Tuesday, May 10, 2005

Social Welfare

Mickey Kaus makes some provocative points in his Slate takeout on Social Security. One of the more interesting:

"Even a radical means test wouldn't turn Social Security into welfare: Why? Traditional "welfare" programs--most obviously the old Aid to Families withDependent Children (AFDC)--help the poor whether or not they work or try to findwork. But Social Security is "work-tested." You can't get Social Security checks unless you've worked and paid in contributions. That means Social Security will never be stigmatized the way AFDC was stigmatized. NYT columnist Paul Krugman, criticizing Pozen, repeats the old saw that "programs for the poor always turn into poor programs." But even if Pozen did make Social Security a program for the poor, which it doesn't, the old saw isn't true. The disproof: the Earned Income Tax Credit. It's a program for the poor--it goes only to people making less than $35,000. But it's a good program! It works. It's popular. Congress after Congress has supported and indeed expanded it. It's popular because, like Social Security, it's work tested. As its name implies, it only goes to people who've earned some income. If means testing makes Social Security as unpopular as the EITC, Democrats have nothing to fear. "

This cleverly undercuts the core Democratic argument against some forms of means-testing, including Bush’s progressive benefit cuts (or the related Pozen plan): That they would turn Social Security into a form of welfare via a major transfer of wealth down the income scale, and torpedo its political support. Bush’s private accounts could have a similar effect. Is Kaus onto something? He’s right that the essential, work-based nature of the system is different from that of welfare programs, and this will make its support more durable.

But the comparison to the EITC leaves something to be desired. The EITC releases low wage earners from an obligation to pay taxes. It's popular because people higher on the income scale (with the exception of those working for the WSJ editorial page) don’t see it as robbing them – just the government. (Ironic, isn't it?) But if you are paying in excess of 12 percent of your income into a system and a growing portion of it is being redistributed to the poor, you might conclude that you’re getting screwed – and your instinct may be to cut those bastards off.