November 17, 2014
Robert Samuelson does the old “pox on both your houses” routine, complaining about Republicans who want tax cuts for rich people and Democrats who defend Social Security and Medicare. Naturally, there are many problems wrong with Samuelson’s formulation. (The “pox on both your houses” story will always sell in elite DC circles, it doesn’t matter what the facts of the situation are.)
First Samuelson asserts:
“Democrats’ rigid support of retirement spending is squeezing many valuable domestic programs that, like defense, are now underfunded.”
Really? Is there any evidence whatsoever that we would be spending more money on education, infrastructure, clean energy, etc. if we spent less on Social Security and Medicare? Samuelson certainly doesn’t present any. The reality is that we are under no real world budget constraints at the moment or in the near-term future. We face political constraints and there is no reason to believe that the Republicans would view an agreement to cut Medicare and Social Security as anything other than an opportunity to give more money to the rich.
The more fundamental problem is that Samuelson’s prescription of reducing benefits for the “affluent elderly” doesn’t make any sense. This is for two reasons. First, unless “affluent” means something different for Samuelson than the rest of us, there ain’t no money there. When we raised income taxes, the line for affluent was an income of $400,000 a year. Even if we cut that in half because we think seniors needs less money, we would find that there ain’t nothing there.
While people earning over $400,000 have very large incomes, which can provide substantial tax revenue, they don’t have very large Social Security checks. It would just be a rounding error in the budget if we took away all of their Social Security and Medicare. To really have a noticeable impact on the budget we would have to go after people who have non-Social Security income of around $40,000 a year. This is not most people’s definition of “affluent.” (It’s funny this double-talk appears in a piece lecturing the public on the need for honest discussion.)
The other problem with cutting benefits for the affluent elderly is that they paid for these benefits. We could with as much justification go after the interest payments on the government bonds held by the affluent elderly, but most people probably would not consider this very fair.
According to an analysis from the Urban Institute most seniors pay more in Social Security taxes than they will receive back in benefits. The value of Medicare benefits exceed the taxes paid in, but this is due to the fact that we pay twice as much per person for our health care as people in other wealthy countries with nothing to show for it in terms of outcomes. The problem here is not how much seniors are getting, but rather how much we are paying to doctors, drug companies, and other health care providers.
Unfortunately, health care providers are a protected class in elite Washington circles. (Drug companies are big advertisers in the WaPo.) So instead we get pox on both your houses pieces that don’t make any sense.
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