July 12, 2010

A Gathering Political Meme

There's a trial balloon floating around that Social (in)Security should be means-tested, most recently in a column by Ross Douthat:
The same pattern is at work in our entitlement system, which is lurching toward bankruptcy in part because of how much Medicare and Social Security pay to seniors who could get along without assistance.
What Douthat is in fact proposing is that the government bracingly announce:
We lied to you. We said we would take your FICA money, invest it, and return it to you. We spent it instead.
The table is being set to blame seniors for what was understood to be not a pay-as-you-go system but a savings account. The dirty work of government reneging on its promise could happen, but I don't appreciate the way he insouciantly disregards that promise. That undermines trust (if, in fact, there is any trust left).

It's true that seniors are living far longer than was originally imagined. And it's true that Social Security is unsustainable. It's fair to delay Social Security benefits till 70 or beyond for workers in their 40s. But to suddenly begin means-testing seniors seems like dirty pool to me.


William Luse said...

Very dirty pool. Some might call it theft, but legal since the government's doing it.

TS said...

Right on. Given that, why trust the government with Roth 401k after-tax monies since there's no guarantee that you won't be taxed anyway upon withdrawing.

Gregg the Obscure said...

The problem is that more is going out than is coming in (and has been for quite some time). Perhaps there could be means-testing once a given beneficiary has already received x times more than he paid in? Wouldn't save as much money, of course, as some people would disperse their assets ahead of time.

Another option, since I'm feeling especially mischeivous: as long as a beneficiary has progeny who are working and paying into the system, he's not means-tested, but those who have not prodcued any such offspring (biologically or by adoption) are means-tested.

TS said...

Option one is most in the spirit of what SS was originally intended to be, an investment vehicle rather than a charity. My main beef is that of changing the rules in the middle of the game. But as long as we're not touching those 50 and older (to be arbitrary about it) then we can redefine what SS is.

Darwin said...

The age division probably does more than just give people warning -- I suspect that most people in their early 30s (which includes Douthat) have simply never imagined thinking of SS as a savings vehicle rather than a government handout program.

The fiction that you actually had a SS Account which had "your" money in it probably seemed a lot more believable to those who hit the working world in the 40s through the 60s than it does to those who started around 2000.