Do we currently apply any means testing to these programs? Does anyone know of a study that shows how much would be saved by cutting out the top 1%, 2%, etc.? What is the opposition to this like and where does it come from?
Thanks,
Rob
There is no means testing under current law. According to this site, there is no benefit to means testing.
As the Wikipedia entry says:
Ross Perot thought it was a good idea, which, in itself, is almost reason enough to dismiss it out of hand.
The real problem is that means testing fundamentally changes what social security is. It isn’t a welfare program, it is essentially a pension program. Everyone is a part of it. Once you start refusing people (who have paid their share) their benefits, it won’t be long before the program is gone altogether.
So, in answer to your question, opposition to this comes from people who don’t want to see social security and medicare dismantled.
SS was sold to the public as if you were saving up for your own pension later. So it doesn’t *sound *like a something for nothing program, nor does it *sound *like a wealth transfer program.
If you means-tested it, then the reality is folks like me who’ve been paying in the max year after year would get zero return. And the folks who paid almost nothing into the system would get back a lot.
In other words, you just turned a good old all-American savings account into bad evil European socialist wealth redistribution … or worse yet, into evil welfare for those inner city drug baby factories.
So that’s how the opposition spins it.
I oppose means-testing for programs in general. It adds administrative cost, encourages cheating, is “unfair”, and creates disincentives: many people are loathe to leave a welfare program if the net gain from employment is small.
To abandon means testing would not mean subsidizing the rich. To the contrary, taxes (on the rich!) would increase to pay for the non-means tested recipients.
But this is only rational thought. In post-modern America the lunatics have taken over the asylum, and all we can hope for are solutions which are the least irrational among those proposed. In that context, a simplistic plan to save a few hundred billion dollars will doubtless gain traction despite that, as Duckster’s link points out, it’s just another wrong solution to another misdiagnosed problem.
That may be a problem, but I’d say the real problem is the one Duckster’s link points out. The savings to be had by means testing are negligible, since there aren’t very many rich people. So there isn’t really any point in doing so, the cost to administer the means testing, chase down fraudsters that try and make it look like they have less wealth then they do, figure out how to deal with people that try and spend down some of their assets to land under the bar for collecting SS, etc. would probably eat up a good chunk of what savings there are to be had.
It’s an “entitlement” program. (For definition of entitlement, see Entitlement - Wikipedia
When you are discussing SS benefits here, you are thinking only of old-age insurance and disability insurance. However, there is one SS benefit that is based on earnings and wealth, the Supplemental Security Income program, which allows benefits to be paid although an individual does not have the “quarters of coverage” if the person has limited income and assets and if that person is disabled or age 65 or over.
Well, for both there are some sorts of means testing. For Soc Sec, your early benefits are reduced for earned income over a certain point.
http://ssa.gov/pubs/10069.html
Same with Part B of Medicare (wiki) " A new income-based premium schema has been in effect since 2007, wherein Part B premiums are higher for beneficiaries with incomes exceeding $85,000 for individuals or $170,000 for married couples. Depending on the extent to which beneficiary earnings exceed the base income, these higher Part B premiums are $134.90, $192.70, $250.50, or $308.30 for 2009, with the highest premium paid by individuals earning more than $213,000, or married couples earning more than $426,000.[32] "
I’d like to point out that there is a progressive (as in not linear) aspect to the Social Security payments. First of all, the earned income tax credit effectively returns the employee’s Social Security payroll deductions back to people who have a very low annual income. And then, when your Social Security payments are calculated at retirement age, after adjusting for inflation throughout your earning period, lower dollar credits are weighted more heavily than higher dollar credits. Thus, someone who had a lower annual income during their earning years will get more bang for their bucks than another person who paid the maximum Social Security tax each year.
The formula for calculating Social Security payments can be found on the Social Security website. See for yourself
That’s not means testing. It was the law, about a decade or so ago, that you could not earn above a certain amount before you would incur an offset to your retirement benefits. Hey, it’s retirement benefits: you are supposed to be retired. (Technically, it’s “old age” benefits.) The law was changed so the offset is applicable only for early retirement.
The premiums for Part B Medicare are increased if you earn over certain amounts, but that’s not a means testing for your receiving the benefits.