May 04, 2005

Lowry on Progressive Indexing

Rich Lowry's latest National Review column on the politics of progressive indexing accuses Democrats of being disingenuous in their opposition to the President's proposal for progressive price indexing of Social Security. A few people have pointed out inadequacies in Lowry's argument . (See Yglesias and Maxspeak, for example.)

Lowry's column does contain some real whoppers, as these guys point out. But there's one charge he makes that, I think, sticks: the argument that "the last thing [Democrats] want the public to know is that Social Security is a glorified welfare program, and the more a worker pays in now, the less, on a percentage basis, he gets later." He's saying that Dems oppose Bush's plan to make the benefit structure even more progressive simply because such a change would make the (currently hidden) progressivity of the system more painfully obvious, which would diminish public support for the program. Leaving aside the question of whether the system would actually be "more progressive" under price indexing (Dean Baker and others seem pretty convinced that it won't), I think it's absolutely true that Dems are afraid to make the system a worse deal for upper-income taxpayers. Social Security is, in fact, a superficially universal program rather than an explicitly means-tested one, because FDR wanted to create a plan that could get something approaching universal support. I can't think of anyone who's defending the current program who is making a straight-up argument about how progressive the benefit structure ought to be.

So here's the question: am I right in thinking that (1) supporters of Social Security are, and have been, very hush-hush about the true distributional impact of Social Security under current law, and (2) if we did have an honest debate over what the distributional impact of Soc Sec ought to be, public support for the current approach would go down?


At 12:20 AM, Anonymous Steve Hill said...

Matt--it is curious that much of the criticism of the President's plan is coming from those of us who should be quite pleased that the poorest workers are protected and at the very least his proposal does make the program more progressive. Nonetheless there are several troubling components (that I tried to articulate in a fair way on our Maryland Policy blog).

1. The benefit cuts are large. Only those earning less than $20,000 are spared benefit cuts. In the end, we probably need to protect workers with incomes higher than that as well.

2. The reforms only involve the benefit side; we probably need to balance benefit changes with revenue changes.

3. The most troubling part of it all might be the private accounts component (and, how that is being pitched).

But, to answer your question (using a poll of n=1) I don't think that public support for the current approach would go down if people knew about the distributional impact of the benefit structure. If anything, I think that the public would want a more progressive approach (say, by reducing benefits for the highest-income workers).

One of the readers your blog must have polling data, no?


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