I was listening to Tom Ashbrook’s NPR program “On Point” this morning while running around and his guests posited that two things could be offered to help deal with the budget impasse.
Means-testing of Medicare and SSI
Removing the SSI contribution cap
Now, disclaimer, I’d like to see both happen.
But could it get through? The guests on the show posited that Medicare means testing could be something offered by the Republicans in return for not moving the tax rate - or leaving the sequester in place. Another guest offered that removing the contribution cap would be an enticement placed out there by democrats to get something back from Republicans.
Seems convoluted to me, though. But the question isn’t necessarily “is it feasible” but rather ‘is it feasible to get it through congress?’
Is it feasible? Well, the part that isn’t feasible is the part where the Republicans go for it. I’ve noticed a popular sentiment among the social security/Tea Party set is “keep the government out of health care and end entitlements- but don’t touch my Medicare and Social Security” with a variant of “don’t touch mine, but you can means test it for the people who aren’t collecting yet”. Any Republican who wants re-election is not going to want to alienate them.
Perhaps he meant means-testing of regular social security (that’s the trouble with acronyms).
The problem with means-testing Medicare and Social Security is what to do about current and soon-to-be users who have counted on those programs for their retirement. I would never pass a means test (I’m sure I would have “too much” income, but living in San Francisco that is barely enough), but if I didn’t have those programs I would be living at subsistence levels, and would be in danger of losing my house. So any practical plan for this would have to take that into account, possibly by introducing it gradually over time.
As for removing the contribution cap for Social Security, the only people who can possibly object to that are those who make more than the cap amount, which is now something like $120K I think. Percentage-wise that is a small (but probably vocal) minority. I think this could pass as part of almost any serious SS reform package.
Means testing medicare doesn’t save much – if you knock off the top 1% of the medicare population, that may knock one percent off the cost, but they are probably healthier than average. And, it changes medicare from “we’re all in this together” to a welfare program that only those people need. It’s a terrible idea.
And, now you need a bureaucracy set up to monitor means testing. Doesn’t it just become medicaid then?
SSDI is effectively means-tested now anyway – the top 1% wealthiest population just blast through the $110k or $120k income limit, whatever it is, and the benefit they receive is not material to them anyway in retirement.
Removing the cap is the final admission that Social Security is NOT a system that you pay into, and later get benefits - rather it is a tax system for redistributing money from people working to people retired. Yes, I know that is what it always has been - but that is not how it was sold nor is it how it is described. That said, I would rather remove the cap than means test - and I am fortunate enough to get nailed if you remove the cap.
Means testing will mean shenanigans. Let me admit this again - there are no significant assets in my parent’s names. They don’t own the land, they don’t own the house. All they legally own is their cars. They are set so that if and when anything happens, there is nothing to tax (estate) or attach (hospice type care). I have ensured that if any means testing is applied, they are shown to only have their retirement income (Annuities and social security and military benefits).
Anyway, removing the SS contribution cap would be a 12% tax increase for those making over $120k (or whatever it is) – do you think the GOP would go for that? In exchange for very modest savings on Medicare and SS? I don’t even know why the Democrats would go for that – if you remove the cap, would you also remove the cap on SS benefits? Does SS need that kind of radical cash infusion to keep paying 100% of benefits?
These are inside-the-beltway issues that don’t really affect the real world.
What you’ve noticed isn’t a sentiment held by any significant number of people among the Tea Party or anyone else. It’s a meme mostly talked about by people on the left, and it dates back to the early 1990’s and Clinton’s attempt at health care reform.
There’s another meme that “All your base are belong to us.” That doesn’t mean that aliens are actually taking over our bases either.
As to the OP, Algher nailed it. Means testing SS would be an admission that it’s welfare for old people and that you don’t get back what you’ve paid in.
It would also basically be a tax on people with bad accountants, since anyone with a bit of common sense would just hide assets so as to be able to collect.
The only thing I’d add is that it would also be terribly unfair. You’d be punishing all the people who did the right thing and contributed to their 401ks and IRAs their whole lives and taxing them to pay for the retirement of their neighbors who didn’t save.
Bad idea all around. The only good part would be that it would weaken SS perhaps to the point that we could destroy it one day.
I’m not talking about a meme.i’m talking about a sentiment that literally every tea party supporter i know personally over age 55 or so has expressed. They may not be representative,but i’m not hearing it from people on the left,
Correct - but there are also those that control their spending to be able to have retirement income to supplement Social Security. If you tax that money, you are telling me to stop saving for retirement. I drive a car longer, so that I can put more into my 401k. My 18 year old is now working and I am teaching him to put some money into an IRA now rather than wait - compound interest is his friend.
However, if he were to suddenly be told that upon retirement he has to spend all of his savings first, and THEN he can start getting Social Security - his path to the Dark Side of Conservative Libertarianism would be complete.
Do Shodan and Debaser really think that elderly Tea Party supporters want cuts to Medicare? Because poll after poll has shown that they don’t.
As to the literal quote: “Keep government out of Medicare”, I can find references to Art Laffer saying it on CNN in 2009, and a few TP-types saying it at GOP town halls (Bob Inglas, a GOP congressman seems to be the source of that claim). Obviously there are the famous sign pictures, but who knows how real they are.
ETA: Just found a link to a poll that had 39% of Americans agreeing with the statement “Do you think the Government should stay out of Medicare?”. So if it’s a meme its a rather well-spread one.
Supporting Medicare in it’s current state is hardly the same thing as being so ignorant as to not know that Medicare is a government program.
We did this in another thread. Laffer is an accomplished economist. It’s silly to think he’s so ignorant about basic knowledge such as this. Plus from the clip it’s obvious he simply misspoke. Inglas claimed he heard it in a town hall on the same exact day that Obama claimed he heard it, so either that’s a miraculous coincidence or it’s just politicians repeating a meme, as they often do.
As I said, it goes back to the early 1990s. I have no doubt, someone, somewhere is conservative and also dumb enough to think that the government doesn’t run Medicare. But it’s just a silly meme and to repeat it as if it has any meaningful use in a debate is worthless.
To get back to the OP, of course it’s possible. Obama is in the center-right of the party. and I can see him makeing a deal that includes the changes, and there are enough Dems that would support it that it could pass if the Pubs support it.
The real sticking point is that if Obama supports it, it becomes “his idea”, and the Pubs wouldn’t support it even if they proposed it the week before.