Wednesday, August 11, 2010

Social Security: Washington Post hints that means testing may be appropriate component of reform


The Washington Post ran a provocative lead editorial Wednesday, Aug. 11, p. A16, “Social security’s tough truths: Whatever the deniers say, the program needs reform, and soon”, link here.  This may sound like another variation of the Al Gore “inconvenient truth” mathematics.

The Post is critical of proposals to harden Social Security from the revenue side only. It mentions “means testing” as an unacceptable measure on a list examined by both Erskine Bowles (D) and Alan Simpson (R), among reduction in benefits and raising retirement age, however incrementally.

The Post wants a “balanced approach”. (Already, my full retirement age did not occur until 66, but I was able to start payments at 62, and my employer’s “social security bridge” pension payment had made the assumption that I would, as do most “social security offset” provisions in many defined benefit pensions).

The Post sensibly does say that reforming Social Security should not add to the deficit (and accounting gimmicks often discussed by conservatives should not hide it either), but the post also says, “Some adjustments on the benefits side, particularly making benefits less generous for the highest-income recipients, would also make sense.”

That’s the rub. My experience with social security is that it is essentially an annuity, with the FICA taxes over the years (a minimum of ten) amounting to a premium. “I earned it.” (As my Army buddies said, “put it in “The Proles”.) If you take it away, that’s redistribution of wealth. You don’t take annuity payments away. (I admit, there’s a question that when Social Security started, the earliest beneficiaries in the 1930s had not made contributions, but that doesn’t make the entire system into welfare. Curiously, some corporations call their severance packages “welfare programs”.)

But once you except the idea that Social Security is not an annuity (that is, what the Bushies wanted with complete privatization, as does Cato) but a “tax” on the working to "support" the elderly, then you have the argument that the “pro-family” people make all the time. That is, we have socialized eldercare (while "privatizing" parenthood) so that individual family members, especially the childless and LGBT, get the “false freedom” of total personal autonomy, without sharing the family responsibility elected by those who choose to marry and become parents (both).

Of course, if social security retirement benefit is an "annuity", why does the law require Social Security to enforce the "annual earnings limit" test before full retirement age? Since the benefit is acutarially reduced when started earlier according to life expectancy (and may prove disadvantageous, especially for females), it seems unnecessary to restruct the benefit. Furthermore, if there were means testing, there might exist rules that no more than one benefit could be paid per household (spouses, domestic partners [a twist for same-sex], or even a very old person living with an adult child himself or herself old enough to receive social security retirement benefit; right now, the benefit is strictly based on individual "number holder" (wage earner or spouse of wage earner, and the rules allow spouses a choice, as to how to use separate work records to their advantage).

I wrote blog postings earlier this week on my Issues and GLBT blogs, based on other news and columns. In any case, eldercare is not completely socialized: custodial care is still family responsibility, and budget-hurt states are likely to start enforcing filial responsibility laws in lieu of Medicaid payments for nursing care in many cases.

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