Monday, May 16, 2005
Finally, A Debate On Social Security?
Now we can have a real debate.
Supposely against the wishes of his party's leaders, the first Democrat to break the party’s ranks and offer a plan to reform social security, other than to block the Bush administration’s plan, has come forward, according to Joel Havemann in the Los Angeles Times:
The Wexler plan does not include private savings accounts, although it doesn't appear to preclude them either. Even though it's not presented as one for cutting current benefits, of course like the current Bush trial balloon, that’s exactly what it does.
How is that? Because the historic social security compact between each of us and the government is that we will get back what we pay into social security. Historically, that meant if you were able to pay in more while you were working, the government would be returning more to you at the other end, when you retired. After all the funds taken from you while you work were yours, and being kept in the proverbial "lock box" right?
That’s why, until now, increasing the amount of income on the front end subject to the social security tax was self defeating as a way to bring the system into balance, because it was suppposed to be offset by an increase in benefitsn retirmemnt. otherwise, it was just another tax. Thus currently the amount of income taxed at the front end is capped at the first $90,000 of income.
If the government taxed more at the front end (current income), it would irritate people for one thing. And because under the historic formula, the more the government took at the front end, the more it had to pay back to you when you retired. If you’re already making that kind of money at the front end, chances are you’d be more irritated by the tax than grateful for the payment in retirement.
Wexler’s plan calls only for the government to take more in taxes at the front end, but pay no more (and maybe even less) in benefits at the back end. That means in effect that above the $90,000 amount, the Wexler plan would rewrite the benefits formula, and the so-called social security tax afte that would become just another tax on our income, to be transferred to someone else, not us, in retirement, and without any pretense that it’s part of a retirement savings fund at all.
The Democrats are livid at Wexler, for at least two reasons. First, after the Bush administration seized the “third rail of politics” Democrats they pulled out all of the stops to paint him as insane, and they thought it was working. So long as it was working, Democrats didn't have to present any alternatives. exler, from Florida seems to be saying that strategy isn't working, at least for his retiree consituents.
Second, the Democrats all know that the only alternative they have to offer to Bush’s plan is exactly this kind of alternative: a massive tax increase without a commensurate increase in benefits.
Now they either have to admit it and be pilloried for that (Does anyone, except Tipper Gore, really believe that any such tax increase will be “lock-boxed” away for future beneficiaries?) Or the Democrats have to deny that this plan is anything like what they have in mind.
Disingenuous to the core, the Democrats have gone into their standard denial mode:
We think it’s always a good thing, of course, when Democrats start eating their own.
But really, what is the Democrats’ plan to reform social security if not something very m uch like the Wexler plan?
Supposely against the wishes of his party's leaders, the first Democrat to break the party’s ranks and offer a plan to reform social security, other than to block the Bush administration’s plan, has come forward, according to Joel Havemann in the Los Angeles Times:
In new political maneuvering over Social Security, a Democratic lawmaker says he will introduce a plan Monday for shoring up the finances of the retirement system, putting him at odds with leaders of his party.
Rep. Robert Wexler (D-Fla.) says that by imposing a 6% tax on wages above $90,000, to be paid half by workers and half by employers, the government could raise enough money to solve Social Security's financial problems for 75 years.
Workers and employers pay a combined 12.4% Social Security tax on wages up to $90,000 a year, but none on amounts above that.
The Wexler plan does not include private savings accounts, although it doesn't appear to preclude them either. Even though it's not presented as one for cutting current benefits, of course like the current Bush trial balloon, that’s exactly what it does.
How is that? Because the historic social security compact between each of us and the government is that we will get back what we pay into social security. Historically, that meant if you were able to pay in more while you were working, the government would be returning more to you at the other end, when you retired. After all the funds taken from you while you work were yours, and being kept in the proverbial "lock box" right?
That’s why, until now, increasing the amount of income on the front end subject to the social security tax was self defeating as a way to bring the system into balance, because it was suppposed to be offset by an increase in benefitsn retirmemnt. otherwise, it was just another tax. Thus currently the amount of income taxed at the front end is capped at the first $90,000 of income.
If the government taxed more at the front end (current income), it would irritate people for one thing. And because under the historic formula, the more the government took at the front end, the more it had to pay back to you when you retired. If you’re already making that kind of money at the front end, chances are you’d be more irritated by the tax than grateful for the payment in retirement.
Wexler’s plan calls only for the government to take more in taxes at the front end, but pay no more (and maybe even less) in benefits at the back end. That means in effect that above the $90,000 amount, the Wexler plan would rewrite the benefits formula, and the so-called social security tax afte that would become just another tax on our income, to be transferred to someone else, not us, in retirement, and without any pretense that it’s part of a retirement savings fund at all.
The Democrats are livid at Wexler, for at least two reasons. First, after the Bush administration seized the “third rail of politics” Democrats they pulled out all of the stops to paint him as insane, and they thought it was working. So long as it was working, Democrats didn't have to present any alternatives. exler, from Florida seems to be saying that strategy isn't working, at least for his retiree consituents.
Second, the Democrats all know that the only alternative they have to offer to Bush’s plan is exactly this kind of alternative: a massive tax increase without a commensurate increase in benefits.
Now they either have to admit it and be pilloried for that (Does anyone, except Tipper Gore, really believe that any such tax increase will be “lock-boxed” away for future beneficiaries?) Or the Democrats have to deny that this plan is anything like what they have in mind.
Disingenuous to the core, the Democrats have gone into their standard denial mode:
Aides to the top House Democrat and the Senate Democratic leader predicted that Wexler would not draw much support from others in the party.
"He's a party of one on this," said Jim Manley, spokesman for Senate Minority Leader Harry Reid (D-Nev.).
Jennifer Crider, press secretary to House Minority Leader Nancy Pelosi (D-San Francisco), said, "This is not the Democratic plan."
We think it’s always a good thing, of course, when Democrats start eating their own.
But really, what is the Democrats’ plan to reform social security if not something very m uch like the Wexler plan?
