Why Progressives Support Welfare for the Rich

Democrats' counterintuitive resistance to means-testing Medicare and Social Security

Since Republicans are pushing entitlement reform and Democrats like taking money from rich people, you might think they could agree on means-testing Medicare and Social Security as part of a deficit reduction deal. Yet many Democrats are surprisingly hostile to the idea of tailoring these programs to help people who actually need them.

There are two main reasons for this resistance—one strategic, the other ideological. Neither is persuasive, even from a progressive point of view, at a time when trillion-dollar deficits are the norm and publicly held federal debt is projected to reach 150 percent of GDP within two decades.

"I don't want to see Medicare turn into a welfare program, which is what it would be if wealthier people didn't benefit from it or had a significantly reduced benefit," Rep. Keith Ellison (D-Minn.) told ABC's George Stephanopoulos on Sunday. "It needs to be something shared that Americans are all in, that we all participate in and we all contribute to." Ellison is co-chairman of the Congressional Progressive Caucus, which opposes any cuts to Medicare or Social Security benefits.

The strategic rationale for this position is that reducing or eliminating retirement subsidies for people who can easily get by without them would spoil the illusion that all of us are "entitled" to those benefits because we have "earned" them through our "contributions." In reality, Medicare and Social Security are funded through intergenerational transfers from relatively poor workers to relatively affluent retirees.

That does not sound terribly progressive, but left-leaning opponents of means testing worry that narrower versions of these programs would be politically vulnerable. "If Medicare turns from an earned benefit into a welfare program," warns Max Richtman, president of the National Committee to Preserve Social Security and Medicare, "you will see support dissipate."

There is not much evidence to support that prediction. In a 2010 Heritage Foundation report, Katherine Bradley and Robert Rector counted "over 70 different means-tested anti-poverty programs" and noted that spending on such programs "has grown faster than every other component of government over the past two decades."

Furthermore, Medicare and Social Security already are transfer programs; they are just poorly targeted. If the aim is to prevent the elderly from sinking into poverty or to ensure that they can obtain the medical care they need, it hardly makes sense to use payroll taxes extracted from middle- and working-class employees to cut monthly checks to Michael Bloomberg or subsidize prescription drugs for Ross Perot.

Both programs do include some modest means tests. The monthly premiums that help fund Medicare are higher for wealthier beneficiaries, for example, and the share of Social Security benefits subject to tax is larger for retirees with higher incomes—functionally equivalent to reduced benefits.

But with Medicare and Social Security facing unfunded long-term liabilities of $42.8 trillion and $20.5 trillion, respectively, they need to move much further in the direction feared by Ellison and Richtman. As Andrew Biggs of the American Enterprise Institute observed last year in National Affairs, "It is inevitable that Social Security, Medicare, and other government programs will become less generous toward the rich than they are today."

If progressives are having trouble adjusting to this reality, it is not only because they (mistakenly) believe means testing will jeopardize these programs. As William Voegeli observes in his 2005 book Never Enough: America's Limitless Welfare State, progressives' counterintuitive resistance to means testing also stems from a communitarian vision that sees universal participation in tax-funded social services as inherently good.

Voegeli quotes Robert Kuttner, co-editor of The American Prospect, who in his 1987 book The Life of the Party argued that "there is immense civic value to treating middle-class and poor people alike." According to Kuttner, "a common social security program, or medical care program, or public school program" fosters "social solidarity."

You may or may not find this vision appealing. Either way, we can no longer afford it.

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  • ||

    "If Medicare turns from an earned benefit into a welfare program," warns Max Richtman, president of the National Committee to Preserve Social Security and Medicare, "you will see support dissipate."

    Spot on. Middle-class welfare is a great way to co-opt people into an expanding state, and subtly turn them from citizens to clients. If we're all happily on the public tit, we can't complain, can we? Not until we realise how freakin' expensive it is

  • Fist of Etiquette||

    Yes, it's not all that difficult to understand why these entitlements are a bridge too far in the war between the classes. Voters who can survive without social security but had paid into it will definitely resent seeing everyong else enjoying the benefits. The "progressive point of view" isn't so divorced from reality as to not see that coming.

  • Pound. Head. On. Desk.||

    Yeah, but the courts have ruled time and again that the tax and the benefit are unrelated to each other. Paying in for a lifetime does not mean you qualify for benefits. Also vice-versa.

  • Heroic Mulatto||

    Voters who can survive without social security but had paid into it will definitely resent seeing everyong else enjoying the benefits. The "progressive point of view" isn't so divorced from reality as to not see that coming.

    Really? As I've argued before, they'll be shocked, shocked I tell you, when elderly and senile Baby Boomers are dragged from their nursing home beds and lynched in the street.

  • Fist of Etiquette||

    Well, let's say progressive political operatives can foresee it.

  • ||

    I just think they get a sad when they think of the idea of not everyone "belonging" to the same super-consciousness.

  • ||

    This sense of "belonging" ends when the conversation turns to income taxes.

  • bmp1701||

    As far the courts have been concerned, going back to the New Deal Supremes, Social Security is just a tax and spending program. Hence, you don't actually have any sort of Constitutional "right" to collect from Social Security; they could crank the tax rates and cut benefits massively, and you'd have no property right to your Social Security "account." However, people who have enough money to invest in a private fund might be really pissed to learn that Social Security is fundamentally a tax/spend program with a veneer of an "entitlement."

  • AdamJ||

    Tell that to the AARP and their ads claiming they've earned their benefits

  • bmp1701||

    In the same sense that a man "earns" a minimum of a BJ after three dates. Same probability of going to a court and getting that enforced.

  • Mike M.||

    "If Medicare turns from an earned benefit into a welfare program," warns Max Richtman, president of the National Committee to Preserve Social Security and Medicare, "you will see support dissipate."

    Oh really? I think some people need to pay closer attention to what's going on, because the lesson of the election we just had doesn't seem to be fully sinking in for everyone. This is no longer the same country it was as recently as 20 years ago.

  • wareagle||

    people realize it's not the same country, but they don't care. They are perfectly okay with turning it into something else long as they get their freebies.

    From a logic standpoint, there was no reason to vote for Obama; no reasonable person was making the case that four more years of the same is a good thing. But folks like free shit or the perception of free shit. When you cannot convince a majority that the "fair share" talking point is a flat out lie, you have lost.

  • sarcasmic||

    Dude! He's black! I mean... you got to vote for him! He's black!

  • VG Zaytsev||

    It would have helped if Romney called it a lie instead of pussy footing around.

  • ||

    No, that's not it. The thing is that we're supposed to feel a warm sense of mindless belonging as we participate in this program that "we're all in together". People who resist the joining and togetherness are, like, wierd and anti-social and selfish.

    How can you want to have your own brain and want to be independent and shit? it just FEELS SO GOOD when we're all of one mind and being! You "individuals" are ruining the undifferentiated togetherness for the rest of us!

  • Bill||

    You, too, will be assimilated.

    Wait until we have "voluntary" mandatory national service.

  • The_Choctaw||

    Glibertarians believe everyone is as aspergery as them. Not so. Most people like, even have a deep biological urge, to be part of a group. Humans naturally form into bands and tribes.

    One of many ways glibertarian ideology is at odds with human nature.

  • DarrenM||

    Humans naturally form into bands and tribes.

    And the tribe then needs to conquer other tribes and continue until it becomes... something else.

  • ||

    Choctaw said:

    Glibertarians believe everyone is as aspergery as them. Not so...Humans naturally form into bands and tribes.

    If that's the case, then you don't need government violence and regulation to force people to cooperate with each other, then, do you? Cooperation, then, is just a natural, human behavior.

    Libertarians don't want isolation. We want people to stop pointing guns at us and telling us all the grand things we must participate in to avoid jail time, such as supporting foreign wars and giving our children horrible educations while crowding out decent schools.

  • Coriolanus||

    As has been said, libertarians don't fancy themselves 'islands' with no need of human contact. What libertarians want is to be part of a community that doesn't demand slavery, oppression, and threat of violence to be the societal norm under the guise of 'progressive' social theories and what amounts to robbing Peter to pay Paul.

  • R C Dean||

    If Medicare turns from an earned benefit into a welfare program

    Its been a welfare program all along. The only requirement to be a Medicare beneficiary is to be old enough. There is no requirement that you ever paid into the program.

  • ||

    "...facing unfunded long-term liabilities of $42.8 trillion and $20.5 trillion, respectively,..."

    I hardly know what to say about that. Talk about divorced from reality.....

    Maybe captain zero could instruct everyone to take a pen and add a few zeros on all of their bills?
    I was in Bolivia in '85 when the government did just that.

  • Pound. Head. On. Desk.||

    Brazil, about the same time, wasn't technically in hyperinflation, but it was bad enough to look plenty like it to me. They went into it whole-heartedly a few years later.

  • waaminn||

    OK so who comes up with all this crazy stuff? Seriously?

    www.Hidden-Anon.tk

  • Jerryskids||

    Part of the problem as well is sheer economic and mathematical ignorance. Some of these people seriously believe that if we divvied up the wealth 'fairly', we could all be wealthy. Any government wealth redistribution scheme is an unquestionably good thing.

    I have had a dishearteningly large number of people (1 is a dishearteningly large number, to be honest)suggest that raising taxes on the rich could simultaneously erase the deficit, lower taxes for everybody else, provide government jobs for the unemployed *and* expand government programs for the poor, the old, the sick, the schools, etc. etc. etc.

    I can only surmise that they really don't grasp the scale of difference among millions, billions, and trillions.

  • Rich||

    they really don't grasp the scale of difference among millions, billions, and trillions.

    True. Just *ask* Joe Blow to describe those differences. Fucking powers of ten, how do they work?

  • Whiterun Guard||

    Math and economics don't matter. Only intentions.

  • mr simple||

    Another part of the problem is that it is willful ignorance for some people. There are too many people who should know better, supposed experts or economists, who let ideology blind them and provide cover for those who don't know better.Then again, I guess that's all part of the plan. I get letters from schools wanting me to pursue graduate degrees in Urban Planning, Public Administration and so forth. I sometimes get the urge to write them back and say "I disagree with everything you stand for," but my apathy always wins in the end.

  • Jerryskids||

    I sometimes get the urge to write them back and say "I disagree with everything you stand for," but my apathy always wins in the end.

    I may have mentioned this before: Among my 'F's' in college was a public administration class. One of the test questions concerned what I, as an administrator, would advise a female employee to do in a case of adverse working conditions. My answer was that I would advise her to quit her government job and go become a crack whore since crack whores are more socially useful than government employees. The professor said that he really didn't find my attempt at humor appropriate; I explained to him that I was serious as a heart attack; he walked away saying that obviously there was no sense in trying to talk to someone as close-minded as me about government.

  • sarcasmic||

    The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it.
    The first lesson of politics is to disregard the first lesson of economics.
    --Thomas Sowell

    It's not a matter of not grasping, but more of willful ignorance.
    They know what they feel, and no amount of logic, reason, or truth will change their feelings.

  • Rich||

    "Thinking is HARD!"

    /Voter Barbie

  • Bill Dalasio||

    Well, why should they pay attention to logic, reason or truth. Those advocating such things have told them over and over and over that their schemes to make reality bend to their demands wouldn't work. But, someone, somewhere makes it all work out for them(usually the person or people who warned them in the first place). If you tell your child "You can't have your cake and eat it too." but then buy her a second cake to shut up her bawling, don't be surprised when she thinks she can and that you're lying.

  • DarrenM||

    I can only surmise that they really don't grasp the scale of difference among millions, billions, and trillions.

    Have they hit puberty yet?

  • Bean Counter||

    Just curious - how much of the "relatively affluence" of seasoned citizens represents equity in their homes simply because they have lived in them long enough to pay off their mortgages. As everyone has to have somewhere to live, drawing on that equity to fund living expenses is not a viable way to fund your bronze years (trust me, they ain't golden). Not saying the main thrust of the transfer of wealth from lower wealth holding, younger people to higher wealth holding, older people argument is wrong. Just being thorough, like any observer should be.

  • wareagle||

    why isn't "the main thrust" wrong? I don't see where 25-year olds should be made to fund the retirements of 65-year olds. But, people refuse to accept that SS is no different than the Madoff approach.

  • Bean Counter||

    Sorry if I was unclear - I agree that there is nothing equitable about the social security & Medicare system and it's certainly unfair to ask a 25 year old who's trying to start a family to pay for my retirement. It was just a point which I would like someone to address. After all, there are those of us whose only hope of avoiding an Alpo diet in retirement is the relief of not paying a mortgage payment every month. There really are people who look at more than two sides of an argument. I just want to learn from one of them.

  • DJK||

    Your point ignores a fact. That house can easily (at least when there's a market for houses) be liquidated into cash and part of the payout used to move into more a more modest locale. The desire to stay in a house you've paid for is understandable. You may have raised kids there. Or have a fond attachment to the place. But it's certainly not an economic necessity. Elderly folks don't need 4 bedroom houses when their children have moved out. If they can afford it, great. If not, they can easily move into smaller places, take a bunch of cash from the sale of their homes, and make out nicely. Why should younger taxpayers be forced to subsidize their sentimental attachment to a place?

  • DJK||

    Also, I think the "relative affluence" thing is generally referring to the fact that older citizens have had a much longer time to accumulate assets than have younger citizens. They've hit their peak earning and saving (they should have been doing this) years, invested, had compound interest, etc.

    Moreover, they've benefited from the wealth transfer programs. Social Security in particular. I'm too lazy to look up the numbers right now, but Google "Nick Gillespie Social Security" and you'll find that recent retirees have taken far more in Social Security benefits than they've paid into the system. That's another part of the "relative affluence".

  • Death Rock and Skull||

    If the house is paid off, you don't really need to worry about a market for your house if cash would be very useful to you at the moment.

  • DJK||

    I may have chosen my words poorly. Even if your house is paid off, you still need someone willing to buy it if you wish to get some cash. Or you need someone who is willing to lend against it.

    Currently, the former solution doesn't seem all that tenable. There is not a ton of demand for housing. The first component, want for housing, is there. But the second component, ability to pay for it, isn't. This is my perception of the housing market at this point; it may not be accurate. But we can certainly all imagine scenarios in which no one is buying houses.

    The second option is interesting. At first thought, I assumed that no one would be willing to lend to an elderly person as they've passed their income generating years. However, they could always leverage the house as collateral. I'm sure some sort of financial instrument exists or could exist for leveraging home value into liquidity while still staying in the home. Oh, shit! That's what people are talking about when they say "reverse mortgage". It's almost as if the private markets figured this one out on their own...

  • Death Rock and Skull||

    The is always a market for a house or the land it sits on. If it is paid off, then you don't have to worry about what you still owe. If what you really need is the cash, then the house can be sold for what people are willing to pay. People are willing to pay something.

  • Lexy||

    Why the hell shouldn't elderly take equity out of their homes to finance their golden years? It's an asset, perhaps not as liquid, but Gramps chose to put his money there. He could have rented and saved more in liquid assets.

  • Lexy||

    Geesus H. Pickles - cry me a river

  • DarrenM||

    There is not a ton of demand for housing.

    Perhaps not at the price the owner would like to get for it, but that's always the case.

  • Bill Dalasio||

    I've actually run the numbers once or twice and that's only partially true. The entire thing is that the claim ignores the time value of money (that whole compound interest thing). Of course that provides the biggest punchline of the whole scheme. Social Security is the only system where you screw everybody else and yourself.

  • Adam330||

    What does that matter? You don't need to draw on the equity for a paid-off house to be a significant benefit. If you've paid off your mortgage, you've cut out a large monthly payment that younger folks with mortgages have to pay.

  • R C Dean||

    That, plus I don't see anything particularly bad about requiring people to liquidate assets or otherwise monetize them in order to fund their living expenses. Get a reverse mortgage, if you have to.

    Medicare and SocSec enjoy a lot of support because people see them as protecting their inheritance. As long as Mum and Dad are drawing checks from the government, they aren't spending down your inheritance, after all.

  • VG Zaytsev||

    At a few proglodyte sites I've propose a limited variable inheritance tax that would take back the amount of social security and medicare that was spent on the dead person and use the money to fund those programs.

    Progs absolutely hate the idea. Even though it would keep SS and Medicare viable, and they generally love inheritance taxes.

  • ||

    they generally love inheritance taxes

    FIFY!

  • Death Rock and Skull||

    I hate the idea of taxes on existing assets, including property taxes, but I would make an exception for a temporary inheritance tax to cancel out social security forever. It would put both old and young entitled douchebags in the place they deserve. I may or may not inherit anything, but all that matters to me is not having the assets that I have personally earned taken away from me.

  • Bean Counter||

    "Temporary" & "Tax" - 2 words that should never be used in the same sentence by an adult with an IQ over 75.
    A better solution to the whole mess would be to allow people to opt out of the system or let them have ownership of their accounts and invest them in the capitalist markets.....but that is a RADICAL IDEA THAT WOULD PUT ALL SENIOR CITIZENS ON THE STREET TO DIE OF MALNUTRITION.
    If you don't believe me, just ask Paul Krugnuts or Rachel Maddow.

  • Jerryskids||

    I would think a large percentage of senior wealth comes from having a paid-off mortgage - that plus the fact that the household furnishings are probably paid for and the household no longer includes children and their attendant expenses.

    But I think the important thing is that "relative" part of the "relative affluence" - isn't median annual household income somewhere in the range of 50-55k? The idea that there is some group of 'rich' people who, if we simply forced them to pay their 'fair share', have the wealth necessary to fully fund all the ambitions of government is simply a fantasy. As wealthy as we collectively may be, there simply is not enough money in the world to allow everybody to live an above-average lifestyle.

    Historically, 'rich' means having anything more than some food in your belly and clothes on your back and a warm, dry place to lay your head at night. And now some people want to argue that the basic necessities of life include an education, a good job, a leisurely retirement and a free triple-bypass when you need one. Sorry, those are luxuries - unaffordable luxuries.

  • Rasilio||

    "As everyone has to have somewhere to live, drawing on that equity to fund living expenses is not a viable way to fund your bronze years (trust me, they ain't golden)"

    Google "Reverse Mortgage" and let us know if you might want to rephrase that statement.

  • Bean Counter||

    NO, I don't. Reverse mortgages don't work unless you can arrange to die before the funds run out. An early death is not what I was angling for. If you are going to require seniors to liquidate their homes to qualify for social security, then you obviously would have to require that all seniors with ANY retirement funds should exhaust them before collecting SS. (A paid off home is one way to plan for retirement that doesn't depend on the government to keep its promise not to tax Roth IRA's, etc.) This would openly admit that SS is a welfare program and make planning for retirement an obvious sucker's game.
    Folks, these aren't simple problems with easy solutions and giving me 5th grade level answers to my question doesn't qualify as "people who look at more than 2 sides of a question" who can help me learn. Don't forget I have paid between 8 and 15 percent of my earned income into the Ponzi scheme my entire working life, thus being robbed of the opportunity to use that money to fund my retirement. I fully understand the politics and economics of the system, but I still know I have been robbed and forcing me to liquidate my home in order to get SOME of my money back is a SHITTY deal.

  • Adam330||

    Stop thinking of it as "paying into" the system. The SS taxes you pay are taxes just like income taxes. You have no legimate expectation of "getting them back." The government takes them and uses them for whatever the hell it wants.

  • Bean Counter||

    Actually, I do have a legitimate expectation of "getting some of my tax payments back". If I pay property tax, I have a legitimate expectation of seeing schools funded and public facilities maintained. If I pay income tax, I have a legitimate expectation that the armed forces will be funded to protect my nation from attack, and the public welfare will be addressed. If I pay social security and medicare taxes, I have a legitimate expectation that I will receive retirement income and medical care. Sadly, legitimate expectation and realistic expectation are not only not the same thing, they're not even in the same universe. And legitimate expectation and legal expectation as defined by the courts are not much closer. So, No, I don't expect to get a reasonable return on my 50 years' of SS tax payments - I'm not a damned fool or a progressive!
    I might also point out that selling or reverse mortgaging my house, given that I paid $124K and its FMV is around $85k, would only give me 7 years equivalence of not paying my $1,000 mortgage payment, as opposed to the 20 or so years I hope to live in the paid for house, assuming I could get FMV in this crap market.

  • ||

    I do have a legitimate expectation of "getting some of my tax payments back".

    Even if you want to get something out of the Social Security system, it's not going to be any portion of your tax payments. Those were already spent the moment they were deducted from your income. What you'll be getting "back" is new tax revenue from a new generation of workers who are going to get screwed the same way you did. There is no graceful exit from a Ponzi scheme - SOMEBODY is going to get fucked.

  • Lexy||

    You need to lower your expectations, honey.

    This is government we're talking about.

  • Tim||

    "At a recent march, men wearing fluorescent vests stood on rickety wooden towers and used binoculars to scan the crowd for signs of sexual mobbing... "

    http://worldnews.nbcnews.com/_.....women?lite

  • Heroic Mulatto||

    And the Feminist blogosphere will denounce Egypt's "rape culture" any minute now...

    Any minute now...

    I said, any minu....Oh, for fuck's sake, ladies!

  • Bean Counter||

    "Ladies"? In the feminist blogosphere? Seriously?

  • ||

    "It needs to be something shared that Americans are all in, that we all participate in and we all contribute to."

    Progressives are always so enamored of the idea of forcing everyone to be part of their big happy fun cuddle pile.

  • Bean Counter||

    ^^PLUS 10^^

  • T o n y||

    If you advocate means testing you are in favor of more government intrusion into people's personal lives. Do you people even know what your own principles are?

  • Adam330||

    How so? I already have to cough up detailed information on every aspect of my financial life for income tax purposes. How does means testing increase the intrusion that's already there?

  • Rasilio||

    Actually it would mean a massive intrusion beyond mere income taxes.

    It would basically mean providing a detailed possession list of everything you own which has *some* value to the government every year, followed closely by granting the government the ability to make spot inspections to prove you didn't lie.

    Right now you merely have to state your income, but that $200,000 Degas you have hanging in your living room remains your little secret and only needs to be declared if you happen to sell it for a profit. With means testing well the government gets to know about EVERYTHING of value that you own.

  • Adam330||

    All of the means testing proposals I have seen are income-based. No need for wealth tests. In any case, the IRS already knows most of what I and others own because third parties (banks, mutual funds, etc.) have to send them reports each year.

  • T o n y||

    BUT WHY? It won't save a significant amount of money.

  • ||

    I advocate allowing people to opt out of social security entirely.
    Or turning it into "retirement insurance". Which would essentially be means testing.

  • DJK||

    Well, means testing requires government to look at your financial situation and see if they should intervene. In the looking, they're intervening. So you're supporting intervening.

    Of course, I'd just say that I don't support the government having any intervention in the first place. And that the first intervention would be taking the money I've earned to fund its activities. That it has intervened by piling on huge amounts of debt that I will be required to pay. And so on.

    I disagree with intervention in general. But there is no realistic chance of getting rid of it completely anytime soon. So, in the meantime, I support things like means testing to reduce the overall burden. Which includes intervening (though, they already have my tax records and stuff...).

  • DJK||

    Of course, all of that would require Tony to take a nuanced view and actually understand the general principle of non-initiation of force. Which he either doesn't despite long involvement in these boards or does but gets off on being confrontational.

    Don't waste your time with Tony. He's only here to bring up tangential and irrelevant "problems". I'm well aware that he'll respond to this. If it gets someone else to ignore him, it was worth it.

  • ||

    No, you have to apply for benefits. If you don't want them intervening, don't apply for benefits. Easy.

  • Lexy||

    Example: Jonestown.

    This is where the road to collectivism eventually leads

  • Lexy||

    Jonestown

  • Bean Counter||

    "there is immense civic value to treating middle-class and poor people alike. You may or may not find this vision appealing. Either way, we can no longer afford it."

    I work 60 to 80 hour weeks so I WON'T be treated like a poor person. NO...I DON'T find it appealing. Poor decisions (such as some I made in my misspent youth) SHOULD have consequences. I don't like living where half drunk men set in their crappy, cars-on-blocks infested front yards and talk loudly and play sucky music until 1:00 A.M. I don't want my grandchildren going to school where most of the kids think doing homework is "giving in to the Man" and make fun of honest work, while idolizing pimps and gang bangers.
    Plus - he's right; we can't afford it.

  • R C Dean||

    there is immense civic value to treating middle-class and poor people alike.

    Socially, sure.

    Economically? Not so much.

  • VG Zaytsev||

    Not even socially.

    In the modern world, most poor people are poor because of really bad decisions and bad lifestyles.

    Treating all people the same will lead to more poor as people on the margins say fuck it what the point of trying to be middle class.

  • T o n y||

    Please read Krugman's take on means testing before dismissing it because it's Krugman:

    The usual argument against means-testing — which is entirely valid — is that it (a) doesn’t save much money and (b) messes up a relatively simple program. The reason it can’t save much money is that there are relatively few people rich enough to be able to afford major cost-sharing. Meanwhile, the good thing about Medicare, as with Social Security, is precisely that it doesn’t depend on your personal financial status — you just get it. Means-testing would turn it into something much more intrusive, like Medicaid.

    But there’s a further point I haven’t seen emphasized: if you want the well-off to pay more, it’s just better to raise their taxes.
  • Adam330||

    "But there’s a further point I haven’t seen emphasized: if you want the well-off to pay more, it’s just better to raise their taxes."

    Yes, this is much better. That way you can route the money through the inefficient bureaucracy, which will shave off a nice percentage, only to give it right back to the person that paid it. Excellent. And also, the idea that making medicare means tested will be intrusive is laughable- is this somehow more intrusive than the federal income tax system?

  • VG Zaytsev||

    It's also economically ignorant.

    To illustrate:

    Eliminating benefits for the top 20% of recipients would increase the funds available to the other 80% by 25%.

    To increase the funds available to everyone by 25%, at the expense of the top 20% would require raising taxes on the that cohort by 125%.

    Which will result in serious tax avoidance by the targeted group, resulting in less revenue than expected.

  • ||

    I particularly enjoyed the part where Krugman freely admits how few rich people there actually are to make any real impact in cost-sharing... and then goes on to support raising their taxes for, what I assume from reading his op-eds, will be game-changing development of infrastructure, world aid, medicine, sustainable energy investments, welfare programs, and mass deficit reduction.

    Kruggie is normally a magic-eye page of idiocy hidden in a fanciful page of designs and colors. However, this is a pretty obvious bit of stupid.

  • Rasilio||

    This is just Krugs being Krugs.

    Here is the problem, right now we tax income, people with high income != people with large wealth. Sure there is a large overlap between the two but they are not one and the same and most importantly are usually not once you start talking about people of retirement age. A wealthy retiree can easily show very little income just by structuring how and when he realises his gains and cash payouts. Raising taxes on the rich will not impact him much at all because as a general rule he will not see much if any more income than a middle class wage earner in any given year

  • Death Rock and Skull||

    "Please read Krugman's"

    Change channel.

  • Lexy||

    Sorry, I can't ! My cat (Milton) just pooped on his columns.

  • DarrenM||

    Please read Krugman's take on means testing before dismissing it because it's Krugman:

    Could you provide a link next time?

  • ||

    Krugman said:

    Means-testing would turn it into something much more intrusive, like Medicaid.


    Oh, how horrible an intrusive government would be. Tell us, Dr. Krugman.

  • T o n y||

    Wait, you say: won’t raising taxes reduce incentives to work and create wealth? Yes, it will (although such effects are greatly exaggerated in our political discourse.) But means-testing benefits does the same thing. Conservative economists love to point out that means-tested programs like food stamps in effect create high marginal tax rates for low-income families, since they lose benefits if they work and earn more. Well, means-testing Medicare would do the same thing: your reward for a life of hard work and accumulation will be higher copays and deductibles.

    So what’s the difference between means-testing and just collecting a bit more taxes? The answer is, class warfare — not between the rich and poor, but between the filthy rich and the merely affluent. For a tax rise would get a significant amount of revenue from the very, very rich (because they have so much money), while means-testing would end up imposing the same burden on $400,000 a year working Wall Street stiffs that it imposes on billion-a-year hedge fund managers.

    What we need is actual control of health costs. Means-testing of Medicare is just a badly designed, unfair form of taxation.
  • ||

    Is insurance a disincentive to avoid crashing your car, since you will be compensated financially for the loss?

    If SS was turned into a retirement insurance program, you could easily structure it so that people end up with some minimum old-age stipend, which is phased out as their personal retirement savings support it.

  • T o n y||

    But why?

  • ||

    But why?

    The same question could be asked for why it is somehow more appropriate to stick it to the rich via more taxation than to end their "benefits" from a program they don't need to use. Only it would actually be a legitimate question in that case.

  • T o n y||

    If they don't need to use it then what costs will they impose on it?

  • ||

    Are you retarded? Not needing to use it and not using it or not automatically being forced to use it are all different things.

  • johnl||

    SS already does this to some extent, on a self selected basis. Delay collecting benefits for a year, and your benefits go up 12% (not compounded). The bet favors the house. But this gives someone who thinks he can retire on his savings an incentive to go ahead and do that. And then if he bets wrong, he is given a consideration for trying.

  • DarrenM||

    Means testing is find in theory. So far, I think I lean toward NO means testing. It's always better to keep things simple. It would be better to raise SS (FICA?) taxes. Lower the cap on how much SS will be paid out to an individual. More likly, let inflation lower the real cap. If that's not enough, move somplace with a lower cost of living if possible.

  • ||

    Krugman said:

    Wait, you say: won’t raising taxes reduce incentives to work and create wealth? Yes, it will (although such effects are greatly exaggerated in our political discourse.)

    .

    Wow. It will? I thought the going line on this was that taxes have absolutely nothing to do with work incentives and wealth creation. I wonder why we're switching from a "no effect" to "exaggerated effect" stance...

  • ||

    Krugman said:

    What we need is actual control of health costs. Means-testing of Medicare is just a badly designed, unfair form of taxation.

    No thanks, please, you've done enough already. I don't think I can afford any more affordable health care.

  • Invisible Finger||

    Means testing is a goddamned joke. The Income Tax started via means testing. Now look what a farce the AMT is.

    Means testing Social Security and Medicare essentially results is everybody paying in and only 15% getting their money back.

    The current system, as bad as it is, is simple and straightforward. Means testing would fuck it up even worse. Either leave it alone or promote phasing the whole thing out completely; stumping for means testing is about the stupidest thing that could be done.

  • ||

    You could means-test and then gredually lower the tax rate so it just supports minimal payments to people who don't have their own retirement savings.

    Eventually turn it into a retirement insurance system. You pay in a small amount and then you get a pay out only if you end up with insufficient savings upon retirement. You premiums could be pegged to how much you have saved in your 401(k) or IRA.

  • DarrenM||

    Just a thought. Pay out SS for a limited period, say 20 years (just to pick a number). Means-testing would kick in if that person wanted extended benefits.

  • LTC(ret) John||

    I'd gladly opt out of ever receiving a dime of SS, if you would release me from my tax burden. Leave it on the employer at a discounted rate, to fund the current folks, but I'd be more than happy to get the FICA leech off my pay - and save it myself, in something that would actually earn interest or dividends, and be transferrable to my kids should I snuff it, etc.

    Means test, ha. Just admit the whole thing has become a lie and let me and anyone else who wants to, out of it.

  • johnl||

    Means testing SS is the same as adding a new regressive tax to IRA disbursements. It's just going to punish people who saved for retirement. The only people I see pushing this are Nick and now Jacob. But they never discuss the perverse incentives. This is what happens when we get a lit major writing about pensions. Really it's hard to understand a libertarian who wants people to spend more time matriculating with bureaucrats and discussing their finances with them. Work out the numbers guys and then get back to us. Because cutting SS for Bill Gates and Warren Buffett isn't really going to save a lot of money. You have to cut mine.

  • DJK||

    I think you're missing the point. We already have absurdly perverse incentives in the form of income taxes. We already share an inordinate amount of information with bureaucrats on our April tax statements. Means testing doesn't introduce any new "time matriculating with bureaucrats".

    It does, however, have the advantage of bringing unsustainable programs back down toward the earth. It would also have the benefit of shifting public thinking about the entitlement programs. Which is why Nick and Jacob support them.

  • johnl||

    People will just cash out their IRAs and invest in things that make no taxable income. Like Buffett does. If you want to means test SS for Buffett, you will have to do it with assets instead of income. This represents new level of intrusion that we've never had before.

    I do like your idea that since we already have intrusive taxes with perverse incentives, another income or wealth tax on top of that would be beneficial, because it might shift public thinking. I sonder if I stumbled into the DU looking for reason.

  • ||

    You do realize that capital gains are also both reported and taxed, right? There is not one single fucking bit if income that is not taxable as far as government is concerned. Buffett already lets the government know his holdings in securities and the amount he makes from the sale of them in addition to his salary income. You're slaying strawmen.

  • johnl||

    Why means test SS only? Shouldn't we apply it to all income, if we really want to change the way people think about entitlements? From each according to his abilities, to each according to his needs.

  • ||

    Good point. Because all income is exactly like Social Security - extracted from group of people, by another group of people, then distributed back to the first group of people again.

    What the fuck are you even talking about?

  • T o n y||

    extracted from group of people, by another group of people, then distributed back to the first group of people again

    Sounds like most forms of income to me. Buyers to sellers to buyers.

    Oh looks like it's time for an irrelevant lecture on the morality of coercion.

  • ||

    Oh looks like it's time for an irrelevant lecture on the morality of coercion.

    Yeah, that's what "extracted" means. It's the difference between handing a homeless man a sandwich and having him put a knife to your throat and steal your wallet. The fact that you can't tell the difference says pretty much all anyone needs to know about you.

  • ||

    Tony said:

    Oh looks like it's time for an irrelevant lecture on the morality of coercion.

    Because we all know that morality doesn't exist, so it's silly to talk about it. Unless you're invading Iraq, criticizing the president, and want out of SS. In that case, you're an evil, racist bastard who wants to kill grandma. Totally subjectively, though, because morality doesn't exist.

  • Lexy||

    What does mean exactly?

  • buybuydandavis||

    "Yet many Democrats are surprisingly hostile to the idea of tailoring these programs to help people who actually need them."

    It's only a surprise if you think the point is helping those in need. If you see that the point is power, controlling everyone and everything, it all makes perfect sense.

    Look at what the programs do, not the rationalizations for them.

  • T o n y||

    Black helicopters.

  • ||

    Conspiracy theories being out of vogue with Bush no longer in the White House, you understand...

  • Tablet pc||

    Why Progressives Support Welfare for the Rich? i always do not know, even i have read this post.

  • Lexy||

    Yeah, those People's Temple followers had plenty of community. Down to the last drop.

  • Lexy||

    Means testing? I'd rather opt out!!

    You don't tax me and I'll worry about my own "golden years".

    No harm, no foul - you leave me alone and I have no expectations on govt.

  • ||

    ^^ this ^^

  • HECM||

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading what you all have to say... http://www.reversemortgagelend.....s-it-work/

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