Social Security Reform

January 26, 2005 6:17 PM

I notice that conspicuously absent from public discussions about reform of the Social Security is imposition of a reasonable system of means testing. The idea whereby wealthy seniors, who don't need social security payments to keep themselves in a comfortable lifestyle, don't collect from the general fund which was created to protect the poor and disabled, seems reasonable to me.

Given the alternative solutions of payroll tax increases, elimination of benefits, and/or huge budget deficits, means testing along with Bush's proposed private investment accounts could lead to a win-win social security reform-- one that maintains the traditional safety net for low income seniors and disabled while encouraging savings and investment. What's wrong with this idea? Why is no one making this argument?
posted by NorthCoastCafe to law & government (23 comments total)

Rich senior citizens get out the vote. If someone cut you a check each month, whether you needed it or not, would you turn it down? Would you vote for someone who'd take that check away?
posted by AlexReynolds at 6:20 PM on January 26, 2005

There are a lot more poor people than rich people.
posted by smackfu at 6:26 PM on January 26, 2005

One of the reasons Social Security is still around is that everyone gets it. Rich or poor, black or white, urban or rural, ~every oldster gets it.

Turning it into a program that only poor people get will send it to follow food-stamps', medicaid's, and AFDC/TANF's path towards being a perennial whipping-boy with limited support.

You get essentially the same effect with taxation of the benefits, or by more aggressively taxing other forms of retirement income. Giving it to everyone, but taxing it away from rich people again, seems to help programs be popular.
posted by ROU_Xenophobe at 6:31 PM on January 26, 2005

Means Testing = the end of social security.

The fact that everyone gets it is what makes Social Security Social Security.

What might be more viable is a reverse of the test you propose, wherein, peoples payments could be INCREASED based on need (to a greater degree than now, I know there are some adjustments already), rather than decreased based on wealth.
posted by TTIKTDA at 6:40 PM on January 26, 2005

Means testing social security would more or less just turn it into welfare, wouldn't it? Considering how unpopular welfare is amongst conservatives and even some moderates (at least, the impression I get* is that moderates tend to more tolerate welfare than actually support it). I doubt mean testing social security would get much support or, as ROU_Xenophone said, it would just turn social security into another oft-targeted-for-reduction social service like food stamps or medicaid. While I'm sure many conservatives don't necessarily support social security anyway, turning it into something more like welfare would likely decrease support for the program, even if it makes the program more fiscally viable. I always thought the important aspect of the program was the idea that, eventually, everyone (more or less) gets a piece of the pie.

Funnily enough, the first result of a Google search for "means testing" is a PDF on means testing social security. (Not trying to say Google could have easily answered your question. Just thought it was interesting. I hadn't really heard of anyone suggesting the idea of means testing social security until now either.)

*i.e., I have no numbers to back myself up on that, so take that as you will.
posted by DyRE at 7:12 PM on January 26, 2005

I think this discussion should be on the blue, but anyway, here are some takes on the means testing issue:

The Hill: Alternate plans in congress that would involve means testing. Includes why Dems are opposed.

CSM column: " the fact that income taxes will eventually need to be increased in order to cover Social Security benefits was part of the Greenspan/Reagan plan from the start.
That's the real meaning of the trust fund: It's an implicit promise that high earners will keep their part of the bargain and begin paying their share of Social Security's costs when the baby boomers retire."

Time mag: Joe Klein has a very readable look at Lindsey Graham's alternate plan.


Kaus (audio) on means testing.
posted by CunningLinguist at 7:51 PM on January 26, 2005

I'm all for a safety net for the underprivileged, but hell, that's what taxes are for. I'm begging them to take some of my federal income tax out of the Pentagon and give it to poor people.

However, that money that says social security that they take out of my paycheck, I'm expecting that back.

We can debate what form it takes, government managed pool or private savings account, but fuck any politician in the ass that messes with that money.

And I'm under 30. Imagine what seniors think.
posted by PissOnYourParade at 8:30 PM on January 26, 2005

There is also a sticking point about how to means-test-- whether to base the test on income or assets.
posted by Kwantsar at 8:34 PM on January 26, 2005

However, that money that says social security that they take out of my paycheck, I'm expecting that back.

See, you're looking at it wrong. It's not your money being saved for you. You are paying for gramps' retirement.
Will you be okay with getting your benefits cut off once you "get back" what you've paid in with interest?
posted by CunningLinguist at 8:41 PM on January 26, 2005

I've got to agree with CunningLinguist here. It's just part of the sales pitch that you're going to "get back what you put in." I've always thought that, given the pay-as-you-go system, SS already looks a lot like welfare. The only difference is that there are earmarked taxes for it and the qualifications are based on age (I know: age, income, etc.). But no one's saving your contributions until you get them back; you're paying someone else's income right now.
posted by leecifer at 9:16 PM on January 26, 2005

Just because my money is going to gramps retirement doesn't mean that the concept has changed. It comes down to the fact that I expect benefits when I retire. It's up to the government to find the money they owe me when it's my time to collect.

Now, I understand that its probably not going to happen. Due to increased cost SS has become somewhat of a national pyramid scheme.

But I'm talking about concepts and the ideal here. I am not a scrooge regarding welfare. I support an extensive social safety net, and I'm willing to pay for it.

I live in NYC proper and probably have a higher tax load then almost anyone else in the nation (minus the other NYC'ers of course) Much of that money goes into safety net features that New York State and City has that most other municipalities do not. For example, my boyfriend is a playwright and some years has limited income. New York State provides us with very low cost comprehensive group health care (Under $175/month for full HMO)

This is stuff I am willing to pay for out of my state, city and federal taxes.

But social security, regardless of how its working (or not) right now, should be a government managed retirement plan. I am giving the government a portion of my paycheck to manage and I expect benefits when I retire. I expect them honor that commitment whether I'm penniless or well to due.

Every year the government sends me a statement on how much I've put into social security so far and what my expected benefits should be when I retire. To me, that sounds alot like a guaranteed retirement plan, and I'm going to hold them to their word.
posted by PissOnYourParade at 10:49 PM on January 26, 2005

Who has ever received a sales pitch for Social Security?

I've always paid it because it's a mandatory tax.

I like the statements I get, because they assure me that if something really awful happens I have a minimum safety net. But I'm still stashing money away for my retirement, because I don't expect anyone but me to support myself if I enjoy a long working life.
posted by croutonsupafreak at 12:14 AM on January 27, 2005

I know I'm late to the party, but PLEASE people - there is no trust fund. I wish everyone would stop using that term. I have a retirement 'trust fund' of 1 million dollars, as of right now. I just have to make sure to pay myself sometime in the future. Don't worry, I'll find a way to do it.

To answer the original question - the AARP has quite a few voting members. Old people like to vote. For some reason, young people don't.
posted by bh at 12:50 AM on January 27, 2005

Social Security is supposed to be an insurance program. Not paying benefits to people who have paid their SS premiums - not taxes! - is not an option, regardless of how well off they may be.
A form of means testing is already in place since the retired draw an amount based on their contribution.
Some of the dire predictions you may have heard are exaggerations to cause fear. Sound like a familiar tactic?
posted by Cranberry at 12:56 AM on January 27, 2005

It ain't broke. The 'crisis' is invented by people who want to privatize SS, so they can get their hands on that money (and invest in healthy companies like Enron).

AARP may once have been a voice for retired persons. Today it is just an insurance company masquerading as a lobby.

Wake up folks! These politicians today are a new lower form of slime. Today they won't use lube, and you can forget the dollar under the pillow!
posted by Goofyy at 5:26 AM on January 27, 2005

Instead of means testing, they could, y'know, eliminate the cap on contributions. (What is it now, around $80,000?) That would make a big difference right there. Of course, those with money would not be thrilled.
posted by litlnemo at 6:09 AM on January 27, 2005

Means testing is unjust. Essentially those rich elderly folks you're mentioning:

a) Were promised their Social Security benefits by their elected representatives who built the system in the first place.

b) Factored the benefits into their retirement planning. What - you think rich people don't plan ahead about things like money? That's not how they got rich in the first place, mostly.

I'm sure all the rich people truly regret that their ostentatious and unjust affluence is offensive prima facie to all poor folks, but it doesn't seem right to arbitrarily screw them over.

Also, there are a wide array of voices on the SS 'crisis'. As others above have noted, there's really no sure consensus that it's even broken. Much depends on the direction the economy takes over the next decade or so.
posted by ikkyu2 at 6:20 AM on January 27, 2005

If it's an insurance program, and it's not means-tested, isn't that like buying everyone a new car whether or not their old one was stolen? Very strange.
posted by cillit bang at 7:55 AM on January 27, 2005

The average monthly check is $955 and the maximum monthly check is $1,939. Would the rich really miss it?
posted by CunningLinguist at 8:32 AM on January 27, 2005

Yes. Have you ever known any rich people? They love bargains and hate losing out on even small benefits, just like the rest of us (if not more so). Plus nobody actually thinks of themself as "rich" -- there's always somebody with more assets to point to and say "Now him -- he's rich."

Well, except maybe Bill Gates.
posted by languagehat at 8:53 AM on January 27, 2005

If it's an insurance program, and it's not means-tested, isn't that like buying everyone a new car whether or not their old one was stolen? Very strange.

No. Because it's an insurance against growing old. Not everybody lives to be old, just ask Kurt Cobain. Likewise, a universal health insurance is just an insurance against getting sick and having to pay medical bills - not "going bankrupt from being sick".

Rich people have car insurance, although they could easily afford a new car. Fire insurance although they could maybe build a new house. But what about the middle class?

This kind of insurance (aka the 'Bismarck model') is the opposite of welfare (aka the Beveridge model). Welfare is not an insurance but an alm to the poor, which is why it's so demeaning, and why you can't claim a right to welfare cheques.

The strange thing about the social security debate in the US is that it pits rich people against "poor" or "so called poor" people (welfare queens). But the people who benefit most from social security as an insurance model are the middle class and the lower middle class. It's better to keep them in the middle class through paying a temporary insurance benefit, than pushing them over the well off/poor barrier through illness or bad luck and then grudgingly keeping them (and their offspring) on welfare and below the poverty line. At least, that's what Europeans think. disclaimer: I'm a European
posted by NekulturnY at 10:59 AM on January 27, 2005

The arguments for and against means testing regularly come up at Obsidian Wings. Scroll down a ways for recent SS discussions.
posted by tdismukes at 1:10 PM on January 27, 2005

To follow up on what Goofyy said, read this Hertzberg New Yorker piece right now.

It appears to be a Bush administration distraction, albeit one for which conservative ideologues have been hankering for a long time. Although tin foil hat theories abound, one plausible suggestion as to what it is a distraction from is Iran.
posted by gramschmidt at 5:47 PM on January 27, 2005