6 Reasons Joseph Stiglitz and Other Top Economists Think Means-Testing Medicare & Social Security Is a Destructive Idea
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Means-testing runs against this fundamental idea by turning Medicare and Social Security into welfare programs that become bargaining chips for politicians. The programs become provisional rather than fundamental. President Franklin Roosevelt understood this point well, which is why he designed Social Security to be attached to a payroll tax so that “no damn politician can ever scrap my social security program.”
Conservatives have dedicated themselves to making Americans feel as though benefits they have earned are undeserved. Consider Mitt Romney’s infamous comments at a 2012 fundraiser:
“There are 47 percent of the people…who are…dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to healthcare, to food, to housing, to you-name-it -- that that's an entitlement. And the government should give it to them.”
By turning Medicare and Social Security into welfare, means-testing feeds right into the Romney view of the world, an us-against-them mentality that pits the self-righteous wealthy against ordinary people. Means-testing would divide the population and further emphasize the difference between the haves and the have-nots by transferring a sense of receiving handouts to those getting Social Security and Medicare.
Alicia Munnel , director of the Center for Retirement Research at Boston College, has explained that programs like Social Security represent "the payoff of a lifetime of premiums." Contrary to what Romney would have you believe, she points out that "the government writes the check, but in most cases individuals have paid for the benefits."
Today, when Grandma goes to the mailbox to find her Social Security check, she can be proud that the millionaire on the next block receives his check, too. They are bound together as Americans, as fellow citizens who have a stake in the economy and in a society that functions well for everyone.
As Dean Baker explained in an email, “People paid for these benefits. It's true that a few people like Peter Peterson may not need them, but these people probably also don't need the interest they get on government bonds. No one talks about means-testing that, or to take another example, federal flood insurance.”
2. Means-Testing Won’t Stop at the Wealthy
Make no mistake: If means-testing on the wealthy is allowed, conservatives will keep pushing until that same means-testing is applied to the middle class, who increasingly must rely on Social Security and Medicare in times of economic uncertainty and job insecurity.
Don’t think so? Think back to 1983, when the Greenspan Commission backed by Ronald Reagan made changes to Social Security, including raising the retirement age to 67 for people born after 1960. “We’ll never do it again!” they said. “Just this once!” The full increase in the retirement age has not yet affected retirees -- that dicey experiment is waiting for those under 52 – and so we don’t even know yet how hard the hit will be.
But those same people who said “never again” are asking to raise the retirement age today. So when you hear politicians and pundits talk about means-testing with promises of “We’ll only do means testing on the very rich,” or “Just this once,” remember how empty such promises tend to be.
As Jared Bernstein himself noted in 2011, “the history of social policy leads me to worry [that] once you shift a program from universal coverage to means testing, it’s increasingly vulnerable to deeper means-testing until it eventually becomes a poverty program which everyone wants to get rid of.” Exactly.
Economist Dean Baker further notes that you don't save any money on programs like Social Security and Medicare unless you hit very modest income people. “There just are not very many wealthy elderly,” wrote Baker in an email. “While you can get a lot of money from taxing the rich, Peter Peterson's Social Security check won't be that much bigger than mine and his Medicare benefits won't be any bigger. To get any money you will have to be hitting people with incomes around $60k. These are people we would not ordinarily think of as rich.”