Monday, January 24, 2005

Bill Thomas Again

Via Atrios and Josh Marshall, I learned that Representative Bill Thomas is still putting more ideas on the table about how to destroy fix the Social Security system. Here he is telling us about some of them:

MR. RUSSERT: Let me show you something else you said at the National Journal Forum that raised some eyebrows: "Women are living longer relative to men today than they were in 1940. Yet, we never ever have debated gender-adjusting Social Security. ...But, at some point if the age difference continues to separate and more women are in the workforce and you have more of an equality of pay structure in the workforce, at some point somebody might want to suggest that we need to take a look at the question of whether or not actuarially we ought to adjust who gets what, when, and how."

A gender adjustment--what does that mean?

REP. THOMAS: Well, it was one of my ways of getting people to focus on the issue of age. To move from 65 to 68, which we did in 1983, was a benefit cut. But it also creates hardships based upon the occupation that you have, and it creates inequities on who you are and how long you live. You could just as easily have a discussion about occupations as to when would be a fair or an unfair time to require. We also need to examine, frankly, Tim, the question of race in terms of how many years of retirement do you get based upon your race? And you ought not to just leave gender off the table because that would be a factor.

What this means is that if four people: a black woman, a black man, a white woman and a white man were all to contribute exactly the same total amount towards Social Security, the black man would get the largest annual payment back and the white woman the smallest. The longer your group lives, on average, the less you will get. No particular person may live just the average number of years for his or her group, of course, so in reality many would still receive more than the amount they paid in and others would receive less than they paid in. But as groups black women and white men, for example, would be getting the same benefits if they paid in the same amounts.

I mentioned in an earlier post that deciding on the proper annuity payment by race and sex is one of those problems where someone always gets treated unfairly. In Thomas' idea it is the individuals who are going to benefit or suffer from discrimination, in the present system it is the groups as defined above (for example, black men as a group would not recoup the total they have paid in because they die younger, on average). The Supreme Court has ruled in the past that discrimination against individuals is worse than discrimination against groups. If this ruling stands, Thomas will not be successful in pushing his proposal.

What is probably behind this and other similar proposals is not so much the aim to cut benefits to save money, but to cut redistribution of income. Wingnuts hate that in a system. Some aspects of the current redistribution should be in their interest, though. For example, major beneficiaries from Social Security are the women who have spent much of their lives out of the labor force, caring for children. Wingnuts like that in women, yet Thomas' proposal would severely harm this very group who has behaved so morally.

There is one proposal for changing the Social Security system that Thomas doesn't want to have on the table, and that is changing the way payroll taxes are funded. Payroll taxes are regressive. If we made them at least income-neutral we'd collect more money for Social Security and we would also alleviate its unintended income redistribution effects. But for Thomas this proposal is too dangerous; it might cut back on employment. Of course, it would also make the very rich pay more.