Dean Baker: Now There's Even a 'Progressive' Plan to Gut Social Security

[marmar]

via AlterNet:




Center for Economic and Policy Research / By Dean Baker

Now There's Even a 'Progressive' Plan to Gut Social Security
The folks trying to slash Social Security face enormous political opposition and have no good argument for their case. They're going to have to lie, cheat, steal to do it.

January 20, 2011 |


The insiders in Washington really really want to cut Social Security, and they are prepared to say or do anything to do it. Among the latest lines is that they want to make Social Security more "progressive." This sort of rhetoric appeared in a report from the liberal Center for American Progress (CAP) in a plan that proposes substantial cuts in benefits.

To understand what CAP and other proponents of increasing the progressivity of Social Security mean, consider the idea of raising a marginal tax rate paid by many middle-income people from 25 percent to 35 percent. The current 25 percent bracket begins at an income of $34,500 for singles, and $69,000 for couples.

Raising this tax rate by 10 percentage points would be a substantial hit to tens of millions of families who are certainly middle class by anyone's definition. However, this tax increase would also be progressive. The bottom 60 percent of the income distribution would not be touched at all, and those just over the cutoffs would only see a small increase in their tax burden.

Nonetheless a couple earning $100,000 a year would see their taxes rise by $3,100, which is not a trivial matter for a middle-class couple. This is the way in the CAP plan for cutting Social Security benefits is progressive. It would lead to substantial reductions in Social Security benefits for people who earned an average of $60,000 or $70,000 during their working lifetimes. While such people earned more than most workers, such salaries don't quite put them on par with Bill Gates. ..............(more)

The complete piece is at: http://www.alternet.org/economy/149614/now_there%27s_even_a_%27progressive%27_plan_to_gut_social_security/

[vi5]

1. "A couple earning $100,000 a year......"

"A couple earning $100,000 a year would see their taxes rise by $3,100, which is not a trivial matter for a middle-class couple"

100K income is not middle class. I'm sorry. Maybe if I'm being generous it's very upper middle class but it's barely so. I live in one of the most expensive areas of the country, and a couple earning $100K here is still doing just fine and can live a very, very nice lifestyle.

When even a progressive article, trying to make the case that messing with social security is bad, it says something like this we are truly through the looking glass. I'm not saying a $3,000 hit wouldn't be a tough nut to crack, but it's not going to send a couple making $100K to the poorhouse.

The article itself is good, don't get me wrong. But just looking at how far the dialogue has shifted is disheartening.

[leveymg]

3. In the DC suburbs, $100K is 25% below the household median income.

If you don't believe me: http://en.wikipedia.org/wiki/Arlington_County,_Virginia

A lot of middle-income people here have $400,000 mortgages on modest homes. $100,000 a year gross isn't half that amount after taxes and withholding for retirement and health insurance. There's very little left for other things, like food, utilities, and the two damn cars everyone has to own to get to work. You're entirely wrong that another $3000 a year out of pocket wouldn't send us to the poor house (as if such a thing still exists).

[vi5]

7. I understand that...

Again, I live just outside of NYC and have lived in NYC. I have friends living in DC making at or around $100K. I know full well what things cost and what that level of salary is after taxes. I'm not saying a $3,000K hit would be a cause for celebration.

As I posted below I understand that there are differences in areas, but DC and NYC are not the entire country. In probably 80-90% of the country, a household making $100K is doing quite well for themselves.

[Chimichurri]

4. in NYC area 100k is much different than in most other places in the US

3000k is a lot of money when you're living paycheck to paycheck.

[vi5]

6. I live just outside of NYC.....

in one of the more expensive areas of NJ.

I know that 100K is much different in NYC. That's also my point. NYC and DC are not the entire country. I'm as NY Tri-State metro area as they come, but that doesn't mean we should be basing the adjustments of entire social programs based on that threshold.

And you can easily not have to live paycheck to paycheck making $100K in NYC. I'm not saying you can live in a penthouse on the upper west side, but you can live comfortably, in a nice apartment on $100K and not be living paycheck to paycheck if you don't live extravagently. I have done so on much less.

[leveymg]

8. Do you have a family? Doesn't sound like it.

Where can one find "a nice apartment" big enough for a family in Manhattan or even Brooklyn for less than $2500/mo? $100K a year family income in the NYC or DC or SF areas is barely entry-level, tract-housing outer burbs middle-class. Maybe you can get by on that if you're single and live in a small apartment closer in, but not a house or coop. Not anymore, not here.

[vi5]

10. 1 Wife, 2 Kids

My point isn't that Manhattan is cheap. It's that in the majority of the country (not where I live, and not where you live maybe), $100K is not struggling by any sense of monetary functionality and it's not typical middle class in most places in the country, and we have people who live in these two very expensive areas basing economic policy on their own unrealistic perspective.

And again, let's not lose sight of another fact: we choose to live where we live. Especially in the NY and DC areas there are plenty of less expensive suburbs and outer areas. To do so might inconvenience our lives a bit with longer commutes or whatever, but it's a choice. I choose to live in this more expensive area and I choose what things are and aren't worth spending money on. It's like saying "I make $100K and that's not middle class and I couldn't afford a middle class tax cut because my kids private school costs $20K ........" O.K. I understand that. But just because someone in a more expensive area is making other choices that may impact their expenses, doesn't mean that it's in proportion to the majority of the country.

My point in all this is just what is being proven by the responses to this thread, and that's the fact that the people making policy and deciding things that affect the entire country, live in NY and DC. It's a skewed perspective and it's not reality for the majority of the country. I understand and don't argue that $100K in Manhattan or DC is not the same as it is everywhere else. That is my point. We shouldn't be basing policy for the entire country on a skewed perspective of a smaller area of the country. And I say this as someone who lives in that more expensive area.

[n2doc]

11. 100K a year is the equivalent of 38K in 1980 dollars

And I don't remember folks saying 38K a year was "rich" or "upper middle class" back then. And we both know inflation has really gone up much more than the official value over that time.

Quit it with the crap about who is rich and who isn't. Frankly just because you would get along just fine on that amount doesn't mean that others would not have trouble on that amount. Try lifting all boats rather than sinking others so you can feel superior about your spending habits.

[vi5]

12. "Try lifting all boats"

I'm not quite show how I lift all boats by making a $100K salary and complaining about how I'm trying to make ends meet when the majority of the country would probably give anything to switch places with me. I lift all boats by saying "Hey, I'm doing o.k. don't worry about me or base policy on me because I'm not representative of most of the country."

As of 2007 census data, anyone making over $80K was in the top 10% income level in the country.

http://blogs.wsj.com/wealth/2007/02/01/the-rich-o-meter/

http://www.kuro5hin.org/story/2008/3/22/92434/7687

Unless my math is terribly wrong, 10% is not the middle of anything.

Look, I'm not saying that different parts of the country don't have different standards and costs of living. And I'm not saying someone making $100K is rich beyond their wildest dreams. But a household with a $100K income is the top 10% income levels in the country. I'm just saying even accounting for increased cost of living and inflation and all that, $100K is not a typical middle class family, and the fact that that income number is being used in an article to represent a typical middle class income shows a decidedly DC/NY perspective that just does not fit the majority of the country.

[hfojvt]

16. they should have though

in 1980, 80% of households made less than $30,000.

Why the need to so vigorously defend the poor, poor $100,000 couple?

It's not crap, when I read an article and they start talking about $100,000 like that should be our focus, like that is the best example of the middle class in a country where the median household income is less than $50,000.

But that's okay, nobody should expect the perpective of a person making $13,000 a year to matter. We're gonna lift all boats by focusing on the $100,000 households and then letting it trickle down.

[n2doc]

17. Because by your reasoning we should only fight for low wages

By your reasoning, screw anyone who is making enough to live a decent, middle class life in any high expense area. By your reasoning we should all be happy living on 40K a year, and screw anyone making more.
I have no problems trying to improve your lot if I can. I just don't see how attacking the middle class is going to do it. But maybe you want more company in your economic level in the hopes that that will drive prices down for you?

[hfojvt]

18. what is attacking the middle class?

I see it the other way around. When these tax cuts were passed, they provided larger benefits to people making over $80,000. That was why I opposed them. It costs trillions of dollars to keep the tax cuts for people making $80,000 to $250,000. Because of that cost of trillions of dollars, the retirement age is likely going to be raised or my FICA benefits are going to be cut. That is how the trillions of dollars going to those richer people is going to come out of my pocket. My retirement will be later and poorer, because they got, and fought to keep, their bigger tax cuts.

And I never said anything about fighting for low wages. What I am asking is that the $80,000 people look at me, and recognize that I exist, and maybe that I matter. That my perspective matters. That my problems matter. That my concerns matter. Instead it seems that I am always berated for not getting all upset about the concerns of the $80,000 - $250,000 crowd. Because, they, unlike the huge group making $30,000 - $80,000 represent the 'middle'.

[MannyGoldstein]

2. It's the war on seniors

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x238503

Given that Social Security is fiscally sound, this is horrible.

[alc]

9. fiscally sound depends on what the "special bonds" are

The have not given details on the bonds. They can claim to have $3 trillion in "special bonds", but if those are only redeemable for dog turd that the government "values" at $3 trillion it won't be a lot of use.

I cannot find "when" the government has agreed to pay them back with something useful. (1000 years?)

I cannot find "how" the government has agreed to pay them back. (more non-marketable "special bonds" of higher value?)

I have found suggestions that they are already included in the national debt, but also suggestions they are not. If they are not, it would be a huge problem to agree to pay them off with marketable assets (e.g. normal bonds) since that would be a large debt increase.

I think it's safe to say that something is not as they claim or so many Democrats would not be on board for changes and hesitant to give details of the "special bonds". If they are as good as normal bonds, why were they issued as "special bonds"? The only difference I can find conclusively is that they are non-marketable (i.e. useless until the govt decides to pay them back with sellable assets).

[mmonk]

5. There's no such thing. Social Security is progressive legislation.

It was legislation that gave the Democrats political dominance for a long period of time. That lesson has been lost as Democrats try to flatten income taxes just like the Republicans.

[socialist_n_TN]

13. Yeah, what you said. It's hard to "define" progressive..........

as something like this. However, it fits into the meme being fostered in some circles (even on DU) that the DLCers and Reagan Democrats are "progressive" or even "liberal". That's bullshit. My definition of progressive and liberal is a LOT more classic than that.

[gratuitous]

14. You wanna make social security more progressive?

Remove the earnings cap.

Lower the retirement age.

Increase benefits by $25 a month. The wealthy won't even notice it; the poor will vote for you forever.

[bullwinkle428]

15. Divide and conquer - a polticial strategy whose roots can probably

be seen laid out in paintings on cave walls!