Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, March 29, 1993 TAG: 9303290423
SECTION: EDITORIAL PAGE: A4 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Further, he says, he's not going to bend on the issue according to how it plays in the polls.
That's commendable - and refreshing.
While meeting with this newspaper's editorial board the other day, Miller himself raised the topic. Head of the federal Office of Management and Budget during the Reagan administration, Miller scoffed at Clinton's labeling of proposed tax increases on Social Security benefits as cuts in spending.
But he said some sort of thoroughgoing means-testing of Social Security is needed.
He called Social Security a giant Ponzi scheme, in which money paid in by later investors is paid out at artificially high rates to earlier investors.
If this weren't a government program, he maintained, it would be illegal - a fraud. And unless radically reformed, the system is destined to fail and to set off intergenerational warfare.
There is much in what Miller says. In fact, Social Security is not a self-financing trust fund, but a collection of IOUs that future governments must fund when workers reach retirement age.
(Miller said confusion on this point has risen to the highest levels; he recalled not being able to persuade Ronald Reagan, when he was president, to admit that Social Security is not self-financing.)
In fact, current retirees receive significantly more back from the system than they contributed to it - even when employer contributions and interest are included.
This will not always be so. The Congressional Research Service estimates that by 2030, the average retiree will have to draw benefits for 18 years to get back what he and his employer paid into the Social Security system, with interest. In 1980, that took only 2.8 years.
To address such problems, Miller is suggesting a tough solution: A worker should get back everything he and his employer put into it, with interest - but not more, unless he meets a means test.
Miller had not worked out a detailed plan, but he tossed out, say, an annual income of $20,000 as the point where benefits might start dropping off on a sliding scale. Those with higher incomes would get progressively lower benefits.
It's a pretty gutsy proposal for a politician. Unfortunately, Miller then goes squishy. The means-testing probably should not apply to current recipients, he said.
Why not?
People now on Social Security quickly get back any investment they have made in the program, and more. It is future recipients whose benefits are at risk. If equity is a problem, why shouldn't current beneficiaries be part of the solution?
We know why, of course: politics. Means-testing for current recipients would involve sacrifice for many in a vocal, politically powerful interest group. It's easier to lower expectations of future recipients than to take away something current beneficiaries are accustomed to getting.
Miller didn't mention it, but another problem with means-testing is the additional bureaucracy it would require. For now, Clinton is on the right track in proposing to slow the rise in entitlement spending by raising the level of benefits subject to taxation. But that is no long-term solution.
Social Security's soundness remains an open question. Miller is talking about it. Other politicians should, too.
by CNB