Feb 7, 2012

Would Means Testing Title II Even Save Money?

From R.J. Eskow writing at Huffington Post:
Last week Republican Mitch Daniels once again pushed the "means testing" argument against Social Security, saying that we can no longer "afford to send millionaires pension checks" or "pay medical bills for even the wealthiest among us.".
Daniels and his fellow Social Security attackers are able to draw on a very reasonable-sounding (but completely deceptive) argument, one that's been honed and promoted by billionaire-funded think tanks and other anti-government organizations. The "means testing" argument does sound fair -- until you think about it.  ...


First of all, what's a "millionaire"? If you say that a millionaire is someone with $1 million or more in investable assets, past studies have showed that only about one American in one hundred meets that definition. After the collapse of the housing market and the decimation of private pension plans, the percentage of retirees who meet that definition is probably much smaller. And it's shrinking every year....

If you define "millionaire" in a more reasonable way -- say, as someone who earns at least a million dollars each year in investment and other income after retirement -- the number of people who fit the definition becomes extremely small.  ...


The Social Security Administration (SSA) is already cash-starved, especially by Republicans who have gutted its budget. These cuts have already delayed the processing of applications and appeals, and have threatened to slow the distribution of checks. These cuts hurt the disabled, children and seniors.
How is the SSA expected to handle this new means-testing function? Right now its overhead is admirably low because it's a simple cash-in/cash-out program. Will it now be forced to process new paperwork on every applicant? Will it have to link its computer systems with those of the IRS, creating a new electronic database of information on every American? Will every retiring senior be grilled by government officials as part of a screening process?
The cost of means-testing could well be greater than the amount of money saved. After all, there are more than 38,000,000 people over the age of 65 in the United States today. And every one of them will need to be screened every year.
I thought Republicans wanted to cut bureaucracy, not increase it....
Here's what would make sense: Tax those high earners so that they're contributing their fair share to the economy.

17 comments:

Anonymous said...

Aren't they all being screened/ means-tested already for Medicare part B premium purposes?

Anonymous said...

"Here's what would make sense: Tax those high earners so that they're contributing their fair share to the economy."

Amen.

With the yacht-loads of money that idiot Mitt Romney rakes in every year, he's only paying FICA taxes on the first $106k or whatever the amount is. Everyone should be paying a fixed percentage of their income towards FICA, whether they make $10,000 or $10 million a year.

Anonymous said...

There aren't enough millionaires that eliminating their Social Security would make a difference. They could raise the base or just put an extra tax on earnings above $1 million with no benefits. This would be a reverse means test in that the wealthy could still get Social Security but may not get a return for their extra taxes. Eliminating Social Security for the wealthy by means-testing is designed to weaken support for Social Security and also give it the appearance that it is welfare.

Anonymous said...

If you collect FICA taxes on all wages, then you also have to pay Social Security benefits based on all wages. Do you want the person who earns and pay FICA taxes on $500,000 a year receiving a monthly retirement check for $13,000 a month?

A better approach would be tightening the disability rules so only people who are truly disabled receive benefits (instead of the thousands of "older" workers being paid because it is harder to find jobs) and tightening the rules for unemployment and other benefits so people have greater incentive to return to work as soon as practical, thereby paying more money into the Social Security system via FICA and SECA taxes and drawing less money out via inappropriate disability benefit payments.

Anonymous said...

"Do you want the person who earns and pay FICA taxes on $500,000 a year receiving a monthly retirement check for $13,000 a month"?

That's my argument for SSA to repduce the alj corp and hire cheaper independant $40,0000 adjudicators.

signed,
the disabled.

Anonymous said...

"Do you want the person who earns and pay FICA taxes on $500,000 a year receiving a monthly retirement check for $13,000 a month"?

That's my argument,a little different but similar thinking for SSA to reduce the alj corp and hire cheaper independant $40,0000 adjudicators.

signed,
the disabled.

Anonymous said...

To: the disabled

Your ongoing rant makes even less sense than usual - most of the $1 million plus wage earners would be filing for retirement benefits - not disability benefits. No ALJs involved!!

Actually, a lot of us would rather go back to the Hearing Examiners SSA used to have. But you wouldn't - just like the DDS examiners, many more of them actually adhered to the rules. No Huntington WV ALJs in that corps. Why you persist in asking for somethng that is against your own interests is beyond me!!

Anonymous said...

12.05

Anonymous said...

Why should the people who are working and paying into the system be responsible for people who have never worked or who are sponsored into this country and their relatives expect the government to take care of them? There needs to be a SSI Means test, if anything.

Anonymous said...

"There needs to be a SSI Means test, if anything." HUH???

Do you know anything about SSI? It is a needs based program, meaning they HAVE to have limited income and resources! There are some definited problems witht e SSI program, but wealthy individuals qualifying is NOT one of them.

Anonymous said...

"If you collect FICA taxes on all wages, then you also have to pay Social Security benefits based on all wages. Do you want the person who earns and pay FICA taxes on $500,000 a year receiving a monthly retirement check for $13,000 a month?"

Pretty sure that if FICA taxes were collected on all wages, there would be no obligation to increase the cap on the monthly retirement wages paid out.

Anonymous said...

Title II RSI is already means tested to a degree because as you earn more the FICA increases (up to the cap) but the evential benefits do not increase to the same degree. The low incore earner gets more back in benefits than the middle class worker. Also, the benefits start to be part of the middle class retiree's income tax calculations, especially if they have some savings and investments.

Nobbins said...

Means testing Retirement Benefits is part of the effort to ultimately kill SS. If you means test it, then certain people would be paying into SS their whole lives, yet get nothing back. Then they would have an argument that they just shouldn't be a part of the SS system. Add in a little astroturf outrage, and then you have Congress fighting to make it an opt in system.

Don Levit said...

The top earners are receiving only 15 cents for every dollar of contributions - resulting in an 85% tax.
Raising the cap would raise benefits, but only 15 cents for every dollar paid.
Don Levit

Anonymous said...

I like the fixed percentage argument. Yes, if a person is taxed for making $500,000 per year then, yes, they should rake in more when it comes to retirement or disability. The SSA could use that income on the wealthy to help other people on SSD. It's like a loan.

I am not sure about $13,000 per month upon retirement or disability. Maybe there should be some reasonable compromise. But right now, only about $106,000 is taxed for SS purposes. Raise that. Then, those who were taxed more get more back on retirement.

It seems simple.

Anonymous said...

Raising the cap could also involve a 4th, lower bendpoint (say between 8.5%-10%).

It's funny that the Republicans complain about "class warfare" except when it is in their best interest to start class warfare. Means testing Title II would simply accelerate the calls to do away with the system. Heck, if I was wealthy I would be crying bloody murder if I had to pay FICA for an entire lifetime with no return on the money.

Nobbins said...

"Heck, if I was wealthy I would be crying bloody murder if I had to pay FICA for an entire lifetime with no return on the money."

If only they could find solace in their Aston Martins, 50 ft yachts, and biannual trips to Europe.