by Bruce Webb, Wed Nov 14, 2007 at 07:35:31 AM EST
Lifting the cap on Social Security is widely seen among progressives as a "no brainer. Well sorry that view is simply wrong. At least once you examine the actual numbers in play and think through the financing. Detailed arguments after the jump, the abbreviated version here:
On Policy. Raising the cap actually opens the door for privatization. Obama's economic advisor Jeffrey Liebman is pushing the Liebman-MacGuineas-Samwick Non-Partisan Social Security Reform Plan which uses a cap increase to help fund PRAs-Personal Retirement Accounts. This Plan is very worker unfriendly and predictably this is more true as you work down the income scale.
On Politics. Raising the cap simply serves to alienate potential progressives who happen to be successful. Do we really need to alienate every tenured professor, every labor lawyer, every head of a social service non-profit in the country while giving capital a pass? Raising the cap while providing no other benefit is designed as a wedge issue.
On Economics. Raising the cap actually works to weaken Social Security going forward. Taken to extremes it amounts to abrogating the Trust Fund and so stealing all of the surpluses accumulated to date. Moreover the current system is not regressive, thinking that it is is just to fall into a frame established by privatizers.