Stunned by the latest report on looming shortfalls in the Social Security and Medicare trust funds, members of Congress are considering cutting benefits for wealthy Americans.
So-called “means-testing” has been kicked around for years. In effect, if you can afford your retirement on private savings, no entitlement payments for you, even if you put into the system for decades.
Here’s the rub: Who is wealthy? Anyone making more than $60,000 a year.
That would be the necessary level at which to cut benefits, according to Dean Baker, co-director of the Center for Economic Policy and Research.
“Such inconsistencies pervade the arguments of those wanting to cut Social Security benefits,” Baker writes in The American Prospect.
“Those who care about logic would note that the loss of more than $10 trillion dollars of wealth in the housing crash and stock market plunge would be an argument against cutting Social Security benefits for retirees and near retirees.”
Michael Lind of the New American Foundation says that, at worst, the Social Security shortfall is only a minor cause of the total budget deficit.
“The anti-Social Security lobby always presents the ‘unfunded liabilities’ of ‘entitlements’ in scary dollar terms, rather than as percentage points of GDP,” Lind notes.
He says that over the next 75 years, the Social Security shortfall would only be around 1 percent of total U.S. GDP projected for the same time frame — and could be easily eliminated altogether.
Nevertheless, if benefits are not cut to some, then somebody somewhere has to pay more to keep the system in the black. It's simple math: As millions of baby boomers retire, far fewer of their kids join the system.
In Lind’s view, that means you tax the people with money, i.e., the rich.
Had the Bush tax cuts been made permanent, Lind argues, they would have created a 75-year shortfall between three and six times greater than Social Security may face.
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