Family Friendly Cuts to Social Security: The Myth of Affluence Testing

[Donnachaidh]

http://www.truthout.org/family-friendly-cuts-social-security-the-myth-affluence-testing59556

Billionaire Wall Street investment banker Peter Peterson has come up with a focus group tested term for his plan to cut Social Security. He calls it "affluence testing." The idea is that we will just cut Social Security benefits for wealthy people like Peterson who don't need their Social Security. We won't touch benefits for ordinary working people.

That's a great story. Unfortunately, it has nothing to do with the debate over cutting Social Security. The problem with the Peterson story is there are very few wealthy elderly. We can zero out the benefits for Peterson and his wealthy friends and nothing in the Social Security accounts would change. Social Security's maximum benefits are just a bit over $30,000. Taking away $30,000 from a few thousand families makes no measurable difference in a program that spends $700 billion a year.

Getting a bit more realistic, let's suppose that we decide that $100,000 is the cutoff for affluent families. This is less than half of the $250,000 a year that President Obama sets as the cutoff for being subject to tax increases. A bit less than 10 percent of families over age 65, or 2.4 million, have an income of more than $100,000 a year. If we zeroed out their Social Security benefits, then we could save $70 billion a year, assuming they get an average of $25,000 a year from the program.

This 10 percent saving might seem a good start to reducing spending, but this requires a bit closer look. Suppose $100,000 is set as a cutoff, where you lose all benefits if your income crosses $100,000. This creates an enormous incentive to keep your income under $100,000. To be serious about this sort of affluence test it must be phased in gradually.

Much more at the link above --

[RKP5637]

1. This is what I always think too...

"Taking away the benefits that better-off workers earned would undoubtedly undermine their support for the program. This could set up a situation in which the program could be more easily attacked in the future."

What always strikes me as peculiar are those that think they are immune from everything. I'll admit, I'm not perfect in my thinking, but I do know I'm not enough of a fool to think I'll never be unhealthy or never in need of money. ..but I am amazed at those I know thy don't want to pay social security, they think they will never need it... and especially those I've known that think they don't need health insurance.

SH** happens in life, a lot... but some think they are immune to it...

I have never minded paying social security taxes... if fact, I've often thought, I wish I could pay more into SS tax with some type of reasonable guaranteed return. I've also never had a problem paying taxes to help those older than me. I guess I just believe in working together for all...

[caledesi]

4. Well said! nt

[ljm2002]

2. The reason it was not defined as a means-tested program...

...is that it would have made it that much easier to dismantle later, because people would see it as a welfare type program rather than a retirement program where you pay in and you get a defined benefit.

To make it means-tested would be to start the process of killing it. The rabid right wing would be all over the airwaves pointing out how "hard working Americans" aren't getting any benefit from Social Security while "those people" (nudge nudge) are getting all that free money.

[kctim]

9. That is because

it was created as a safety net program, not a retirement program.

[ljm2002]

12. Right you are, but the point still stands...

...there were good reasons to avoid making Social Security a means-tested program. If we change that, we enable certain kinds of attacks that will follow, just as sure as night follows day.

[WhiteTara]

3. this sounds like a trojan horse

and the decimation of social security is sure to follow. Cat food will be gourmet meals for the elderly.

[bobbolink]

5. It looks like the cutoff of SS disability is already underway.

A replay of the Raygun cuts, which prompted thousands of suicides?

It doesn't seem to matter much to anyone, so I guess it will take a lot of deaths before it results in any kind of reaction.

Your information is great, and I appreciate it, but right now I am most concerned with disabled people being cut off with no support.

[Scuba]

6. +1

[bobbolink]

7. Does that mean you are seeing the same process underway?

?

[The Backlash Cometh]

8. This game has been played before.

All they'll do is transfer all the wealth to the next generation so they can still apply for social security. It's how the rich elderly end up in rent control apartments in Manhattan.

[Hannah Bell]

10. social security is already means-tested, via taxation of benefits, instituted in 1983.

anything peterson promotes is to soak ordinary people.

[lumberjack_jeff]

11. "Reform" is unnecessary.

Workers loaned high income taxpayers $2 trillion. We're entitled to repayment.