Wednesday, January 26, 2005

On Social Security, Part 4

Now that I'm done with my Tax Exam - hopefully spiritually as well as academically - it's time for more discussion of social security.

I'm very excited to report that I've gotten some dissent, some very thoughtful comments that is, on "my" social security proposal. Consequently, instead of answering my hypothetical "discouraging savings" objection just yet (which no one has yet raised but me), I'm going to attempt an answer to our readers' objections. My hope is that this is turning into a part of an extended "conversation" on social security within the Christian community - which would be a great thing right now. At the very least, it looks like this "series" on Social Security and Christianity on our blog will continue for some time now. Hope no one is getting bored. (If so, let me know.) Here's one comment I got on my last social security post:

Anonymous writes:

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?
Several points in relation to this:

(1) As to the "test way too low" objection:

(a) This is my hypothetical bill, so I can set the means test high enough. Let's say, for example, that any retiree who does not either earn 100K per year or currently possess 500K in savings gets the benefits that year. That solves the objection because anyone with that much money is assured of even more than just a "decent" retirement.

(b) A stronger (more generous) reading of this objection is that it is a purely political one: that the terms of my proposal, once released, will not be fully under my control and will be subject to amendment or compromise by other lawmakers. This objection further assumes that the middle and upper class will side together against the poor and set the benefits too low -- so as not to spend too much on social security. But I think, politically, just the opposite would happen. The only way we can change social security in the fundamental way that I've proposed is through a sort of "class warfare" that allies the poor and the middle class against the wealthy. If anything, the means test will be set too high (i.e., some still realatively wealthy people will get the benefits) because eliminating the benefits for all but the most wealthy would not be politically feasible. If I'm reading your thoughts right, I just think you've analyzed the politics incorrectly.

(2) Connection between means test and benefits. There is no necessary connection between a means test and the extent of benefits those who qualify for the program receive. I think your comment recognizes this, but I want to make sure I'm being clear. I would, indeed, support a means test combined with an increase in benefits for those who do still qualify.

(3) As to the "plenty of money to conquer Islam" objection. This amounts either to (a) a denial that there's really a budget crisis or (b) an objection to using social security specifically to address the budget crisis when we might save money in other ways, say by not spending so much on war.

(a) There is a real budget crisis. The United States is $7.6 trillion in debt. (Check out this interesting national debt counter.) This amounts to almost $26,000 for each American citizen. Many Americans believe that this money is somehow "paper debt" or otherwise "unreal." This is emphatically not true. The fact that excessive debt makes our currency unstable and makes other countries (our predominant creditors) less likely to lend to us (or to lend to us at reasonable rates) is one reason this debt is real and problematic. More importantly, we have to pay interest ever year on this debt. Does all this concern about the national debt make me a "fiscal conservative"? In short, no. "Fiscal conservatives," at least as traditionally defined, are concerned about the debt because the interest that we have to pay on the debt keeps taxes high. On the contrary, I'm concerned about the interest that we pay on the debt because this is money that we could be otherwise spending on helping "the least of these." We spend about $3.5 billion annually just paying interest on the national debt. Can you imagine the anti-poverty measures we could adopt with $3.5 billion per year? What if we didn't have this debt and could have given $3.5 billion in aid and development to the countries hit by the tsunami in Asia? How much suffering could this have relieved? How much would it have improved our national standing in the world? In sum, the national debt is very real, and my concern with it is a Social Gospel-derived concern.

(b) The second question, then is whether social security reform via means testing is a good way to address this debt crisis. I believe that it is for several reasons.

First, as a purely political matter, I see no reason why the government should be giving handouts to the wealthy. In the face of the debt crisis described above, dishing out payments to the wealthy who don't need it is profoundly irresponsible.

Secondly, eliminating social security payments for the wealthy would, by definition, not violate the Social Gospel's fundamental concern with the least of these. Everyone in need - all of the least of these - still get support. Hopefully increased support.

Thirdly, eliminating social security payments for the wealthy is not only not inconsistent with a concern for the least of these, but affirmatively serves the least of these. To the extent that social security redistributes payroll taxes (which are paid disproportionately by the middle class and poor) to wealthy retirees, that portion of social security is profoundly regressive. (Please, please do not misunderstand me as claiming that social security is regressive. I just mean that part of the program is regressive.) By stopping this redistribution from the poor to the rich, we are affirmatively helping the least of these.



My favorite blog reader, DLW, also made some very insightful points as regards my proposal. Unlike his comments sometimes are, these were not over my head. (It stinks when people who evaluate my thoughts are smarter than I am!) I do have some thoughts on DLW's comments, and I will post them in the next installment. But since his comments came later, and because this post is already long, that'll have to wait.

3 Comments:

At 2:23 PM, Blogger DLW said...

jj, I think the Iraq comment was just an aside, refering to how poorly the BushAdmin's been spending our money.

I think to restate my comments, I have problems with turning a forced-savings program into a redistributive program in an ex post manner. Those that paid into social security, expecting to get the money back eventually, should get it back, regardless of their income and savings.

I'm not against redistribution of income through a progressive tax-code, as I mentioned before, but I think it is important to limit the ways we go about redistribution, since there is wisdom in providing for stability in wealth for the wealthy and the not-so-wealthy and one potential source of future instability are policy-changes by well-meaning do-gooders like ourselves.

dlw

 
At 2:16 PM, Blogger DLW said...

You probably would really like this link I commented about at my blog.

 
At 8:40 AM, Anonymous Anonymous said...

Americans' Future In One Plan
I know that most of you are busy to read my book. As I explained previously that Taman Health Plan (www.trafford.com) takes care of all the health care, Medicare, Medicaid and social security. It will threw away all bureaucracies out of window. Let me explain shortly how it works:
1- there will be no more health care insurance companies, no Medicare, Medicaid or Social Security. My plan will take care of all.
2- Basically will be only one Big Health care organization (Taman Health Plan or THP).
3- The center of the plan will be in Washington while the health departments in every state will be the branches.
4- One organized body will be taking care of the Health Care and long term care of all Americans replacing 1500 insurance companies, Medicare, Medicaid and Social Security.
5- This will allow us to provide a uniform service to all Americans every where in both inpatients, outpatients and long term care.
6- When you go to any Duncan Donuts branch your expectation is to have a fresh coffee and a donut with no long wait. We will try to provide a similar predictable service everywhere as Duncan Donuts. With having only one body will be able to do that.
7- The Capital of the plan will be the funds of Medicare and Social Security (before the bankruptcy of both systems). The maintenance will be a yearly tax from each of us (will replace our yearly social security and Medicare holding taxes). A percent of each of us go to his account cards and a percent go to THP itself. The money of the plan will be invested by the investing sector of the plan very likely in Wall Street.
8- We will have 5 ATM cards with a corresponding accounts. Card A (children), Card B (working group 18-65years old), Card C (Medicare card >65 years old), Card D (Medicaid card), Card E ( expensive medicines or investigations).We will have the health cards devoted to health care and long term care. Thus we will have: health cards, banks with accounts to each card and credit card machines in outpatients care and hotelling part of hospitals and nursing homes.
9- Cards will pay for the outpatient medical care including doctors, emergency room visits, investigations, medical supplies, pharmacies and the hotelling part of hospitals and nursing homes. While the medical part of hospitals and nursing homes will be budget by the plan itself.
10- In the first year of issuing cards: Card B and C (most of people) will have a bonus it could be a percent of their Medicare and social security withholding (70 % or so). We will try to be fair to every one but every one has to now that most of us already lost a lot of money with the HMO's. For next year new comers to card B at age of 18 when first issued will have a bonus of 50,000 dollars. It will change every year by a percent a according to inflation.
11- every one of us will get a statement every one or two months of his card account. Card B account will phase in card C at the age of 65. If card C account is vanished Card D will be issued (hoteling part will be less luxurious). Only few of Card B will have card D if there account vanish most likely those with severe medical problems.
12- So basically most of us will have our own account Card B then card C. Say you are 45 and you have now in your account $ 200,000 you can take one or more years out of work, you Can retire early if you like and with your card you will control all the medical services and its prices.
13- With this card system we will end all bureaucracies of health care, Medicare and Medicaid. No one will stand between you and any medical or long term service (only your card). Shop around with you card, have early health care security and responsibility and invest in your health.
14- We will not need Social Security since after age of 65 we will be able to use our cards to stay in any nursing home each according to his account in card C or card D. So when you invest well in your health you will be able to enjoy a nicer nursing home when you get old (actually it will be also a kind of tourism).
15- The money in cards do not get inherited when we pass away but recycle in the plan to support the next generations.
16- The plan will have very positive effects not only in simplifying our care, save a lot of waste in health care, give early health care security and responsibility to Americans it will also have a positive effect on the economy, saving billions of dollars to Americans, creating jobs in health care and cutting outsourcing.
Very likely, you figure it out by now I could have sold the plan to one of the presidential candidates before the 2004 election for millions of dollars (they already spent 2 billion dollars). It is my gift to the American people (it will help the healing process of the two worlds America and the Muslim/Arabs).
Maged Taman.

 

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