Why potential Social Security ‘fix’ won’t work
More help is on the way for Social Security if Sen. Chris Van Hollen, the Maryland Democrat, has his way. He introduced the
His plan would
For those of us who are apt to need the program over time, that sounds like a good start. Unfortunately, this concept will have a very bad end for everyone.
There are two serious misconceptions about this legislation. First, the improvement in the system’s finances doesn’t come just from new revenue collected from the 1%-ers of the nation as advertised by supporters. The bulk of the salvation comes from the diversion of existing estate tax revenue — money that already comes from Buffetts, Gateses or Bezoses and their ilk — to Social Security. As a result, these changes would add about
Second, most of the new money is coming from people who have earned a lot less than those titans of commerce. In fact, the largest segment of salvation draws most of its money from the estates of middle-class Americans in the distant future. The thresholds that trigger the levy are fixed, so inflation is apt to push average people into the tax over time. To illustrate the impact, if inflation in the future follows the course of the last 75 years, people who have an estate of
To see how this design plays out, we need only look to another feature of Social Security — the taxation of benefits. Initially, this levy hit less than 10% of retirees, most of whom were genuinely wealthy. Today,
This proposed legislation isn’t terribly different from Congress writing a check to Social Security for another $3 trillion with money borrowed from our kids. For that princely sum, we would get a projected
Maybe three years sounds like a lot, but it comes at a high price. President Franklin D. Roosevelt
FDR foresaw the problem. He knew that Social Security would be a very difficult sell in Congress as a use of public money. Lawmakers would have to justify using public money on a program that does not serve all Americans equally. In fact,
The reality is that this legislation would simply add trillions of dollars of debt to our children’s load so that the program could continue to provide $50,000 or more in stipend to seniors who are the 1%-ers that we seek to soak.
This legislation isn’t saving Social Security, and it isn’t taxing the Buffetts, Gateses and Bezoses of the world. It recycles the classic tax and spend policies of Washington dressed as a morally justified, sensible populist reform.