Monday, April 04, 2005

We're not so stingy: part 2

TNR strikes again; this time it's Peretz instead of Chait:
And, even if Pozen's indexing plan weren't coupled to private accounts, it would be anathema to liberals. As Jason Furman of the Center on Budget and Policy Priorities explained in a recent analysis, the long-term effect of progressive indexing would be to turn Social Security into a welfare system and erode support for it. While there is now some wealth redistribution inherent in Social Security, there is also a relationship between how much one contributes to Social Security and the benefits one receives upon retirement, a linkage that is the linchpin of the system's near-universal support. Under the Pozen plan, benefits for high and middle earners would, over time, be drastically reduced, while benefits for low earners would hold steady. The entire benefit structure would be flattened, turning it into a wealth-transfer system from rich to poor and shattering the system's political popularity.
Do "liberals" really believe this? Do they think we need to redistribute wealth to the elderly middle class because otherwise the middle class voters will just let the elderly poor starve? That's just too absurd, so I have to assume folks like Chait and Peretz just think the welfare benefits for the elderly poor wouldn't be "enough" in this scenario. Consider welfare reform: we may have ended welfare "as we know it," but we certainly didn't end welfare. I therefore presume Chait and Peretz think current welfare benefits aren't generous enough. I respectfully disagree, so I suppose Peretz would say this demonstrates his point.

Still, I have a hard time believing liberals merely support the current Social Security system merely as an extremely blunt instrument for supporting the elderly poor. Given the costs, e.g. higher payroll taxes, of such an inefficient welfare program, it's very hard for me not to believe that liberals like Peretz and Chait also support, or are least indifferent towards, the "side-effect" of the current form of Social Security benefits for the middle class. In support of my suspicion, I'm pretty sure Chait supports universal health care based on articles like this one. If I'm right, then let us argue about privatized vs. nonprivatized Social Security for the middle class based on their merits as such, rather than as indirect welfare programs.

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