Wednesday, February 4, 2015

A cartoon in the New York Times...

...illustrates the growing problem of income/wealth inequality in America.

It reminded me, in particular, of something I once read by Paul Krugman about means-testing social security. I couldn't find the exact piece, but this one will do: "Six Reasons Joseph Stiglitz and Other Top Economists Think Means-Testing Medicare & Social Security Is a Destructive Idea: Means-testing is a back-door strategy for taking away benefits earned by hard-working Americans."

From the piece (my emphasis):

At their heart, programs like Medicare and Social Security are about fairness, equality and shared citizenship, values that progressive Americans hold dear.

Medicare and Social Security are not welfare programs. They are benefits that people pay for as they work. They are also smart social insurance programs that spread risk across society in order to protect everyone at rates no private insurance scheme, with its much smaller risk pool, could touch.

When I spoke to Joseph Stiglitz, he discussed the idea that “means-testing is mean.” Programs like Medicare and Social Security, he explained, are matters of political economy. They are important to social cohesion, where support comes from the fact that everybody is participating. “We don’t means-test public education,” explained Stiglitz, “because we believe that we want people to have the same opportunities and we lose out on that with means-testing.” The same is true of our belief that everyone deserves a dignified retirement and adequate medical care in old age.

Medicare and Social Security are not handouts to the needy. They are not even intended to be a safety net. In their design, they promote the fundamental notion that dignity and good health in old age are not special privileges that can be bestowed or taken away. They are fundamental rights that every working American who has contributed productively to the economy can expect to enjoy. As James K. Galbraith told me in an email, “It’s insurance, not charity.”

Means-testing runs against this fundamental idea by turning Medicare and Social Security into welfare programs that become bargaining chips for politicians. The programs become provisional rather than fundamental. President Franklin Roosevelt understood this point well, which is why he designed Social Security to be attached to a payroll tax so that “no damn politician can ever scrap my social security program.”

Conservatives have dedicated themselves to making Americans feel as though benefits they have earned are undeserved. Consider Mitt Romney’s infamous comments at a 2012 fundraiser:

“There are 47 percent of the people…who are…dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to healthcare, to food, to housing, to you-name-it -- that that's an entitlement. And the government should give it to them.”

By turning Medicare and Social Security into welfare, means-testing feeds right into the Romney view of the world, an us-against-them mentality that pits the self-righteous wealthy against ordinary people. Means-testing would divide the population and further emphasize the difference between the haves and the have-nots by transferring a sense of receiving handouts to those getting Social Security and Medicare. 

Alicia Munnel, director of the Center for Retirement Research at Boston College, has explained that programs like Social Security represent "the payoff of a lifetime of premiums." Contrary to what Romney would have you believe, she points out that "the government writes the check, but in most cases individuals have paid for the benefits."

Today, when Grandma goes to the mailbox to find her Social Security check, she can be proud that the millionaire on the next block receives his check, too. They are bound together as Americans, as fellow citizens who have a stake in the economy and in a society that functions well for everyone.

As Dean Baker explained in an email, “People paid for these benefits. It's true that a few people like Peter Peterson may not need them, but these people probably also don't need the interest they get on government bonds. No one talks about means-testing that, or to take another example, federal flood insurance.”

To summarize: If the rich didn't participate in Social Security and Medicare like everyone else, how long do you suppose those programs would continue to exist?

Or look at public education: When the rich and powerful (like Rahm Emanuel or President Obama) send their kids to private schools, or the middle class (like my wife and me) flee to the suburbs, what happens to public schools in the cities?

Here's a thought experiment for you: What if you closed every private school in America (or just Illinois) tomorrow and funded everything from Washington (or Springfield)? Would the poor kid from the West Side of Chicago get the same quality education as the rich kid from Lake Forest? Or would they both get an equally crummy education?

Now, I know this could never happen. (I said it was a thought experiment, remember?) But conservatives are fond of saying things like "Equal opportunity should be the goal, not equal outcomes." Okay; fine. So how do you give the poor kid from the West Side the same opportunity as the rich kid from Lake Forest?

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