Ironies abound in the Social Security debate, none of them redounding to the credit of those at the center of the dispute.
Consider the chairman of the National Republican Congressional Committee, Rep. Greg Walden of Oregon, who described the Obama plan as a “shocking attack on seniors.” That was a beaut; chairmen of the National Republican Congressional Committee have grown accustomed since 1982 of defending themselves against charges that they were mounting shocking attacks against seniors. In fairness to the GOP, House Speaker John Boehner of Ohio praised the Obama plan, which bore remarkable similarities to the speaker’s own initiatives.
Now, consider some of the Democrats who rushed to criticize the president’s proposal, many of whom would be the very first to criticize as monstrously regressive any taxation scheme like the very one that underwrites Social Security, which exempts income above $113,700 from taxation. Where are the cries of outrage over that?
Otherwise, the usual suspects are behaving in the usual ways. The AARP is complaining that applying the chained CPI would cut $146 billion in benefits, which if you think about it is the whole point. “AARP believes that Americans deserve better than shortsighted cuts to their hard-earned benefits,” the group says.
It used to be that Social Security was one of the great bargains in American life. Back in the early Reagan years, when a bipartisan committee set out to create the first comprehensive overhaul of Social Security, a two-earner couple making an average wage would pay an estimated $192,000 in lifetime taxes and reap $452,000 in lifetime benefits. The situation is reversed now. That couple today would pay more than $611,000 in taxes in exchange for $560,000 in benefits, according to the Urban Institute.
So any plan to rein in benefits is going to increase that imbalance. But this whole subject is an exercise in colliding fairnesses. Is it fair for the rich to pay so much less proportionately than the poor? Is it fair for the payroll taxes of the poor to underwrite as much as $37,000 a year in Social Security benefits for a wealthy family?