The War on Entitlements

[General Mung Beans]

The War On Entitlements - NYTimes.com

The War On Entitlements
By THOMAS B. EDSALL

Tom Edsall on politics inside and outside of Washington.
TAGS:

BURTLESS, GARY, CONGRESSIONAL BUDGET OFFICE, ELDERLY, FEDERAL BUDGET (US), GRUBER, JONATHAN, LEVIN, YUVAL, MEDICARE, SKOCPOL, THEDA, SOCIAL SECURITY (US)
The debate over reform of Social Security and Medicare is taking place in a vacuum, without adequate consideration of fundamental facts.

These facts include the following: Two-thirds of Americans who are over the age of 65 depend on an average annual Social Security benefit of $15,168.36 for at least half of their income.

Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system.

So why don’t we talk about raising or eliminating the cap – a measure that has strong popular, though not elite, support?

 

[Grizzly]

I like the idea of changing the exemption - but what I would do is have everyone pay into the system, but the more you make, the less you pay in (in terms of percentage). Someone who makes $113,000 a year is less likely to need SS when they retire (but it's not inconceivable that they might). Let them pay less of a percentage of their income towards SS.

 

[stamperben]

What is this that Social Security is an entitlement? I'm only "entitled" to it because I PAID INTO IT. Kinda like our paychecks, we are entitled to them because we put our labor into them.

Much of the language used in this country is pretty far off base...

 

[DaisyDay]

I like the idea of changing the exemption - but what I would do is have everyone pay into the system, but the more you make, the less you pay in (in terms of percentage). Someone who makes $113,000 a year is less likely to need SS when they retire (but it's not inconceivable that they might). Let them pay less of a percentage of their income towards SS.

Cap or exemption?

It's already the case, every dollar you earn in wages over $113,700 is not taxed for Social Security, so the more you earn, the less of a percentage you pay.

That's why the "surplus" Bush "refunded" should not have gone to the wealthiest, but to the people who paid in the most to SS.

 

[Rion]

What is this that Social Security is an entitlement? I'm only "entitled" to it because I PAID INTO IT. Kinda like our paychecks, we are entitled to them because we put our labor into them.

Much of the language used in this country is pretty far off base...

Except that you get far more than you pay into it.

Obama Tells Seniors They've 'Earned' Medicare and Social Security, Forgets to Note We Haven't Paid For Them - Hit & Run : Reason.com

 

[SPB1987]

What is this that Social Security is an entitlement? I'm only "entitled" to it because I PAID INTO IT. Kinda like our paychecks, we are entitled to them because we put our labor into them.

Much of the language used in this country is pretty far off base...

Gotta agree with you here. No sense in calling SS and medicare entitlements when you actually paid in to the systems.

 

[MachZer0]

The problem is that the cap has been raised over the years and it hasn't solved the problem because politicians just spend the money on something else.

 

[MachZer0]

What is this that Social Security is an entitlement? I'm only "entitled" to it because I PAID INTO IT. Kinda like our paychecks, we are entitled to them because we put our labor into them.

Much of the language used in this country is pretty far off base...

Gotta agree with you here. No sense in calling SS and medicare entitlements when you actually paid in to the systems.

Actually, Social Security and Medicare are entitlements just like we are entitled to the paychecks that we worked for.
People are entitled to get what they paid for. It's other things that are misnamed as entitlements.

 

[DaisyDay]

The problem is that the cap has been raised over the years and it hasn't solved the problem because politicians just spend the money on something else.

The cap has been adjusted for inflation.

 

[stamperben]

Actually, Social Security and Medicare are entitlements just like we are entitled to the paychecks that we worked for.
People are entitled to get what they paid for. It's other things that are misnamed as entitlements.

I'm in shock! I think we are agreeing on something.

 

[MachZer0]

I'm in shock! I think we are agreeing on something.

You've been Hannitized. Welcome aboard

 

[stamperben]

You've been Hannitized. Welcome aboard

No, I was definitely de-Hannitized a while back.

You sure you aren't jumping ship?

 

[MachZer0]

No, I was definitely de-Hannitized a while back.

You sure you aren't jumping ship?

I remain "steady as she goes", so welcome aboard

 

[IzzyPop]

Except that you get far more than you pay into it.

Obama Tells Seniors They've 'Earned' Medicare and Social Security, Forgets to Note We Haven't Paid For Them - Hit & Run : Reason.com

You mean like insurance?

 

[jayem]

From the article:

Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system.


But keep in mind that benefits currently are also capped. Maintaining a maximum benefit, while keeping contributions unlimited will be a very tough sell. Businesses with highly paid employees will be up in arms if their FICA match becomes open-ended. It may be true that high-earners should be contributing proportionately more to the system, but in this political climate, it will face tremendous opposition.

 

[kermit]

From the article:

Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system.


But keep in mind that benefits currently are also capped. Maintaining a maximum benefit, while keeping contributions unlimited will be a very tough sell. Businesses with highly paid employees will be up in arms if their FICA match becomes open-ended. It may be true that high-earners should be contributing proportionately more to the system, but in this political climate, it will face tremendous opposition.

What you have to remember is that eveyone on Washington knows that elimiinating the cap on tax and on benefits will make SS solvent in perpetuity, but no one has the courage to do what needs to be done. Politicians learned years ago that the worst thing you can do politically is to solve a problem. For them it's better to patch things so that later it's a crisis again that they can patch... rinse and repeat.

 

[Vylo]

The SS system needs an overhaul big time. It should be cash balance like many pension plans are now, and people should be able to move the money around if they are savy.

 

[Douger]

You've been Hannitized. Welcome aboard

Oh God have mercy

 

[Crusader05]

I'd like to see us phase this entire system out. Pay out to the folks currently getting benefits and let people keep their money. The fact that you're going to grow old and not be able to work it's an emergency, it doesn't suddenly happen, you have your entire life to prepare for retirement. I won't be counting on Social Security being there for me when I retire.

 

[jgarden]

"The 400 of us pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you're in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.
- Warren Buffett speaking at a $4,600-a-seat political fundraiser in New York

Warren Buffett - Wikiquote

Perhaps "entitlement" reform could begin by addressing the fact the wealthy have traditionally paid tax at a far lower rate (assuming that they pay tax at all) than the average citizen.

During the 2012 Presidential Election campaign it became public knowledge that Mitt Romney was being taxed at 14% - like Buffett, his receptionists and cleaning ladies are taxed at a far higher rate.

According to "The Atlantic," 7 000 American millionaires paid no federal income taxes in 2011 - that's an example of real "entitlement!"

Buffett Rule Rorschach: 7,000 Millionaires Paid No Income Taxes in 2011 - Derek Thompson - The Atlantic