Andrew Biggs, formerly the Deputy Commissioner of Social Security (on a recess appointment, after the Senate refused to consider his nomination) has a piece in today's Wall Street JournalWants Social Security To Be A Welfare Plan." claiming that "Obama Of course, in a larger sense Social Security has always been a "welfare plan" in the sense that it is intended to promote the welfare of the American people. The widespread belief that Social Security does promote the welfare of the American people is why the American people support Social Security, a point which Biggs has never understood.
Biggs' article, like everything else that I have read by him, is almost incomprehensible. His thesis, as best I can tell, is that because Barack Obama wants to cut income taxes on the poor and middle class while increasing the FICA tax on high income earners that somehow Social Security will become a dreaded "welfare program." As best I can tell, any increase in the progressivity of taxation in the United States is "welfare" to Biggs. I guess the word "Welfare" sounds more frightening to Biggs than "Socialism", the other term being thrown around by the McCain campaign to describe Obama's plan to increase progressivity of taxation. All Biggs is doing is coupling statistics of dubious relevance with a ridiculous argument and using a pejorative term to describe his opponent's plan.
Biggs' article, like everything else that I have read by him, is almost incomprehensible. His thesis, as best I can tell, is that because Barack Obama wants to cut income taxes on the poor and middle class while increasing the FICA tax on high income earners that somehow Social Security will become a dreaded "welfare program." As best I can tell, any increase in the progressivity of taxation in the United States is "welfare" to Biggs. I guess the word "Welfare" sounds more frightening to Biggs than "Socialism", the other term being thrown around by the McCain campaign to describe Obama's plan to increase progressivity of taxation. All Biggs is doing is coupling statistics of dubious relevance with a ridiculous argument and using a pejorative term to describe his opponent's plan.
4 comments:
2009 PIA formula:
90 percent of the first $744 of AIME
32 percent of AIME over $744 and through $4,483
15 percent of AIME over $4,483
I bet the majority of people do not know that Social Security already gives a greater return to low income workers.
"I guess the word "Welfare" sounds more frightening to Biggs than "Socialism", the other term being thrown around by the McCain campaign to describe Obama's plan to increase progressivity of taxation."
What is Obama's "spreading the wealth around" other than Socialism.
Charles,
I get that you support Obama. Just admit you are reading his article as an Obama partisan. You do not flatter yourself when you are unable to properly analyze Biggs' paper.
Uhhh, progressive taxation was never the intent of SS Retirement. When the income tax was developed, it was intended to be a progressive tax (thus the higher your income, the more you are taxed).
Social Security (SS) Retirement was never meant to be a progressive tax when it was created (thus the constant tax rate regardless of income and the eventuall cap). The reason the "cap" exists on income is because SS Retirement was not meant to be a "welfare" program, ie, the selling point of SS Retirement was that you were getting back the investments that you put in. No one is going to get millions from SS Retirement, thus if you lift the cap on SS Retirement and take millions of dollars from millionaires due to the payroll tax and use that money to pay the benefits of other SS retirees, then it becomes by definition a "welfare" program.
Whether this is a good idea or not is up to each person's opinion. It is not an opinion that SS Retirement becomes more "welfare-like" if you start to use the investments of one class to pay for the retirment benefits of another.
I've never understood why all earned income was not subject to FICA. This is a flaw that should be corrected.
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