Ross Douthat is The New York Times pet resident right wing nut. He’s a would be theocrat who belongs on Wing Nut Daily. The Times keeps him around to prove they aren’t liberal.
From the Center for Economic and Policy Research: http://www.cepr.net/index.php/blogs/beat-the-press/ross-douthat-argues-that-social-security-would-be-easier-to-cut-if-it-were-changed-from-a-social-insurance-program-to-a-welfare-program
Sunday, 25 November 2012
Ross Douthat argues convincingly that if we eliminated the link between contributions and benefits it would be much easier politically to cut Social Security. Of course he thinks ending the link would be a good idea for that reason, but his logic is certainly on the mark, people will more strongly protect benefits that they feel they have earned.
Douthat is off on a few other points. He tells readers:
“In an era of mass unemployment, mediocre wage growth and weak mobility from the bottom of the income ladder, it makes no sense to finance our retirement system with a tax that falls directly on wages and hiring and imposes particular burdens on small business and the working class.
“What’s more, the payroll tax as it exists today can’t cover the program’s projected liabilities anyway, and the pay-as-you-go myth stands in the way of the changes required to keep Social Security solvent.”
The problem here is that we are not condemned to an era of “mass unemployment, mediocre wage growth and weak mobility.” This has been the outcome of inept macroeconomic policy and trade and regulatory policies that were designed to redistribute income from those at the middle and bottom to the top. Most people would look to reverse these policies rather than eliminate social insurance.
The implication of this comment, that we would somehow be able to make up substantial funding shortfalls from cutting taxes on law and middle income people by taxing the wealthy more also is not very plausible. Given the enormous political power of the “job creators” (as demonstrated by the fact that people are not laughed out of town for using this term), it is unlikely that substantially more money will be raised from the wealthy to pay for Social Security. This means that in Douthat’s dream world we would be seeing large cuts in benefits.
He also is wrong with his arithmetic. The payroll tax certainly can cover the program’s expenses. In fact, had it not been for the upward redistribution of income over the last three decades, which nearly doubled the share of wage income going over the cap on taxable income, the projected 75-year shortfall would be about half of its current level.
Continue reading at: http://www.cepr.net/index.php/blogs/beat-the-press/ross-douthat-argues-that-social-security-would-be-easier-to-cut-if-it-were-changed-from-a-social-insurance-program-to-a-welfare-program
