Why Does John Edwards Hate Democrats?
---
Specifically, the Democrats of 1935:
The resolution of the wage cap non-paradox is of course self-apparent to anyone who, unlike Edwards, is not an advocate of class warfare. When Social Security was crafted as a cornerstone of New Deal socialism, its creators -- its liberal Democratic creators -- were adamant that the program be structured, at least nominally, as a compulsory retirement saving plan and not "just another entitlement."
The scheme had and has many more bells and whistles than that, to be sure. But the all-important prime directive behind Social Security's founding was that it would not be presented as "a welfare program." To this day, reminding people of Social Security's progressive-redistributionist (i.e., welfare) structure will bring the scheme's apologists chasing after you like screeching Ringwraiths.
This explains, for example, the (preposterous) description of payroll taxes as "contributions," the naming of the program as "insurance" (as in "Old Age Survivor and Disability Insurance") -- and the wage cap.
In the compulsory saving (or old-age insurance) model of Social Security, wage earners are required to "purchase" (i.e., fund via their payroll taxes) a future minimal annuity stream for their post retirement years. But it only takes so much money to fund such an annuity, just as it only takes so much money to buy a basic, minimal meal. Once a taxpayer has "paid up" for his future Social Security annuity (by hitting the wage cap), then why require her to buy even more annuity?
Remember: Paying more FICA tax means receiving a greater Social Security benefit after retirement. Scrap-the-cap is not "free money" for the government; it is offset by higher benefit obligations for the rich down the road.
So if the purpose of Social Security is not to soak the rich, but to ensure that no elderly be impoverished, then why require the rich to pay into the system beyond the "not impoverished" level? Why force them to buy very high benefits via very payroll taxes if the goal is merely to insure against elderly poverty? (Stated differently: Why force the rich to over-participate in Social Security to the point where they are more than simply "not-impoverished" but actually "very not-impoverished"?)
Meanwhile, scrap-the-cap would delay the Social Security crisis by a few years at best. It "solves" nothing. This demonstrates even more starkly why Edwards (and Obama and almost certainly Clinton) are flat-out lying when they advocate scrap-the-cap as a "solution" to the Social Security crisis rather than a naked class warfare appeal to radical liberal malcontents.
Bottom line: If you believe in Social Security as a "post-retirement safety net," then the cap is perfectly reasonable. It is fact absolutely necessary if the program is to be logically consistent. But if you believe in Social Security as backdoor income redistribution, as a wink-wink, nudge-nudge way to soak the rich (who, recall, also pay almost all the federal income tax), and as an insolent impediment to your dreams of class warfare, then the wage cap is indeed an illogical abomination.
No wonder John Edwards is confused.
(Via Tax Policy Blog.)
---
Did I mention that scrap-the-cap would be the largest tax increase in American history?
---
Meanwhile: Poor little rich boy. Or poor boy. Or something.
"But I don't understand why somebody who makes $50 million a year pays Social Security tax on the first $97,000 and somebody -- and not on the rest..."Edwards is of course referring to the (ever-increasing) Social Security wage cap.
The resolution of the wage cap non-paradox is of course self-apparent to anyone who, unlike Edwards, is not an advocate of class warfare. When Social Security was crafted as a cornerstone of New Deal socialism, its creators -- its liberal Democratic creators -- were adamant that the program be structured, at least nominally, as a compulsory retirement saving plan and not "just another entitlement."
The scheme had and has many more bells and whistles than that, to be sure. But the all-important prime directive behind Social Security's founding was that it would not be presented as "a welfare program." To this day, reminding people of Social Security's progressive-redistributionist (i.e., welfare) structure will bring the scheme's apologists chasing after you like screeching Ringwraiths.
This explains, for example, the (preposterous) description of payroll taxes as "contributions," the naming of the program as "insurance" (as in "Old Age Survivor and Disability Insurance") -- and the wage cap.
In the compulsory saving (or old-age insurance) model of Social Security, wage earners are required to "purchase" (i.e., fund via their payroll taxes) a future minimal annuity stream for their post retirement years. But it only takes so much money to fund such an annuity, just as it only takes so much money to buy a basic, minimal meal. Once a taxpayer has "paid up" for his future Social Security annuity (by hitting the wage cap), then why require her to buy even more annuity?
Remember: Paying more FICA tax means receiving a greater Social Security benefit after retirement. Scrap-the-cap is not "free money" for the government; it is offset by higher benefit obligations for the rich down the road.
So if the purpose of Social Security is not to soak the rich, but to ensure that no elderly be impoverished, then why require the rich to pay into the system beyond the "not impoverished" level? Why force them to buy very high benefits via very payroll taxes if the goal is merely to insure against elderly poverty? (Stated differently: Why force the rich to over-participate in Social Security to the point where they are more than simply "not-impoverished" but actually "very not-impoverished"?)
Meanwhile, scrap-the-cap would delay the Social Security crisis by a few years at best. It "solves" nothing. This demonstrates even more starkly why Edwards (and Obama and almost certainly Clinton) are flat-out lying when they advocate scrap-the-cap as a "solution" to the Social Security crisis rather than a naked class warfare appeal to radical liberal malcontents.
Bottom line: If you believe in Social Security as a "post-retirement safety net," then the cap is perfectly reasonable. It is fact absolutely necessary if the program is to be logically consistent. But if you believe in Social Security as backdoor income redistribution, as a wink-wink, nudge-nudge way to soak the rich (who, recall, also pay almost all the federal income tax), and as an insolent impediment to your dreams of class warfare, then the wage cap is indeed an illogical abomination.
No wonder John Edwards is confused.
(Via Tax Policy Blog.)
---
Did I mention that scrap-the-cap would be the largest tax increase in American history?
---
Meanwhile: Poor little rich boy. Or poor boy. Or something.
Posted by Kip on
28 September 2007
To comment on this post, please visit the new blogsite.
