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Why the right wants to means test  Social Security

Several years ago I attended a discussion group led by a formerly radical professor at a Swarthmore reunion (my wife went to Swarthmore). During the discussion one inquisitor, probably also a former radical, asked the good professor whether it might not be a really good idea to means test Social Security, to which the professor gave an affirmative answer. I raised my hand to protest, but drew back when I realized that among my competition to dissent was Dean Baker, a Swarthmore alum, who proceeded to explain why the good professor was full of shit.

Recently, Dean has explained why Chris Christie, who has also suggested means testing social security, is also full of shit. Baker’s reasoning hasn’t changed much, it goes like this:

The key point is that, while the rich have a large share of the income, they don’t have a large share of Social Security benefits. That is what we would expect with a progressive payback structure in a program with a cap on taxable income. When we did the paper, less than 0.6 percent of benefits went to individuals with non-Social Security income over $200,000. Since incomes have risen somewhat in the last five years, it would be around 1.1 percent of benefits today.

However we’re not going to be able to zero out benefits for everyone who has non-Social Security income over $200,000, otherwise we would find lots of people with incomes of $199,900. As a practical matter, we would have to phase out benefits. A rapid phase out would be losing 20 cents of benefits for each dollar that the person’s income exceeds $200,000.

This would mean, for example, that if a person had an income of $220,000, they would see their benefits reduced by $4,000. This creates a very high marginal tax rate (people are also paying income tax), which would presumably mean some response in that people adjust their behavior since they are paying well over 50 cents of an additional dollar of income in taxes. If this was a person who was still working and paying Social Security taxes, the effective marginal tax rate would be over 70 percent.

By our calculations, this 20 percent phase out would reduce Social Security payouts by roughly 0.6 percent of payouts, the equivalent of an increase in the payroll tax of around 0.09 percentage point. That’s not zero, but it does not hugely change the finances of the program.

In other words, unless you set the income level at which means testing wipes out benefits to a very low point, you don’t save any real money, the ostensible purpose advanced by people like Christie. Baker and his colleagues are entirely correct, but I think they miss the larger point.

Now, I don’t know what Christie is thinking here; he has decided that being a brave straight talker is his schtick, and nothing says bravery more among the elites that demanding sacrifice from those less wealthy and powerful that yourself. Like the other 15 candidates he’s pretty much just spouting talking points without ever having bothered to bone up on the policy one way or another. But the Christies don’t matter, it’s the billionaires who own them who do, and they know precisely what they want and why they want it.

So I still believe that the point I was going to make at Swarthmore is one that must be made in tandem with Baker’s argument, because the call for means testing is not really about saving money. That’s merely the typical right wing smokescreen. One thing you have to say for the right, they plan for the long term. They are very well aware that Social Security is popular because it benefits everyone. Some people don’t really need it, but it’s nice to get it. If you means test it then some people won’t get it, after having paid payroll taxes all their working lives. They will resent that fact, and they’d have a point. The Republicans would play on that resentment. The could more easily categorize Social Security recipients as welfare recipients, making it even easier to destroy the program, which is the ultimate objective. That’s why they don’t really care whether means testing would or would not save money initially. They aren’t looking to save money. They are looking for levers with which they can totally destroy the program.

It is still a mystery to me why the Koch Brothers and Druckenmillers of the world feel it necessary to impoverish millions of people by destroying a program to which they themselves contribute perhaps 5 minutes of their yearly income. Wait, that’s not really true. It should be a mystery, but it’s not. As I’ve said before, their guiding philosophy is clear: It is not enough that they succeed, everyone else must fail.

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