Sunday, January 23, 2005

On Social Security, Part 3

Warning: this post is being written before I've imbibed my morning coffee, which can be a dangerous, dangerous thing. More dangerous, for me thank God, than this crazy NYC blizzard I'm writing in the midst of. (Total accumulation of 12 to 20 inches.) My prayers are with all of those not so lucky as to be comfortably ensconsced in a heated home in these days....

But we're getting far afield from the subject of this post. I warned you about the coffee!

I'm surprised that there have been no objections (voiced in comments or that I could find trackbacking) to my radical, if unoriginal, proposal that a Christian way to reform social security would be to "means test" it - that is, to limit social security benefits to those who need the help. (This is the hot political topic right now isn't it?)

I suspect I've gotten no objections because most of our good readers - even our enigmatic, beloved "frequent-flyer" DLW - are quite progressive and quite young.

But even though none objected, I'm still going to come through on my promise to answer some obvious objections to the proposal. (Note: first cup of coffee imbibed at this point; readers safer.)

First, my well-to-do grandparents might argue that they should be entitled to benefits because they "paid in" to the program throughout their lives. Initially, it's worth of noting that government in general just doesn't work that way. We don't have occasional accountings to make sure people's benefits from government equal the taxes they pay. Everyone pays taxes that go for extra tough terrorism defense in New York City, but the residents of rural areas don't derive any direct benefits from such programs. Even more fundamentally, many government programs are explicitly redistributive. That is, we intend that people who pay into the programs through taxes don't get the benefits of them. Rather, the programs go to those who need them. Medicaid is an example of such a program.

So the first objection has to amount to a claim that social security is somehow different. But my very proposal is that it shouldn't be different. The feelings of entitlement are just that: feelings. We're used to a paying taxes now, getting back benefits later structure of social security. Since we've become accustomed to this structure, it comes to feel like an entitlement. But these "entitlement feelings" are not a rational basis for policy.

Perhaps the objection also amounts to a claim that many middle-aged and elderly people have relied on the promise that these benefits would be available to them regardless of how much they make. My answer to this is twofold: one, if they have already saved enough to survive the means test, then they haven't really "relied to their detriment" on social security's universal availability; and two, I would have no objection to a "grandfather clause" which would provide that the means testing and denial of benefits to the wealthy wouldn't start until, say, my generation. (I'm 25.)

The other obvious objection to my proposal is the allegation that means testing social security might result in people not saving for their retirement on their own. I.e., if I'm going to lose government benefits if I save for myself, why should I do so? There are good answers to this objection, but they'll have to wait for yet another post - both because this one is getting too long and because is Tax-study time again.

P.S. I would disagree with anyone who would object that this discussion is getting pretty far afield from the Social Gospel. My original idea was based on Social Gospel principles, and these completely political arguments are necessary to defend (and show the feasibility of) the original Christian public policy proposal.


At 3:29 PM, Anonymous Anonymous said...

If you let them means test it they'll set the test way too low.

Social Security should enable a decent retirement for all at well above the poverty level.

We are already far from that. We will go further, still, if we give them this opportunity to trim it back.

Meanwhile, plenty of money to conquer Islam to save the world, eh?

At 9:07 PM, Blogger jj said...

My proposal wouldn't be to means test it at like 20K per year. Mine would be to means test it at like 100K per year. Even that would constitute substantial revenue savings. More fundamentally, if you're concerned about assuring a decent retirement for all, then you should focus on increasing benefits, not on making surely the well-to-do still get the small benefits currently available.

At 11:09 PM, Blogger DLW said...

As I understand it, SS is a form of forced, collective savings right now that, as it was implemented, is also a form of inter-generational redistribution program that didn't plan ahead for the retirement of the Baby-Boom generation. You want to turn it into an explicitly redistributive transfer program.

Its prior justification has purportedly been that many of us are naturally bad savers and can benefit from the economies of scale and security provided by the US gov't. I think these are valid justifications for its existence. Although, higher-income-types will probably remain sour-grapes on having some of their income kept at lower rates of return than they could get with the stock-market, but hey that's life. All forms of collective action end up pissing someone off. We can probably pay for the baby-boom generation with a change in the tax-code, closing some loop-holes or raising the estate-taxes(sorry guys if this cuts in to your inheritances.).

Then, for the purpose of income redistribution and poverty-reduction, we can just implement the Basic Income Guarantee program I mentioned before. That would maintain the incomes of the elderly and permit them to work part-time if they so desire. And, notably, it would effect inter-class transfers in, perhaps, a more even-handed manner.



At 6:15 AM, Blogger jj said...

I'm preparing responses to both of your comments which I will post on the main page. I haven't responded to DLW yet, and my response to anonymous was not sufficient. THANK YOU SO MUCH FOR YOUR FEEDBACK AND PRODUCTIVE CONVERSATION.


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