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[Gene GeRue <genegerue AT ruralize.com>]

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