforks.
cleek
@liberal:
sorry, but that’s …. absolutely crazy.
in my hypothetical, the increase came from the government that built the school, but it’s equally likely that an increase in value could come from improvements done by the owner – and now there’s no way to recoup those improvements? or the increase could be due to changes in demographics, or by changes in fashion (ex. there’s suddenly a huge nostalgia-fueled desire for houses built in the 80s), or simple inflation.
and the idea that a 100% tax on profits or a home sale would have “no ill incentive effects” is baffling. taking away the possibility that anyone could make any money on the sale of their house destroys the primary financial benefit of home ownership. everyone might as well rent.
just crazy.
nanute
@Flip YrWhig, That’s the whole point of leaving the cap in place. It does not increase the benefits of the well off. They are more than capable of saving for their retirement. I’m all in favor of increasing social benefits to the less fortunate, just do it by strengthening welfare programs; which SSI is NOT. It is an insurance program.
Uncle Cosmo
Stupid (or possibly ignorant) question here: IIRC the income tax code guarantees that a recipient of SocSec will pay taxes on only a fraction of it, on a sliding scale depending upon income, but in any case on no more than 85% of the payout. (It appears that those with incomes under $25K single/$32K married pay no taxes on it, with incomes between those and $34K/$44K they pay taxes on 50% of the benefits, and above that on 85% of the benefits.)
Why not add a fourth income bracket, say at $54K/$64K, above which all SocSec benefits are taxable? That merely removes a tax break now enjoyed only by those with relatively high retirement incomes. (With a top tax bracket of 37% someone with non-SocSec income over the top threshold & a SocSec benefit of $3000/month would pay an additional $166.50 per month in taxes.)
Now suppose you reverted the additional revenues (from taxes on the 15% of benefits not now taxed) to the SocSec trust fund. I wonder what effect that would have on its long-term viability?
Just wondering…
Fair Economist
@nanute:
So raise the payout cap along with the payin cap. Have the ratios at whatever they are at the current cap. I haven’t looked at the bill but I’ll bet that’s more or less what Brown et al are proposing.
burnspbesq
@liberal:
Why aren’t we also talking about eliminating the disparity in tax treatment for capital gains and qualified dividends? That’s where the real money is. Compared to that, uncapping the Social Security wage base is a rounding error.
cleek
@Uncle Cosmo:
instead of having a tax on SS that goes directly back into SS, for the sake of efficiency, you should just cut SS benefits in that bracket and skip the SS->IRS->SS paperwork.
Fair Economist
@nanute:
That’s simply not true. I know two people who, in spite of being rather wealthy during their working lives, ended up broke. Rich people make mistakes and get cheated too. If they’d had to pay SS taxes on all their income they’d have been better off, along with the country.
fuckwit
@Another Holocene Human: Great idea: incentivize investment, and disincentivize parasitic speculation. Ramp up taxes on short-term capital gains and transations, maintain low taxes on longer-term capital gains.
Mark B.
@Fair Economist: If the payout cap rises linearly with the pay in, it mostly eliminates the actuarial advantage of raising the cap. It’s really about wealth transfer, which isn’t always bad. After all, a lot of the wealth that rich people are able to gain and hold onto is because they live in a society where the general welfare is enhanced by government services, like roads, schools, and yes, universal healthcare. They benefit greatly from the government, so it’s not unfair for them to pay into the systems which provide for the general welfare.
Fair Economist
@burnspbesq:
Yes, having SS taxes on unearned income would, by itself, basically let us fix the retirement system in this country. But, politically, we’re going to have to raise the income cap first. It’s not a coherent argument to say people in the upper middle class are too rich to pay full SS taxes on income and then tax their capital gains.
Bob In Portland
Are you suggesting a flat tax?
nanute
@Fair Economist, Fair point. (no pun intended.) Well, at least those unlucky investors that got swindled, will have a higher level of benefits if they were at the cap. If you want to change the system from an insurance program to a retirement savings program that’s another argument. In the current political climate you’d be pretty hard pressed to convince people that the government is going to force them to save for retirement.
fuckwit
@liberal:
That’s what drives me absolutely nuts about the up-is-down, black-is-white Orwellian politics of projection in this country!
The IDLE RICH ARE IDLE. They aren’t “makers”, they are “takers”. Making money by having money is being a lazy parasite, almost by definition!
What the fuck kind of brainwashing has happened in this country to make people think that workers are just useless peices of shit, but capitalists are magical mystical heroic supermen who make life worth living for us all? It’s like the complete inversion of reality. Whose fault is this? The media? Extremely effective propaganda? How the hell did this happen?
Somehow I think our union-card-holding great-grandfathers wouldn’t have bought this shit. They knew that they did the work, and the bosses profited from it. Somehow today we’ve become totally disconnected from this fundamental fact.
Fair Economist
@Mark B.:
Actually, no, the Greenspan commission changes back in the early ’80 basically put SS on an indefinitely sound financial basis. The problem we’re having is that the massive increases in inequality and unearned income in this country have pulled lots of income out of the SS system, by going to people over the cap or by coming in currently-untaxed unearned income. So effectively SS is running on a shrinking wage base. Raising the caps so the same proportion of income is subject to SS tax makes the Greenspan commission assumptions correct and thus puts SS back on the indefinitely sound footing.
Politically, also, if wealthy people have a large fraction of their anticipated retirement income coming from SS we will probably finally see the end of the endless campaigns to kill it. Raising the caps is a double win; actuarially and politically.
fuckwit
@liberal: Sounds like you might enjoy the work of Henry George.
Chris
@fuckwit:
You’re on fire today. What you said.
mclaren
Irrelevant to the real issue. Which is that the truly rich people in America make most of their money off capital gains — which is not taxed as regular income at all, therefore no FICA tax gets taken out of it.
Eliminate the separate category of capital gains income. Treat capital gains exactly like all other income, and take FICA taxes out of it with no cap.
dale coberly
@kindness: no, this would not be “fair.” you would be taxing the rich to pay for a benefit they do not receive. your idea of “fairness” appears to be “if they have money they should pay.”
so i suppose you stand outside a theater and wait until a rich guy comes along to pay for your ticket.
what is fair… and Roosevelt knew this… as well as politically smart is to create a means for the workers to save their own money, insured against inflation and market losses and personal misfortune, so that they can retire when they are too old to work.
this is a huge boon to workers. there doesn’t seem to be any reason to destroy it by trying to turn it into welfare as we knew it.
in fact, by calling to make the rich pay for your retirement, yo are playing into the hands of the liars who want to destroy Social Security. Right now they are lying by saying that SS is going to be a huge burden. In fact it won’t. Unless you turn it into welfare and make it a huge burden on the people with the political power to destroy it.
Greed is stupid, whether it comes from the left or the right.
kindness
I read the comments here and feel this is exactly why liberals don’t govern effectively. All too often the forest gets lost because of the trees.
If the end desire is to fully fund Social Security within the framework of the existing law but allowing for the tweeking the way the law is carried out why spend so much energy on fighting other fights and not getting this one done? I’ll use the progressive/flat tax as an example. Right now the SS/Medicare tax is flat up until $113K. After that income, there is no tax. Suggesting the SS/Medicare tax needs to be completely fair by incorporating progressive tiers or setting the cap higher does little to further the cause in actually getting more income into Social Security/Medicare. In fact it takes away energy from the argument by furthering progressives to beat up on each other. What does it get you? Nothing.
In order to actually accomplish something wrt Social Security progressives have to focus on the goal and not the complete fairness aspect. And as far as marketing the change, pushing it as a fairness issue by keeping the flatness of it intact will be way more persuasive to all those making less than $113K (most of us here in the good ole US of A) because you could easily point out that those who are better off are dodging what the poor/middle (most of us) already pay.
It’s stealing defeat from the jaws of victory kind of thing and liberals (and I am a liberal of sorts) do all too well.
Bill Arnold
@Gin & Tonic:
As it currently is configured, Social Security is plausibly arguably not “welfare for old people”. If the tax is made flat and uncapped, or progressive and uncapped, but benefits are capped, then it becomes more arguably a transfer.
Same argument applies to Social Security means testing.
The fear is that the R strategy is to erode support, and squeeze it when Rs are in power, until it dies.
Edit – Greg said it more elegantly.
Just Some Fuckhead, Thought Leader
I thought the new retirement plan is a reverse mortgage.
dale coberly
@Gin & Tonic: the reason for the cap is that Social Security is not welfare. IT’s a way for the workers to insure some savings so they can retire at a reasonable age. Taxing income over the cap would be charging a premium that is not justified by the value of the insurance.
Roosevelt understood this. Politically, scrapping the cap is suicide for the left. It will kill Social Security.
dale coberly
@Jamey: you don’t have to raise the cap. you could raise the payroll tax “under the cap” less than a dollar per week per year for twenty of the next hundred years and that would fund social security forever.
of course that would mean the workers would be paying for their own retirement, just like they pay for their own groceries.
but even if you want a country where we are all waiting for the rich man to buy our groceries (before and after retirement) most workers do not, and the rich will not stand for it, and guess who wins in a “class war.”
tazj
Chris, I think that some people who make $250,000+ believe that it’s not fair to increase their taxes because they have truly earned their positions and sacrificed for their jobs while other people have not. I’m sure you’ve heard people say things like “Well, what’s the point of me struggling so hard when I’ll just have to give it back to the government.”
Of course, I would have to disagree with them on a number of points, one being that people who don’t make that much money don’t work hard. Also, some affluent people seem to take for granted the great things that they have that they didn’t earn like their intelligence, good health and caring parent.
Just Some Fuckhead, Thought Leader
@James E Powell: I saw a whole bunch of olds eating lunch at the upscale Piccadilly Cafeteria. No reason they can’t eat off the dollar menu at Taco Bell like everyone else of limited means.
rikyrah
the body language in this pic is HILARIOUS
Brigid Bergin@brigidbergin 3h
Scenes from the first meeting between Mayor Bloomberg and @deBlasioNYC. They’re seated on the stage of the bullpen. pic.twitter.com/Y0BgCR05Az
https://twitter.com/brigidbergin/status/398111420413259776/photo/1
dale coberly
@Skipjack: you are absolutely right. with any luck we can get people to think this through before they destroy Social Security by trying to turn it into welfare.
Mnemosyne
@dale coberly:
The rich don’t benefit by living in a society where you don’t have elderly people starving in the streets?
Sorry, but this “if they don’t benefit dollar-for-dollar, it’s not really a benefit” argument is what got us here in the first place. Rich people benefit by having good public schools, even if they don’t send their kids there. They benefit from having well-funded police and fire departments, even if their houses never catch on fire. They benefit from having good roads and sturdy bridges, even if their chauffeur is the one driving them over them.
I realize a lot of rich people have decided they’d rather have the United States look like a third-world country where they live in luxury but can’t set foot outside their house without being in danger of being kidnapped, but the rest of us would really prefer not to, thankyouverymuch.
Ripley
Let’s cut to the chase and just kill the rich.
Just Some Fuckhead, Thought Leader
Anyone set up a parody Rand Paul Twitter account that tweets – not retweets – what everyone else has already tweeted?
Mark B.
@Ripley: Or just make them live in a society where poor people aren’t left in the streets to die. That would be rich.
dale coberly
@? Martin: the cap is not arbitrary. it was set at a level where paying the payroll tax makes sense in terms of what you get back. it rises with average wages over the years and still represents the point at which SS would stop being insurance and become welfare.
SS has succeeded in reducing poverty better than any welfare program in history exactly because it is NOT welfare.
the problem with the cap is not that it is too low. it is that workers for the past couple of decades have not been getting the wage increases that previous generations were used to getting. it is the INCREASES in wages over time that provide the effective interest that makes SS cheaper than it would otherwise be.
Because of the lower rate of growth in wages as well as the increases in life expectancy, you will need to pay a higher percent of your wages to pay for your retirement. this is not what you want, but it is not unfair and not a huge burden. the actual cost will eventually reach about an extra fifteen dollars per week… in today’s terms… when wages have in increases about an extra hundred and fifty dollars per week. workers are going to be better off, not worse off, even if they have to pay a little more for their retirement.
dale coberly
@liberal: no. it’s not arbitrary. it’s what makes it insurance and not welfare.
chopper
another option is to eliminate the cap, but reduce the payroll tax rate. drop it from 6.2 to, say, 4.2 and everybody who makes less than 166k/yr pays at most the same as they did before (with more noticeable relief for the working poor). everybody who makes more than that pays more. or make it progressive, i dunno.
i’d also like to see a FICA-like tax on unearned income, with certain exemptions.
dale coberly
@liberal: no. it’s insurance. the fact that the poorer you are the better rate of return you get is what makes it insurance. it’s not welfare because you pay the same “premium” based on your income while you are working as the next guy. you don’t know in advance how things are going to turn out.
welfare takes money from people who already have it and give it to someone else whether he paid for it (paid his insurance premiums) or not.
you don’t call insurance “welfare” because someone who get sick, or has a fire or an accident, gets more money back than someone who does not get sick or have the accident or the fire.
Rob in CT
Even if this isn’t going to happen (and I figure it’s got nearly zero chance of happening), it’s nice to have it out there. The GOP makes outlandish demands and then bargains down. The Dems tend to start out with a “reasonable” offer and bargain down. This is a bad dynamic.
Actually doing it, though… I dunno. Lifting the cap and shifting SS over to more of a welfare style program worries me a bit. I, for one, think we need more redistribution to counter the income inequality trends (though I’d prefer changes that changed the distribution on the front end, instead of having to rely on redistribution), but I’m not sure SS is the place to do it.
dale coberly
@MomSense: absolutely. there is no reason not to tax the rich to pay for welfare for those whose SS benefits are not enough.
but that is very different from raising the cap on Social Security. SS works very very well the way it is. turn it into welfare and you play into Petersons hand. the rich will destroy it.
the rich WILL notice an extra three thousand or thirty thousand dollars in taxes. if the tax is for your retirement they won’t pay it. if they can’t tell how much of the tax is for true welfare or “defence” they won’t be able to destroy it… though they will keep trying to kill welfare.
when they try to kill welfare they have the support of everyone who doesn’t get welfare. when they try to kill Social Security they don’t have the support of anyone except the crazies and the people they can fool into thinking that SS already is “welfare.”
chopper
@dale coberly:
what do you call it when someone who’s poor gets more money back than the rest regardless of any of those details?
Omnes Omnibus
Social security is not a pension program; it is an insurance program. The payments one makes are to ensure that, no matter what else happens, one will have an income of a certain amount when when one reaches a certain age. If I have health and/or car insurance but make get back less than the premiums I paid in, did I lose? No, I was covered in case I wasn’t one of the lucky ones. I don’t think that paying the FICA rate on 100% of income changes that rationale.
Matt McIrvin
@dale coberly:
So should we eliminate all progressive income taxes as well?
I can actually see your argument. Social Security remains popular in part because it’s just flat/regressive enough that it’s not perceived as a redistributive program. So as much as I’d like it to be progressively funded, there are sensible political reasons not to.
What worries me is that the same argument applies to absolutely everything else. And there’s simply no way to run a modern republic with the level of income inequality ours has on regressive funding.
To put it another way, the rest of us are spending our days buying the rich guys’ groceries, and that seems to be perfectly OK with all the people in power.
nanute
@dale coberly, exactly my point earlier. You want to tax the rich for welfare, fine. Just don’t confuse SSI as welfare. Unfortunately too many already think it’s welfare. And thanks for chiming in.
dale coberly
@BobS: Bob S: if you only understand half of the problem, it might look simple to you.
SS collects a “tax” on income up to the cap because that’s where it stops paying benefits.
regular taxes are taxed on the idea that we all get benefits from general government activity. we may not all agree with everything the government does, but it’s harder to disentangle my benefit from national defense, or even welfare.
For Social Security you get back exactly what you pay in, adjusted for inflation, and an”interest” based on the general increase in wages, and an insurance effect (which you pay for).
The difference is critical.
chopper
@Matt McIrvin:
this is true. i think part of the problem is that people call ‘redistribution’ as ‘welfare’. i mean, social security isn’t strictly insurance anymore than obamacare is; if you and i both get the same plan or the same benefit, but since you’re poor you get 90% of the cost covered by a subsidy and i don’t, it isn’t strictly insurance, there’s some ‘welfare’ thrown in there if you want to call it that. same is true of SS and medicare (tho to a point, most everybody gets more out of medicare than they paid in).
the thing is, it’s social security. if there’s anything we can fund more even if it makes it look even more redistributive than it already is, it’s SS. at least i hope so.
dale coberly
@liberal: well, the highly paid economists like to say the employer share of the payroll tax is “really” the employees money.
but when the wind changes they like to say that the payroll tax is a “jobs killing tax.”
you see, they want it both ways according to who they are trying to fool and what the economy is doing at the time.
if you count the employer share as really the employee money, the employee “return on investment” is not very high…. but that’s not the point. the point about SS is that it’s there when you need it most. it’s insurance not an investment plan.
if you call it a jobs killing tax, but it’s really the employees money… you are saying that paying your employees kills jobs. and there are people who believe that. it’s why we had to fight a civil war to end slavery.
Omnes Omnibus
@dale coberly: As I said above, social security is an insurance program not a pension program.
dale coberly
@FlipYrWhig: if you want to provide welfare to the poor go for it.
but don’t destroy Social Security by trying to turn it into welfare. Social Security already protects most workers from the worst poverty.
Don’t try to make it do every good thing you can think of.
It’s like having a patient little donkey which you have loaded with all your worldly goods, and then as you go along you meet someone who needs a ride, so you load him on the donkey, and a little later you meet someone with a big bundle, so you load that on the donkey, and pretty soon every poor person you see is trying to get on the donkey. and then the donkey falls down and dies.
Bluecoat
Raising the cap is a very bad idea – and so it will get a lot of support from the neo-liberals. When did they ever let go of an opportunity to stick it to labor?
1)Because SS benefits is tied to to contributions, benefits also have to be raised. You can say that benefits should be capped or tapered, but then basically you are in the means-testing/welfare arena, which is a route to killing SS. Making SS into a welfare program is a sure way to kill it.
2)The issue is not wage cap. The issue is that only wages are subject to SS. The rich don’t receive their income as wages, they get it as capital gains. Increasing the cap does not touch the rich, but older workers, people working overtime or multiple jobs, and workers in high cost of living areas (See BART strike in San Francisco – look at the BART wage numbers and be shocked at what it takes to barely make it there)
3)Look at it this way – raising the cap has zero effect on Mitt Romney, or wall street bankers. But it will raise the tax on wages to more than 50% on wages (Fed, state, payroll) – and will mainly fall on Blue State workers living in high cost of living areas on the coasts. Raising the cap is a subterfuge to shift the burden away from the capitalists to labor.
BobS
@liberal: Sorry, it’s not. The employer contribution doesn’t really add significant complexity for someone who understands that adding 6.2% (employee) + 6.2% (employer) = a 12.4% tax on everything earned below the cap and no tax on income above.
Matt McIrvin
@dale coberly: Not only that, Social Security usually figures in computations of exorbitant government spending, but the payroll tax that funds it mysteriously disappears the moment Republicans start to complain about the takers who “pay no taxes” (by which they mean federal income tax).
dale coberly
@nanute: nanute
in fact SSI is a welfare program. but SSI is NOT Social Security, It is Supplemental Security Income.
FlipYrWhig
@Omnes Omnibus: Why does it matter? That’s just the politics of it, not the policy. As the program currently exists, people who have always been dirt-poor get to stay dirt-poor after retirement. That sucks. “Welfare” or not, that’s a shitty policy outcome that hurts poor people. We should be at least as concerned with everyday poor people’s well-being than the anticipated desire of upper-middle-class people to complain less about being wronged by “welfare.”
dale coberly
@Uncle Cosmo: not much.
the amount of money rich people get from social security does not make any difference to the program. and in any case they paid for their benefits too. cutting their benefits would just make them not see any reason to support social security… which those who are not insane do.
FlipYrWhig
@dale coberly: If it were the public retirement program rather than an insurance program tied to income, I fully believe it would help a lot more people. Also, of course, some people would complain about “welfare.” I’d like to think the forces of good could overwhelm the forces of kvetch, but maybe I’m wrong.
Anyway, to the degree that Social Security could stand some sort of reform, IMHO it would be to prop up beneficiaries at the bottom end. If anyone wants to call that “welfare,” well, bring ’em on.
dale coberly
@Fair Economist: not really. they paid ss taxes up to the cap so they get a retirement check of about 3000 a month. not as much as they are used to, but enough to keep them out of the poor house, which is what SS is for.
if they had paid the ss tax on all of their income they would have felt they were being robbed as the chances of their losing it all were small enough that the premium wouldhave seemed toohigh to them.
it is figuring your odds AFTER the events that cause much of the confusion about SS.
dale coberly
@FlipYrWhig: what it matters is this: the rich do not just complain about welfare, they destroy it.
those people who were poor all their lives don’t really expect to get rich just because when they get old some nice person gives them more money than they were able to make on their own.
they do get a higher … much higher… return on their payroll tax than the rich guy gets on his. that’s RATE of return. SS is insurance, not a reward for being poor all your life.
Omnes Omnibus
@FlipYrWhig: The politics of it do matter. It was set up and sold as insurance from the beginning so that everyone felt they got something from it. The people who put it together wanted to ensure that it wasn’t seen as welfare because welfare gets controversial.
As far as policy goes, I think a national guaranteed minimum income program is a good idea.
dale coberly
@Mark B.: mark
that’s true. they do pay in. maybe they should pay more. but Social Security is a specific program with a specific purpose. if you try to make it the universal rectifier of all injustice in the world, you will simply destroy it.
Jamey
@Jebediah, RBG: Thank you Jeb–for both sentiments!
chopper
@dale coberly:
jesus, we just let a shit-ton of SNAP benefits get cut and nobody seems to give a shit. ‘just provide more welfare for the poor’ isn’t going to go anywhere in the current environment.
i’m not saying messing with the cap is politically super-feasible, but ‘just increase welfare instead’ is laughable.
dale coberly
@Fair Economist: probably not. SS is not a great return for those with high incomes. they would kill SS and take their chances with the market.
the fact that ordinary workers are not getting the raises they should is part of the problem with the “actuarial deficit” projected by the Trustees. But that is NOT the same as the rich getting richer. What’s wrong is that the poor are not getting richer… the way they did when the New Deal was still what informed our economics.
You could “raise the cap” to make up the difference, but those who are now above the cap would see that as a huge tax increase with no benefit to themselves, and they would join the people trying to kill SS entirely.
If nothing else, you could raise the payroll tax under the cap about one tenth of one percent per year (about eighty cents per week) and that would fund Social Security forever… while wages are rising about eight dollars per week per year at the same time. Thepoor would be paying ahigher percent of their income for their Social SEcurity but they would have MORE money after paying the tax, and when they retire, than they do today.
There is really nothing wrong with paying for your own retirement, even if it costs a little more than you expected… mostly because you are going to live longer than you expected.
FlipYrWhig
@Omnes Omnibus: I know the politics matter, but I would think that marginally less popular politics that succeeded in providing substantially more material benefit would be an acceptable tradeoff. These are dummy numbers, but if 85% of people currently support Social Security in its customary form, how much would that drop by adding a higher minimum that could, yes, get demagogued as “senior welfare”? 10%? I can’t imagine it being that much, and even if it were, it would still be a lot more popular than other policies we routinely advocate.
catclub
@dale coberly: “If nothing else, you could raise the payroll tax under the cap about one tenth of one percent per year (about eighty cents per week).”
The other long term proposal was made in the 1970’s to raise the gas tax 5cents per year.
We would have much greater energy independence if we had done it.
FlipYrWhig
@chopper: Welfare for the poor isn’t going anywhere, but welfare for the poor and old wouldn’t have the same ETA: trumped-up association with lazy dark-complected moochers.
At any rate, I find it frustrating that we always have to act like these policy choices are inviolate. But I don’t expect a change and would be hard-pressed to advocate it outside a much broader framework of providing (and funding) a robust social democracy.
dale coberly
@Mnemosyne: i agree that the rich benefit from Social Security by not having a population of workers desperately afraid of being poor in old age.
but that is not the way they are going to see it. they would see it as a huge tax increase. a terrible burden of them having to pay for your retirement.
when you can pay for your own retirement, i don’t see any advantage to trying to make the rich pay for it.
the fact is we HAVE Social Security and it works. don’t destroy it by trying to use it to get a free ride.
Jamey
@dale coberly:
Except Roosevelt “knew” nothing of the sort. Social Security Act of 1935 is pretty explicit in its intents: “to provide assistance to aged individuals (Title I), for unemployment insurance (Title III), Aid to Families with Dependent Children (Title IV), Maternal and Child Welfare (Title V), public health services (Title VI), and the blind (Title X).”
It’s not a retirement investment, it is an insurance fund. This may seem like splitting hairs, but the money that goes out monthly is categorized (by SSA) as “relief,” not as income. That’s why there’s an “I” in FICA.
Chris T.
FYI, the 2013 cap is $113,700 and the 2014 cap is $117,000. The tax rate is 12.4% but it’s split in half to make it look more palatable.
Thus, if you earn $250k+ and the cap were raised to $250k, the additional tax the OASDI program would collect (the full 12.4%) in 2014 is: (250000 – 117000) x 0.124 = 133000 x 0.124 = $16,492.
It’s not clear how many people this would affect. I found estimates ranging from 3 to 6 million. Using the lower number (3 million) this would collect about $49.5 billion more per year.
dale coberly
@Matt McIrvin: matt why is it that “dont scrap the cap” becomes in your mind “eliminate progressive taxation.” is it really true that people cannot separate two different things in their minds?
SS was created exactly NOT to be welfare. it works beautifully. you want to turn it into welfare… which doesn’t work so well.
i am all in favor of welfare when nothing else works. but SS works.
dale coberly
@chopper: in the first place SS is not “flat/regressive”. it is hugely progressive. that’s what insurance is. you pay the same premium as the other guy. but if you have the accident you get more back than he does.
and playing with words about “redistributive” vs “welfare” doesn’t change the reality.
there is plenty of “welfare” in this country and you are free to try to raise taxes to make it “better.” but Social Security was created NOT to be welfare. ANd it works. So why destroy it because you can’t think of anything other than “tax the rich” to pay for the poor.
The poor can do quite well for themselves if they are protected from the rich. That’s what Social Security does. By not understanding how it works you are just playing into the hands of the people who want to kill it.
dale coberly
@chopper: you almost understand my point. change SS into welfare and you will kill it.
let SS do what it does.
if you think it doesn’t do enough…. then try to increase welfare. and good luck to you. but don’t kill SS by trying to turn it into welfare.
chopper
@dale coberly:
i didn’t say SS was regressive. i’m pointing out that the fact that benefits are slanted towards the poor goes to show that it isn’t strictly insurance. it’s something more. makes sense, as social security was originally created to be a combination of insurance and ASSISTANCE.
you’ve said this about 20 times. we get what you’re arguing already.
dale coberly
@Jamey: Jamey
i can’t understand what you are saying. FDR created SS to be insurance… paid for by workers… exactly because he knew what would happen if it was “welfare” (he called it “the dole.”)
He knew a hell of a lot more about it than you do.
I think you are confusing yourself with words.
dale coberly
@chopper: doesn’t look to me like you do get it.
INSURANCE is redistributive without being “welfare.” try to think about that for awhile.
kindness
@dale coberly: You must be a Fox sock puppet.
Eliminating the cap would not kill Social Security. Suggesting it would be a travesty as you have repeatedly done so leads me to believe not very nice things about your actual desires. Certainly those of us who make less than the cap now (about 90% of all Americans) would not feel that increasing the income level Social Security is taxed at would be bad. So in your mind you think that remaining 10% who do vote at a higher rate would be able to defeat the other 90%? I don’t agree with you. Sorry.
chopper
@dale coberly:
and if you get a deal to make sure you get more than you pay in because you’re poor, it’s still strictly ‘insurance’? cause i’d throw in ‘assistance’ as well.
if SS benefits were strictly like my pension, i wouldn’t be making this argument. however, SS benefits are already (and rightfully so) slanted towards the poor. raising the cap in order to slant that even more does not magically fundamentally change the entire thing.
nor would, say, raising the special minimum benefit.
Raught
@dale coberly: I think you’re the one that is confused. “Insurance” isn’t redistributive at all. Payouts cover losses, that is not “redistributive”. You seem to want to define things such that only your definitions work for your vocabulary, and vice-versa. You also seem to think that there is only one true and great and exact formula for the cap, payouts, etc., and that Greenspan discovered it in the ’80s, and it is inviolate.
Arne
@dale coberly:
” try to think about that for awhile”
Dale, you were doing really well for a while. Don’t be disappointed that you have not changed their minds right away. Give them time to think, but avoid telling them to think.
Dale is right. SS works pretty well at allowing workers to create their own insurance pool in a way that actually provides savings for retirement. I toally understand wanting it to do more because it does what it does well, but (where analogies are often lousy) his donkey analogy is apt.
SS does need some changes because people are living longer. They understood that in 1983, but they chose a 75 year fix (that lasted for 60). The belief by many that it was fixed forever is now a problem getting the fairly small adjustements that are needed.
Arne
@chopper:
I really don’t know anyone who plans to go through life being poor. SS insures having about enough to pay for food and shelter consistent with what you are used to – consistent with better food and shelter for those who have paid the higher premiums.
SS is a negotiated compromise and I can try to look at it in many different ways with different amounts of success. It makes the most sense to see it as insurance by workers for workers.
fidelio
@nanute: I’m sorry, but if you mean by SSI what I mean by SSI (Supplemental Security Income, a supplemental income program for the blind, disabled and elderly for limited income and assets, which is administered by the Social Security Administration), it is not an insurance program. It’s needs-based. Here’s a piece at Wikipedia, which links to the SSAdministration website, and gives what may be more details than you require.
That’s not to say SSI is a bad program. It’s a good and useful one, and has helped a lot of people in difficult circumstances. But it is not, unlike the regular Social Security retirement, survivors’ and disability programs, an insurance program.
Fair Economist
@dale coberly:
That’s not an option once they’ve already paid in. The young wealthy might want to avoid paying in in the first place, but generally speaking the people with power are the older middle-aged and they, for the most part, will have done most of their paying. Besides, people think in terms of what’s customary, not in terms of optimizing long-term rate of return (which is incalculable over these kinds of periods in advance). Once it’s standard that the working-age wealthy end up with big honking SS payouts, that’ll be what they expect.
dale coberly
@kindness: kindness. it’s not that the 10% vote, it’s that they contribute to politicians… their vote counts more than yours. sorry about that.
it’s one thing to believe in kindness. it’s another to make yourself a fool for the man who is picking your pocket.
I have been spending my time for the last ten years trying to fight against the Peterson lie machine. You haven’t spent ten minutes thinking about anything more than your gut feeling. Well, gut feelings are nice, but a little brain helps sometimes.
dale coberly
@fidelio: fidelio, nanute made a common mistake, or slip of the tongue. you are right about SSI. nanute was thinking about Social Security (OASDI).
chopper
@Arne:
nor do i, but that’s neither here nor there.
dale coberly
@Arne: Arne
thanks. you are right. if i was doing well for awhile its because i try to learn from you. my natural personality is not patient.
dale coberly
@Raught: raught. lets not get into an argy bargy about the meaning of words. insurance is redistributive in the sense that for most insurance the premiums are quite small compared to the potential payment for a loss. but that is because the risk of a loss is quite small. with SS the payments are quite high compared to the probable payout, but that is because the probable need for the (extra) payout is quite high.
SS is redistributive in exactly the way any insurance is redistributive. you pay your premium. if you do well your “payout” is less. if you have bad luck, your payout is more.
this is different from welfare, where you pay out (in taxes) for someone else’s need whether you bought the insurance or not, and whether he paid for his insurance or not.
you can talk the issue around to where they look exactly the same or exactly different. it depends on what you are trying to point at. unless all you are doing is saying “my one idea about a word is “the truth” and your idea about a word is “wrong.” that’s the way most people think. it’s why they don’t get anywhere.
dale coberly
@Fair Economist: fair economist… it is not in the cards that the wealthy will end up with big honking payments. SS does not and cannot work that way. SS GUARANTEES a return that keeps you out of the worst poverty, whatever inflation does and whatever the market does, and even whatever you do… if you pay the “tax.” that means the “return” is limited to what the future payer of the tax can pay in… as a function of average wages (which are more or less automatically adjusted to take care of inflation.) this will limit the average “return on investment” in the nearish future to about 2% “real.” Most people think they can do better than that on the market. most people are wrong. but “the rich”… the people who would be paying for that increased cap are far more likely to “know” they can do better than 2% real. up to a point they will take the “loss” as a fair price for the insurance value of SS. much beyond that point they won’t. and you will have made enemies of people who should be your friends, or at least indifferent.
Fair Economist
It does that, but not just that. The only limit on payout is average working income. The formula for somebody with consistently high earnings reaching 66 this year works out to $1990 per month plus 15% of their average monthly income above $4762. So a CEO with a multimillion dollar income would indeed end up with a SS payment of tens of thousands per month, which is a big honking payment in my mind.
chopper
one thing that further complicates things is that while SS may at some point have been intended to merely be insurance against catastrophic loss in income, even the US government doesn’t consider it to be that anymore and hasn’t for decades. the US government considers SS benefits to be a form of retirement package.
chopper
@Fair Economist:
i thought the yearly benefit was capped.
chopper
@chopper:
actually, looking around, that aint quite right.
Pen
Fucking hell Dale, do you get paid by the post or something? You’ve got to be 10-15% of the replies on this thread all by yourself, and most of them are right in a row of each other.
chopper
@Pen:
ehrmagerd!
kindness
Dale thinks socialism is worse than I do. I have no problem that Social Security is distributing wealth from young to old. It’s way better than old people dying in the street homeless. And it is redistributive. Those olds collecting now did not pay into the system what they are going to pull out of it. Suggesting this is a bad thing or that people knowing this will KILL THE SYSTEM is something a lunatic could push. I think that is your que Dale.
chopper
@dale coberly:
well let’s not get into the argy bargy of the meaning of words. if you want a different word to describe uncle sam making sure my poor neighbor gets a better return on SS benefits-vs-payments than i do at my expense, call it ‘government assistance’.
dale coberly
@Fair Economist: fair economist: as i tried to say, the money isn’t there to support that level of payment. even if the rich fellow paid SS tax on his whole income. SS has no mechanism to “earn interest”. it only earns a virtual interest by virtue of the average increase in wages. That has run about three percent in the past, may drop to about 2% or even less in the future.
moreover the reason for not making SS means tested is that those who do well over a lifetime end up paying for those who do badly. if they got nothing for their money… or a lot less than they paid in, they would see SS as welfare and their congressmen would vote to end SS the way they ended welfare as we knew it.
it’s one thing to have opinions, but it’s something else to know the arithmetic. that is really know it. not go around mouthing “it’s the arithmetic” like news people who DON’T know the arithmetic but believe what the Peterson liars tell them.
dale coberly
@Pen: Pen. I study Social Security more or less full time, so I know more than most people. Someone asked me to weigh in here because most of you don’t know what you are talking about.
No shame in that. You haven’t time to learn. But what defeats me is that you aren’t even willing to think about it. If it disagrees with you, it must be some kind of lie.
So I”ll just say it bluntly: I care very much about Social Security. I know it can be “fixed” by raising the payroll tax, under the cap, by about eighty cents per week for the average worker. That does not seem to me to be a high price to pay for an extra five years or so of retiremtent at a higher standard of living than today.
Trying to make the rich pay for it will destroy it. You don’t realize it but you are saying what Pete Peterson has been saying for twenty years. Only he was lying. You are trying to make it true.
And that plays into his hands. If you could say to Congress… “we are willing to pay for our own Social Security just as our parents and grandparents did, they would have to stop all this crap about it going broke or causing huge deficits. Instead you are saying lets make the rich pay for it. That won’t happen. But it will make “the rich” call their Congressman and say, you know, Social Security is going to cause us huge taxes or huge deficits. We need to “fix” it the way you “fix” a cat.
dale coberly
@kindness: kindness: the old did pay into the system. what they get out is more than they paid in because the system pays interest by virtue of the growth in the economy. just the way a corporation pays “interest” (dividends) by virtue of the growth in the company. That means in both cases that “the young” are paying for “the old”. But the young will become old and they will get the same deal because the economy keeps growing.
The fact that you don’t understand this does not make it not true.
dale coberly
@kindness: kindness: as for being a lunatic, you do not seem even to be able to read what i have written here. you are lashing out at the demons in your own mind.
as for socialism… if you can get it great. meanwhile i have to live in the real world. the one where rich people run the politicians.
fortunately, most of the rich are just like you: ignorant and lazy. so they won’t bother about Social Security unless it hits them hard in the pocket book. Which it does not today. But which it will do if you have your way. Then THEY will destroy it. Helped of course by you.
chopper
@dale coberly:
this the same ‘real world’ where you just wish for welfare and it appears?
chopper
@dale coberly:
you seem quite distressed. excuse me for mixing metaphors, but it must be just terrible to have to come down from your perch on Olympus to dirty yourself talking to the ignorant proles. and to think, despite this they have the audacity to actually disagree about the future! don’t they know that you’re omniscient?
dale coberly
chopper
i can’t do much about your inferiority complex. i do happen to know more about social security than most people do. including you. i don’t feel i am dirtying myself trying to explain it to you, but i do feel, after a while, that i am wasting my time.
generally i know that i know less than some other people about things i care about. i am usually willing to listen to them, though i don’t stop thinking for myself.
i would just like to see you start thinking for yourself.
chopper
@dale coberly:
oh, you’re a psychologist too. how do you find the time?
well, on behalf of everyone here I’d like to thank you for taking human form for at least a few hours to tell us all what’s what. as to the future, I hope that there will finally be flying cars.
you can go and fuck right the fuck off now. kthxbye.
ezra abrams
“The crusade to expand Social Security got started with liberal bloggers such as Atrios began pushing for it, and gained some momentum when liberal groups such as the Progressive Change Campaign Committee began mobilizing behind the idea.”
Really ?
I gotta think, just on commonsense, that a push for better SocSec has been going on for longer then the internet has been in existence (taking CERN as start, not arpanet like stuff)
ezra abrams
Re the arguments on raising the cap and welfare vs insurance
One way to slice this is step back, and in the non Soc Sec bucket, do what we should do: tax cap gains and div as ordinary income, raise marginal rates a LOT, stop tax subsidys like college savings accounts and medical savings accounts that accure to only the upper half or third or 10%, etc
I think if we built 50,000 units of decent affordable public housing a year for the next ten years, much of hte soc sec funding issue would go away
anyway, we all agree taht funding soc sec ain’t hard; what is hard is bending the cost curve on healthcare
dale coberly
@ezra abrams: ezra: i agree with you about the need for all those things. and i agree that funding SS ain’t hard. what i think is important, that no one else here agrees with me about, is that SS is a special program, a unique idea in the history of poverty prevention…. that works.
changing it to welfare simply destroys what SS is. and, i believe, will destroy what SS does. note those are two different things. the first is true by definition. the second is only probably true. we could disagree, and you currently have a few senators on your side and some people who think raising the cap is the right thing to do. they might succeed.
i don’t think they will. and if they do, it will only be a short time before “the rich” destroy SS (what it does… protect workers from desperate poverty in old age). I don’t think it’s worth the risk. And I don’t think most workers want to live on welfare for twenty years of their lives. And it’s not necessary… workers can pay for their own Social Security, the way it was designed… for about an extra dollar a week each year… an amount of money they would never notice.
Though there are some on both the right and the left who would obsess about it and drive themselves crazy.
dale coberly
@ezra abrams: ezra, since you mention health care, i’ll start some folks howling by making a suggestion they will hate… because they won’t stop to think about what i am actually saying:
health care should be essentially “medicare for all.” that means the workers will pay for it themselves. this will be expensive for them at first. but the cost of staying alive might be worth the price. thing is though that without the insurance companies incentive to make a profit, the government ought to be able to bring prices down… unless of course the government does to health care what it does to defense spending. at least the people would have a chance to fight that. they can’t really fight the insurance companies… even with obamacare.
now, about the workers paying for it… they pay for it anyway. somewhere in the economy prices are higher beause someone else is paying for your medical care and passing the costs on to their customers. or subtracting it from their workers wages…. though they make it look like something they are adding to your wages.
i would propose that if it were paid for by a flat tax… just like medicare is now (absent the about 50% of medicare that is paid by the general tax) only capped… so that “the rich” aren’t paying a huge amount for someone else’s health care. that may seem like “justice” to most of the people here, but what it really does is teach the rich to not care about your health care. and if you were paying for someone else’s health care you would begin to feel the same way, however much you think you believe in “helping the poor.”
but note. a flat tax would already be much lower in absolute dollars for the poor than for the rich. the rich would still be subsidizing the poor… though they might have to see the “subsidy” as something like an additional premium for insurance against becoming so poor they could not afford the true “expected” cost of medical care themselves.
i am fairly sure this is what we end up with anyway, though we disguise it from ourselves by “making the rich pay.” i think if we stopped fooling ourselves this way and were forced to pay attention to the costs ourselves, we would find a way to lower those costs… just as they do in other civilized countries. But at the end of the day we do have to decide if health care is important enough to us to pay for it.
note, nowhere in this do i propose that the poor be forced to do without health are. if you can’t read the fine print, at least try to connect the dots.
dale coberly
@dale coberly: if i may add: i am fairly sure that if we paid for it ourselves… directly… wages would rise to cover the cost. that might take some political action to assure a minimum wage that covered the cost of living… that includes health care and retirement… and correcting the abuses of an economic system now dominated by big business and criminal banks.