From what my conservatives friends have said recently, it seems that George W. Bush has settled on two main goals with Social Security, making it more progressive and fixing the shortfall. I'm all for it. But the Pozen plan isn't an efficient way of doing that. It hurts the middle class, reduces benefits, etc. So I'm going to help the president out, I'm going to tell him how to fix the shortfall in a progressive way. Ooh Mr. President, you're going to love this!
• First, raise the cap on earnings subject to the payroll tax so 90% of all income is included, That, after all, was Ronald Reagan's magic number. What the Gipper failed to foresee was that the earnings of the rich would spring forward, laughing maniacally as the rest of the country's income tried and failed to catch up. Because of that, 15% of earnings are outside the tax. So increase the earnings cap by 2% more per year than we would otherwise and, by 2043, we'll hit the magic 90%. Not only that, but you'll cut the program's deficit by almost 1/3rd. Whee!
• Bring back the Estate Tax in it's 2009 form and make it a dedicated revenue source for Social Security. As you yourself clearly realize, it's silly for the rich to pay so little and get so much. That's why you want the program to be more progressive! But where Pozen tried to do that by cutting benefits for the wealthy, my plan* does it be taxing them after they die! When they don't even know they're being taxed! It's a much better system, I'm sure you'll agree. And here's a bonus: last week, in the NY Times, Paris Hilton said:
"I'm glad I got the partying out of my system when I was young, because now I'm so over it and I can focus on my career," Ms. Hilton said one balmy afternoon late last week. "Now I'm trying to build an empire. I don't want to be known as this Hilton hotel girl my whole life. I want to make my own name."
Isn't that just like so ew!? Paris Hilton got her partying out when young? She makes Jenna look like a school marm! Well, let's help Paris achieve her goals and take a cut of her inheritance. After all, she doesn't want all that hotel money anyway...
• Now don't get all excited, Mr. President. I know you want your private accounts. But who wants a lot of little ones? We're gonna give you giant private account! 20% of Social Security's assets should be invested in equities. We'll phase it in, keep it as a percentage, and the massive amount of cash will let the program ride out the markets ups and downs. So it's still a private account, but without all that pesky risk to the individual. And it'll make money!
Do all this, and Social Security is basically balanced -- the shortfall's down to .49% of GDP, having started from 1.89%. Good stuff, and enough to be considered within "close actuarial balance". But you're a perfectionist, right Mr. President? Fine. Well. Good. Let me reach into my bag of tricks here...
• Come 2010, make sure all federal and state employees are covered by Social Security. I keep hearing you mention how Congress doesn't use the program. I'm with you -- that bunch'a bastards. Get all those federal bureaucrat lagger types in the system and the shortfall goes down by another .19%, making it a mere .3%. We can cover that with change from behind the couch.
Now, this isn't "my plan", precisely. It's really Robert Ball's plan, but it's kinda long and complicated how he wrote it so I figured I'd give you a Cliff Notes. Now, he offered a way to make benefits rise more slowly by indexing them to the Consumer Price Index. It'd be more accurate but I know you don't want to do anything regressive, and that'd hurt the poor, particularly since Medicare premiums keep going up and are taking an ever-bigger chunk out of Social Security checks.
So there ya go! If you want to make it more progressive, we can soak the rich, roll back some of your tax cuts, raise the cap higher, or do a variety of other thingies that'll raise more funds that you can add to checks for the poor. But we can talk about that later. For now, I'm just going to hang out by the mailbox, excitedly waiting for your invitation to come by the White House, Pozen-like, and tell you more about my plan. Because, let's be honest -- his kinda sucked, didn't it? We all thought it'd be good, but it ended up hurting people under the cloak of helping them. That's silly. Mine is stolen from one of the two guys who's been administering the system since the beginning of time (well, not quite, but close) and actually helps everybody, 'cept some of the super rich, and it doesn't even hurt them, it just makes their kids a teeny-bit less super rich. My plan wins, and if you adopt it, so will you.
One of the real issues that many miss is that FICA is a payroll tax for employees and self employed only. Many of the very high income earners don't get that big of a paycheck, but get other remuneration that is not subject to this tax such as incentive stock options, dividends, capital gains, etc.
I doubt you will capture that much more by raising the ceiling....at least not as much as you think you will.......
Posted by: Robert Zimmerman | May 05, 2005 at 01:38 PM
You're the man, Ezra (and a true son of R. Ball). The Ball piece seems to have been written before Bush got his estate tax repeal, so their is ZERO chance he'd back out of this 'victory'. So some other juicy tax source will have to be selected.
I like Ball's idea of forcing all NEW state and local government workers into Soc. Sec. (some already are).
How about consolidating some other government retirement trusts (railroad workers, etc.) into Soc. Security?
BTW: the new site design is good. But the content is really the attraction.
Posted by: JimPortlandOR | May 05, 2005 at 01:52 PM
Changes still not fixed. Think the shrub will read post ?
Posted by: opit | May 05, 2005 at 02:05 PM