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View Diary: Social Security Rashomon: an Actuary, a Defender and a Reformer Meet (33 comments)

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  •  People talk about it all the time (5+ / 0-)

    In fact in the Social Security policy circles I frequent they talk about little else. At least until everyone started focusing on Chained CPI proposals.

    CBO scored a variety of cap increase proposals in their 2010 Social Security Policy Options paper, and serious discussions should start there.

    But along the way should maybe examine why the payroll cap was instituted to start with (and it wasn't because FDR was in the pocket of the bankers, as if!). And then examine the crowding out effect that taxing capital an extra 12.4% would have on proposals to tax it for other elements of the progressive agenda. After all Social Security is fully funded for 20 years and dedicating that proposing tax to it gives a perfect excuse for the 1% to refuse to fund anything else while at the same time validating their whole 'Social Security is in crisis'.

    Two points. Social Security owes nothing TO capital because it has taken nothing FROM capital. To cannibalize a phrase it is "Of the Worker, By the Worker, and For the Worker". Which explains in large part why it has for 75 years been considered the Third Rail of American Politics, in the final analysis it's not capital's money. Whereas any cap increase risks triggering another old saying "He who Pays the Paper Calls the Tune". Do we really need to risk that?

    And two. Social Security self-funds simply by restoring the share of productivity going to labor to where it was in the 60s and 70s, get real wage back towards 2% and all is well. And which is the message progressives want to send going forward? "Please Mr. Rich Man, can you spare a dime to bail out my pension fund?" or "More Jobs! Better Wages!"

    Me I don't relish crawling whimpering to beg for an after the fact redress of an initial screwing out of workers' rightful share. Screw 'redistribution', the problem is in the power relations driving the original 'distribution' in favor of capital.

    On our feet? Or on our knees? The latter doesn't add up to "live happily ever after" to me.

    socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

    by Bruce Webb on Mon Dec 31, 2012 at 10:38:22 PM PST

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    •  It depends on whose ox is gored (1+ / 0-)
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      tardis10

      as always. The reason we're hearing so much about chained CPI is that it takes the onus off high earners, while lifting the income ceiling means those who have more contribute a bit more. Since those with a bit more have Congress' ear, they're the ones getting heard.

      Radarlady, who would pay more if the income ceiling were lifted, but sees that as a good thing...

      •  a serious question (5+ / 0-)

        Why should the wealthy contribute to pay for Social Security? Specifically?

        Basic income support? Certainly. And that is why we have SSI, Suplementary Security Income, a pure General Fund welfare program administered by Social Security but not funded by worker contributions. Now SSI is criminally inadequate and I would fully support an income tax surcharge on wages over the cap and extended to earnings on capital intended and devoted to beefing up SSI and its companion program Medicaid. And maybe throw in some more money to child care and early education. Hell turn us into Sweden for all I care, at heart I am a Social Democrat.

        But Social Security was set up on an insurance model for solid reasons. Among other things FDR was on record explaining that it would give political protection to workers from the demands of capital simply BECAUSE the later were not paying for it. And for similar reasons it was set up as an entitlement program whose continuing payouts were not explicitly tied to Congressional Appropriations and later why Social Security was legally placed "off budget". And those who propose to break down that carefully constructed wall and in effect turn Social Security from insurance to welfare because of some half-baked commitment to progressivism need to ask themselves a couple questions?

        Why do you think you are smarter and/or more progressive than FDRs Brain Trust who designed Social Security to start with? And actually there are some solid arguments to be made there. But they don't start with essentially lazy appeals to "Just lift the cap already!"

        In the face of the entire progressive agenda why on earth would we but into the 'crisis' narrarative being sold by the right and just jump to "Raise the Cap"? Why not consider a range of options that would preserve the careful design of traditional Social Security? Or calculate the true costs of Nothing as a Plan for Social Security? Progressives have just fallen into a carefully laid trap of "Fix Social Security Now!" while not fully asking the question of whether it is even in any way in actual need of fixing, or whether the solutions proposed simply distract us from more pressing needs?

        If you want to beef up basic social income via progressive taxation the do so via traditional Social Democratic mechanisms: SSI, Food Stamps, Head Start, Single Payer. All of them need financial and political support because they directly serve people who have limited political power and voice. But there is no pressing need to accomplish ANY of that via Social Security or even Medicare. Hell we even have the Tea Party out there yelling "Keep government hands off my Social Security and Medicare".

        Just because the Social Insurance programs are popular among the broad middle class including much of the Right doesn't automatically make them the perfect vehicle for economic justice. For example progressives who want to go to the wall to defende the Payroll Tax holiday need to understand that this largely middle and upper middle class tax cut was funded by gutting such programs as Make Work Pay which focused in people at the bottom. It's sunset is the first step towards opening room to resume progress towards the progressive agenda by putting that money in a more focused direction than giving a $2300 tax cut to some administrator making exactly the 2012 cap amount of $110,100 while throwing some pennies at the single mother working 29 hours (so as not to have her employer supply health insurance) at minimum wage. Properly seen the Payroll Tax holiday was a pure pander by Obama to middle class voters at the expense of the working poor. But seeing that requires throwing away certain blinders that confuse 'progressive' tax measures for actual progressivity.

        Not everything is as obvious as some people would have it. And pace certain commenters (not you) not every omission is actually such. Some things just don't hold up well on examination. For example cap increases.  And payroll tax holidays.

        socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

        by Bruce Webb on Tue Jan 01, 2013 at 10:17:19 AM PST

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        •  The reality of our (1+ / 0-)
          Recommended by:
          radarlady

          sound byte political era has to also be recognized. This is an era of "full transparency" and few actually looking.Fewer still thinking. In other words, the prism of Rashomon may not work in the era of Read -Aloud Bible Stories.
           

          "George RR Martin is not your bitch" ~~ Neil Gaiman

          by tardis10 on Tue Jan 01, 2013 at 11:33:07 AM PST

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        •  Thanks for your comment (1+ / 0-)
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          gulfgal98

          Well-reasoned, and one I had to read twice.

          As far as your concern about the wealthy, note that lifting the income cap would only apply to wages, not investments (so far as I know), and since the millionaire types (as least, as far as I've read, since I'm not one) are compensated via investments, rather than wages (which are subject to higher income tax rates) we're not talking about skimming off all their income.

          As for why the wealthy should pay taxes on all their income into Social Security, I'd have to point back to your comment: it provides basic income. Not every wealthy person is wealthy all their lives, and not everyone whose income exceeds the cap has always lived in the lap of luxury (Radarlady raises her hand electronically). While I don't expect to live exclusively on Social Security when I retire (provided my 401K's don't vanish in the next big financial meltdown), SS will be a help. It certainly helps my mother right now, and keeps me and my sister from bearing the whole burden of supporting her in the closing years of her life.

          Your response deserves a longer answer, but right now, I have one ear tuned to CSpan.

          Thanks again,

          Radarlady

          •  Wage earners over thc cap not the enemy (2+ / 0-)
            Recommended by:
            radarlady, Zinman

            Relatively tiny numbers of CEOs, entertainers, sports stars etc actually earn $10 million a year in wages or wage equivalents. And almost none earn that earn that year over year for their entire careers, instead entertainment superstars and moguls get to the $100,000,000 level by owning 'pieces' of the operations that put out their product, that is by taking compensation in the form of capital, which as you note is not totally captured, if at all, by FICA and whose earnings certainly are not.

            But let's say you are in that tiny fraction of CEOs that actually earn $10 million a year that could be captured by FICA? How many years would you need to work to cumulatively earn (not accumulate, earn) your FIRST billion? Answer: 100. And those Wall Sreet floor traders who earn in the high six figures? It would take them around 1200 years to earn that first billion.

            So even if there was a cogent reason to tax the 'wealthy' to pay for Social Security, why on earth would we limit it to the segment of that group limited to six figures while giving the nine figure folk a free pass? By and large the professional class and even over-compensated mid level people in finance are not the class enemy of labor, they are just higher paid ladies to the real MOTUs. The latter, the actual controllers of capital and overwhelmingly the skimmers of the biggest share of national income, simply laugh at cap increases. If anything the net effect is to take pressure off of the top rates they ARE exposed to.

            Obama picked $250,000 out of a hat. And the top slice of them are literally in the ranks of "We Are the 99%". A focus on cap increases that target the 84-90 or even 84-99% while giving the actual top 1% a free pass is kind of a funny approach to economic justice.

            Yes most cap proposals limit that to existing categories of covered income, that is wages and wage equivalents. For me that is a big part of the PROBLEM. If you want progressivity and economic justice you should go hunting where the ducks are. And the Occupy people by skill or luck zeroed in on the right targets: the 1%.

            Maybe just once we should try actually listening to the DFHs and not reflexively jump at any proposal with the label of 'progressive tax'. Because without meaning to doing so can just play to the actual advantage of the billionaires/MOTUs.

            socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

            by Bruce Webb on Tue Jan 01, 2013 at 01:15:15 PM PST

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        •  (10+/0-) (0+ / 0-)

          "Double, double, toile and trouble; Fire burne, and Cauldron bubble... By the pricking of my Thumbes, Something wicked this way comes": Republicans!!. . Willkommen im Vierten Reich! Sie haben keine Bedeutung mehr.

          by Bluefin on Sat Jan 05, 2013 at 04:54:43 PM PST

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    •  Instead of completely doing away with the cap, (0+ / 0-)

      have there been any scenarios run that involve raising the cap incrementally or even tying the cap to an index of some sort?  To me, this is a way of trying to get reasonable adjustments all along the line without triggering a so called tie to capital.  

      "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

      by gulfgal98 on Wed Jan 02, 2013 at 07:39:41 AM PST

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      •  Sure. In fact the cap is set by formula (0+ / 0-)

        now.

        And I personally support such a change to get the cap level back to 90% of income rather than its current 83%. On the other hand it is difficult from a progressive point of view to explain why THAT segment of the rich or near rich should take a hit while the top 10% go relatively untouched.

        Plus there are some indications that just redressing the outrageous income inequality we have seen over the last thirty years would have the same effect, that the problem is not with the formula per se. But the particular math involved is a little above my pay grade, and so it just remains a suspicion on my prt.

        socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

        by Bruce Webb on Thu Jan 03, 2013 at 08:17:55 PM PST

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