Monday, December 06, 2004

Pony up, high-income voters, if you want to give Wall Street a cut of Social Security

Bob Novak's Sun-Times column here lays out Senator Lindsey Graham's plan (the only 'real' plan out there) for Wall Street to get their commission-greedy hands on Social Security: raise the cap of $87,900 on taxable income for Social Security.

Now, everyone pays 12.4% of the income to Social Security until one is paid $87,900. (So we all pay up to $10,900 to Social Security -- no more than that). If you're making more than 88 large, congratulations. You don't pay tax on that income. So if you make 200 grand or 100 grand or Blair Hull-like income of 10 million, you pay $10,900 in Social Security taxes.

No wonder there are long-term deficits in our public pension.

The Bushies and some GOP leaders want to make private accounts the centerpiece of the 2005-6 federal legislative session. where workers can take 3 or 4 or 5 percent of their income and pay Wall Street money managers to speculate or invest in different equities, with presumably a higher rate of return. Unless the stock market crashes, and then you're like an Enron shareholder. Broke. Anyway, the problem is the transition cost, because that 3 or 4 or 5 percent of income is not going to fund the benefits of Grandma and Grandpa, so how do benefits get paid if a third of all the income is diverted? Those transaction costs are probably a TRILLION dollars. Truh - hill - yun. Needless to say, if I were spending a trillion (three times the whole freakin' military), I could probably get us world peace. For real. Maybe that's a bit of a stretch. But we could largely eliminate poverty. I digress.

To raise the trillion, Senator Graham suggests taxing the same 12.4 percent on income earned by wealthier people above the $87.900 cap. Which is fair, since they should have been paying into Social Security this whole time.

Otherwise, the money would be raised by. . . borrowing it. Yes, that's right. Although we borrowed more than a trillion so that Bush and the GOP could lower the top tax rate from 39.6 percent to 35 percent, we're going to borrow even more. That is a recipe for financial disaster.

I like this Senator Graham guy.

11 comments:

Phocion said...

DJW, what is it with you insider types always picking on Blair Hull? The guy made his fortune from scratch, and helped a lot of folks out along the way. I don't disagree that social security shouldn't be restructured. But the way you frame the argument gives opponents ammunition to say you're just out to stifle the dreams of Americans to work hard and get rich.

FightforJustice said...

Sen. Graham is a Republican. I wonder if the Dems will support his proposal.

Jeff Trigg said...

They can also cut the Social Security outlaws considerably with means testing. Why should Blair Hull, Bill Gates, Rupert Murdoch, etc get Social Security benefits when they obviously don't need it? My prime example is George Ryan. He has a $200,000/year tax free state pension and still gets Social Security.

The Democrats have blocked any attempts at means testing that would stop taking money from the poor and giving it to the rich. I'd love to see stats on how much money has already been given to people with $100,000+ per year pensions. They don't need Social Security. I'd bet it's enough that the first $25,000 of everyone's income could have been exempted from FICA taxes so we could stop taxing the poor.

Dan Johnson-Weinberger said...

If 'picking on' Blair Hull means acknowledging how much income he has, you and I have a different definition of 'picking on.' Why are people so touchy about money? The dude makes a mint. Good for him. He and the other wealthy people (among whom I would like to count myself some day) should pay the piper to fund public pensions. I mean, we should avoid taxing income earned below $5K instead of avoiding income earned above $89K. And if *I'm* an insider, then you have a very expansive definition of insider. Weren't you the one crowing about your guy Senator Raoul getting the nod from the committeewomen of Hyde Park / South Shore to fill Barack's seat? Maybe that makes you the insider. . . .

Amy Allen said...

I share your admiration of Lindsey Graham,sir.

Anonymous said...

Dan, a trillion dollars is about $165 per person in the world. You can largely eliminate poverty with that? Even if you just meant in the US, 1 trill is about $3,000 per per person, and presumably that's spread over a number of years. Do you really think that will make even a dent in poverty?

Jeff, I always figured that the reason the Democrats oppose means-testing and similar measures is that Social Security derives its popularity from the fact that it is not viewed as "just another welfare program". If you break the connection between pay-in and draw-out, that perception will eventually change and SS will become politically tenuous.

N. Y. Krause

PS - This Lindsey Graham is beginning to repulse me ...

Phocion said...

DJW, You're getting way too sensitive. You mentioned Hull for some reason, but Hull isn't anywhere close to being the wealthiest Illinoisan. Here's an interesting list for you (as of 2002) of Illinoisans who made the Forbes 500 list:

1. Robert Alan Pritzker
worth in dollars: 7, 600, 000, 000
age: 76
marital status: married
residence: Chicago, IL
source of income: hotels, investments

2. Thos. Pritzker
worth in dollars: 7, 600, 000, 000
age: 52
marital status: married
residence: Chicago, IL
source of income: hotels, investments

3. H. Ty Warner
worth in dollars: 6, 000, 000, 000
age: 58
marital status: single
residence: Chicago, IL
source of income: Beanie Babies

4. William Wrigley, Jr.
worth in dollars: 3, 300, 000, 000
age: 38
marital status: married
residence: Lake Forest, IL
source of income: chewing gum

5. Lester Crown & family
worth in dollars: 3, 100, 000, 000
age: 77
marital status: married
residence: Wilmette, IL
source of income: investments

6. Samuel Zell
worth in dollars: 1, 800, 000, 000
age: 61
marital status: married
residence: Chicago, IL
source of income: real estate

7. Michael Krasny
worth in dollars: 1, 600, 000, 000
age: 49
marital status: married
residence: Vernon Hills, IL
source of income: CDW Computer Centers

8. Gary Campbell Comer
worth in dollars: 1, 000, 000, 000
age: 74
marital status: married
residence:/ Chicago, IL
source of income: Lands' End

9. Marvin J. Herb
worth in dollars: 1, 000, 000, 000
age: 65
marital status: married
residence: Chicago, IL
source of income: soft drink bottling

10. Oprah Winfrey
worth in dollars: 975, 000, 000
age: 48
marital status: single
residence: Chicago, IL
source of income: television

11. John Hammond Krehbiel, Jr.
worth in dollars: 950, 000, 000
age: 65
marital status: married
residence: Lake Forest, IL
source of income: Molex

12. Neil Gary Bluhm
worth in dollars: 900, 000, 000
age: 64
marital status: divorced
residence: Chicago, IL
source of income: real estate/casinos

13. Frederick A. Krehbiel
worth in dollars: 700, 000, 000
age: 61
marital status: married
residence: Hinsdale, IL
source of income: Molex

14. Michael E. Heisley, Sr.
worth in dollars: 680, 000, 000
age: 65
marital status: married
residence: St. Charles, IL
source of income: manufacturing

15. Robert William Galvin
worth in dollars: 675, 000, 000
age: 80
marital status: married
residence: Schaumburg, IL
source of income: Motorola

16. Patrick George Ryan
worth in dollars: 660, 000, 000
age: 65
marital status: married
residence: Winnetka, IL
source of income: insurance

Roxabunch said...

Graham is still essentially backing No Stockbroker Left Behind, he's just trying to find some bait to lure in Democrats. Like Harry Reid said a few days back; Social Security doesn't need "saving", it needs reforms. Fair taxation alone would be enough.

Dan Johnson-Weinberger said...

Thanks N.Y. -- I guess I did go a bit overboard with my figure. However, if we get into 2 or 3 trillion in the biggest bond in the history of the universe to finance Wall Street's cut of Social Security, and we focus on the 1 or 2 billion people who live on less than a dollar a day, maybe we do get closer to ending a whole lot of global poverty if we spent that money differently.

Amy Allen said...

Also, thanks for linking to me, Mr Johnson-Weinburger.

Anonymous said...

Hey Dan, here's a hint. Privatized social security is bad. Don't entertain anyones ideas about it. It'll never pass anyway. But the fact that you entertain graham's ideas scares me. Social security must remain a government sponsored and administered program.

-LK