FAIRNESS AND SOCIAL SECURITY….The Social Security plan that President Bush unveiled last week keeps benefits unchanged for the poor but cuts them substantially over time for the working and middle classes. As a result, benefits for the poor would eventually be more nearly equal to the benefits of the better off than they are now, which in turn would make Social Security a more progressive program than it is today.
Conservatives are gleeful at the potential that this piece of political jiu jitsu has to unnerve liberals. After all, we liberals like progressive programs, don’t we? But we don’t like George Bush. What a dilemma! New York Times columnist John Tierney condensed the conservative conventional wisdom on this perfectly last Saturday when he crowed, “Someone has finally called their bluff.”
Sorry, but no. The fact that liberals support progressivity doesn’t mean that we support only progressivity, and only maximal progressivity at that. What we support are intuitive ideas of fairness, and most Americans think that a certain amount of progressivity is intuitively fair: the poor need help more than the rich and the rich can afford to give help more than the poor. That’s common sense.
But that’s not all there is to fairness. Most Americans also intuitively accept the idea that tax rates become unfair if they get too high, no matter how well off you are. They also think it’s unfair to pay taxes and get nothing back. A common sense notion of fairness suggests that Social Security should be progressive but not flat. If you pay more in, you get more out.
That’s what we have today, but under the “Pozen plan” that’s the basis of Bush’s proposal, it wouldn’t be for long. The CBPP estimates that by the end of the century, a low income earner would get back 49% of his wages in Social Security benefits, the equivalent of $8,070 today. A high earner would get back only 9%, the equivalent of $8,100 today.
If there’s a contradiction here for liberals, I don’t see it. I support progressive tax rates, but I don’t support 99% marginal rates. I support the minimum wage, but I don’t support a minimum wage that’s 99% of the median. I support progressive Social Security benefits, but I don’t support a program that gives low earners 99% of the benefits of higher earners who have paid much more into the system.
So: no one’s bluff has been called. Sorry. Sensible liberals believe in combining the notion of moderate progressivity with the notion that people who pay more in should get more out. Neither principle needs to be wholly discarded in favor of the other.
The result of this is a Social Security program that strikes most Americans as intuitively fair. Maybe that’s why so many conservatives hate it so much.