Wednesday, March 23, 2011

The "liberal" case for social security reform

Robert Pozen has an interesting missive on p A19 of the Wednesday Washington Post, “Why liberals should back Social Security reform”, link (website url) here

He argues first that lower wage workers live shorter lives than the more affluent, so they would benefit less from even a proportional system.  He also argues that the historical benchmark, of 90% of wages, would be met by raising the wage base subject the FICA tax to $170000.

He makes another subtle point. Federal tax policy favors matching 401K contributions from employers, and this benefits high wage earners more than those forming the subsistence base of the system.  This seems to comport with the arguments written about the effect of low wages by Barbara Ehrenreich, Lisa Dodson, Patrician Warren, and others. 

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