Today two Washington Post columnists offer solutions to the problem of Social Security’s solvency.
Bush has refused to put his own tax cuts on the table as part of a Social Security fix. Repealing Bush’s tax cuts for those earning more than $350,000 a year could cover all or most of the 75-year Social Security shortfall. Keeping part of the estate tax in place could cover a quarter to half of the shortfall. Some of the hole could be filled in by a modest surtax on dividends or capital gains.
But Bush is resolute about protecting the interests of the truly rich by making sure that any taxes on wealth are ruled out of the game from the beginning. The Social Security cuts he is proposing for the wealthy are a pittance compared with the benefits they get from his tax cuts. The president is keeping his eye on what really matters to him.
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.
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.
I say we should do both. Raise the cap to ensure Social Security’s future and roll back Chimpy’s tax cuts for the rich in order to fund universal health care.