The other day I noted that Obama wants to raise taxes on high earners to pay for Social Security, and asked whether he was going to give those people higher benefits, too. The program as it stands pays you more the more you put into it, although it does not go up proportionally. Abandoning that rule, I wrote, would expose Social Security as a welfare program rather than a compact among generations. Mickey Kaus takes issue with that formulation, noting that the program generally requires people to work before they qualify for any benefits–and thus avoids the problem that earned welfare a bad name. Fair enough: I’ll amend my comments to say that abandoning the more-for-more rule would more clearly expose the program’s redistributive character.
Kaus favors doing that, but questions Obama’s chosen method. He argues that it would make more sense to cut high earners’ benefits with a means test than to tax them more–why cycle extra money through the program? Like Kaus, I’ve found the standard liberal position on means-testing a little baffling. Their principal objection to, say, Bush’s proposal to reduce the growth of benefits for high earners was that as they saw that the program was a worse deal for them they would support it less and political support for the program would start to collapse. Even if that were true, I wondered, how would it be any better to use taxes to make the deal worse for them? Andrew Biggs, a former commissioner for the Social Security Administration, offers an answer: Liberals might prefer raising rich people’s taxes to cutting their benefits for the simple reason that they can get more money that way.