Skip to Content.
Sympa Menu

homestead - [Homestead] Social Security, Day Two

homestead AT lists.ibiblio.org

Subject: Homestead mailing list

List archive

Chronological Thread  
  • From: Gene GeRue <genegerue AT ruralize.com>
  • To: "homestead AT lists.ibiblio.org" <homestead AT lists.ibiblio.org>
  • Subject: [Homestead] Social Security, Day Two
  • Date: Tue, 03 May 2005 09:46:15 -0700

Social Security, Day by Day

By Richard Cohen

Tuesday, May 3, 2005; Page A21

This column is about Day Two. Day One is the first day of the work year. On that day, the average American worker earns about $142.31 and, of course, has a piece of that withheld for Social Security. Since the cap on such payments is $90,000 a year and the average American earns only $37,000, he or she pays Social Security tax all year long. Now we come to Day Two. For some people, it's not like Day One at all.

A couple of those people happen to be Tom Freston and Les Moonves. They are co-presidents of Viacom, the entertainment conglomerate that owns CBS and Paramount Studios. Last year they each took home more than $50 million. Of that, about $20 million was in salary and bonuses (I'm rounding like crazy here), which means that if they get paid for 52 weeks a year and work a five-day week, they earned about $77,000 on Day One. By, say, 10:15 in the morning of Day Two, their Social Security obligation was behind them.


I give you these data so you will see what suckers we Americans are. Here is the president of the United States, a certain Mr. Bush, attempting to sell us a revision of the hallowed Social Security program -- FDR, Warm Springs and all that -- that would reduce benefits for many of us while at the same time ruling out any increase in the cap. The cap would stay where it is, about $90,000, because to raise it would mean a tax increase, and it is dogma in the Republican Party and the White House that such a thing must not be done. Instead, taxes must only be reduced, which they have been under George W. Bush. To refer back to Freston and Moonves, had they been in the money back in, say, the 1980s, their marginal tax rate -- the rate paid on anything over the first couple of hundred thousand dollars -- would have been 50 percent. (It's been as high as 94 percent.) It is now around 35 percent. Not bad. Not bad at all.

It just so happens that I think George Bush is doing something interesting with Social Security. The program does need to be fixed or recalibrated or something, and he has had the guts to take it on. Moreover, I kind of like the idea of personal investment accounts if funding them does not weaken the overall program or add to the nation's incredible debt. After all, there is something to be said for expanding the number of American worker-capitalists and having a nest egg an heir could inherit, or one that would not be eliminated by death. The idea is not all that radical, after all. It's being done in other countries -- Australia, Sweden, Chile, Britain.

Whatever the merits of personal investment accounts, they would do nothing to alter the dismal math of Social Security projections. But raising the cap would. Why $90,000? Why not $140,000? Better yet, why not raise it to $140,000 and then raise it to confiscatory levels on obscene payments such as Michael Eisner's $575.6 million back in 1998 or -- brace yourself -- the $105,000 Moonves got for using his own home in New York rather than a hotel or the $43,000 Freston got for spending time in his place in Los Angeles. (Moonves is based in L.A.; Freston is based in New York.) Somewhere, ladies and gentlemen, is a CEO who's angling to be paid for sleeping with his wife. It's just a matter of time. Get mad, people. Get mad.

But we don't. Instead, Washington can somehow discuss reducing Social Security benefits when all across America what used to be called Fat Cats are laughing up their sleeves at what they're getting away with and Bush will not even consider raising the cap. But if he did, it would by itself go a long way toward fixing the looming imbalance in the Social Security program. That's good. And so is making everyone pay his fair share, restoring the sense that the more you make, the more you owe others. [A value that is not shared by all.]

A deal can be made on Social Security. If Bush raised the cap, the Democrats could permit some sort of move toward private accounts. Both objectives make sense. What matters is not ideology or political advantage but a dependable retirement for the average American. Bush should take the first step. All it takes is making Day Two more like Day One.

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/02/AR2005050201261.html






Archive powered by MHonArc 2.6.24.

Top of Page