Conservatives never much liked Social Security. It’s a wildly popular government program that’s totally solvent until 2033. It will be easily fixable and by then may not need fixing at all. Doesn’t quite fit with the government-can’t-do-anything-right talking point.
Then there’s the Social Security Trust Fund, a nice hunk of change invested in Treasury securities that some conservatives don’t want to pay back. The trust fund represents payroll taxes collected from workers and employers — taxes raised a quarter century ago to provide a cushion against the predicted stresses of an aging population. The money in the trust fund was loaned, not given, to the federal government.
Many conservatives argue that the trust fund doesn’t exist, thanks to cheesy accounting of the money. Whoops, it’s been spent, they say. Tough luck.
The counterargument goes that the trust fund is real enough that the Treasury may not default on its debt to it without a vote by Congress. Name one rep of either party who would vote for stiffing the trust fund. Counterargument wins.
So Social Security’s foes need Plan B.
They already tried Plan A during the George W. Bush years. Recall efforts to privatize the program — that is, let workers put their Social Security payroll tax money into private investment plans. Recall how the boosters tried to sell stocks as a no-lose investment.
The beauty of Plan A was that Wall Street would get its cut, and eventually, the federal government would no longer be obligated to cut Social Security checks. But the public was so protective of traditional Social Security that Plan A crashed even before the stock market did.
Plan B starts with means-testing. It is a clever approach because it expropriates liberal rhetoric about the rich helping the poor. Means-testing would reduce the benefits of the well-to-do while keeping (or raising) them for others. This is an excellent way to destroy the loyalty to the program among our more powerful citizens. The deal could include making permanent the Social Security payroll tax holiday scheduled to expire on Jan. 1 — in the interests of progressive taxation, of course.
Another counter-idea: The payroll tax holiday was always a bad concept from a true liberal perspective. (President Obama backed it as a stimulus measure.) It’s bad because Social Security is an earned benefit. You can’t easily take away something people know they’ve paid for.
So here’s the work-around: It makes no sense, writes conservative Ross Douthat, “to finance our retirement system with a tax that … imposes particular burdens on small business and the working class.”
How liberal sounding. How sneaky. Start paying for Social Security out of general revenues and reduce benefits for the wealthy, and what do you have? You have welfare. You know what happens to welfare.
Douthat breaks from liberal sweet-talk and gets down to basics. He urges Republicans to regard the payroll tax as “an obstacle — originally created by their political enemies! — to any restraint in what the program spends.”
Actually, the law forbids Social Security to take a single penny from general revenues. I can’t think of a better spending restraint than that. But the payroll tax is definitely a political restraint on plans to steal the trust fund.
By the way, we already have a system for means-testing. It’s called the progressive income tax. If conservatives think rich people should pay more, they can simply let marginal tax rates (and the capital gains tax rate) rise. Complicating Social Security with more means-testing and ending the tax dedicated to keeping it afloat would kill the program — with a smile.
On to Plan C.