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.