Social Security: Two Separate Programs

by Liberty and Power

Below Sheldon Richmond has a post concerning social security and in the comments section Richmond relates that “One idea that is on the table is raising or scrapping the income cap for the payroll tax. Great.” Jonathan Dresner replies “And how is that not raising payroll taxes? I'm not saying it's a bad idea (though the cap should be the same as the benefits cap, or something like that), but it's certainly not consistent with"the rules.”

I think that Dresner is correct that such a change would be an increase in taxes and normally I would oppose any kind of tax boost. However, in this case I think it is a good idea because of an argument I once heard Milton Friedman make on CSPAN. He made the point that because there are no actual assets in the “Trust Fund” only government bonds, which are merely promises to tax people in the future, there is no real connection between social security taxes and social security benefits. Therefore, if you look at the system as two separate programs you see its true nature.

The tax program could not be more regressive. It begins with the first dollar you earn but because there is a cap the more you earn over the cap the lower the tax is as a percentage of your total income. As for the benefits program, the more you earn during your lifetime, and therefore presumably the less you need the money, the more you are paid. All of this begs the question why are those who are supposed to favor the poor and working class fighting so hard to preserve a system that so clearly favors the rich?

If we were to eliminate or increase the cap the tax program at least would become less regressive. More importantly, if the pain of the tax program were to spread upwards to the more influential there would be a greater chance that the social security system would be privatized and ownership of the money restored to the people who earned it. That is the only moral and practical course.

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More Comments:

Charles Johnson - 2/5/2005

"If we had a fair conscription and the sons and daughters of congressmen and their contributors were being sent to Iraq do think they would be applauding Bush's foreign policy so loudly?"

Who cares? The sons and daughters of the wealthy and powerful are not pawns for your political purposes. Enslaving other people in order to shift policy is treating other people as if they were your property. They're not.

(Of course, it's also worth noting that even if moral side constraints were satisfied here--which they aren't--the practical case would still be extraordinarily weak. There is no example in American history of any war that was prevented or shortened by a draft. Every single draft has prepared for or prolonged a war which could not be pursued by voluntary enlistment. And of course even if the draft were somehow passed (by whom?!) in such a way that the sons and daughters of the wealthy and powerful weren't given easy outs, they would still--as they always have--exercise their influence to achieve safer officer and clerical positions. That's exactly what happened in Vietnam once the lottery was instituted and student exemptions were undermined, just to pick a recent example. Conscription always and everywhere means more war for longer.

John T. Kennedy - 2/4/2005

Haldeman: "If we had a fair conscription..."

Fair to whom? Conscripts?

You're willing to enslave men and women to (you hope) rein in policy?

Jonathan Dresner - 2/4/2005

We'll see. It's going to be hard to manage the next war and guarantee Iraqi security as long as it takes, without a significant increase in military human assets (i.e. troops).

Keith Halderman - 2/4/2005

If we had a fair conscription and the sons and daughters of congressmen and their contributors were being sent to Iraq do think they would be applauding Bush's foreign policy so loudly?

John T. Kennedy - 2/4/2005

Swell.

Reminds me of Charles Rangel's idea to spread the pain by implementing conscription.