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"America has two great dominant strands of political thought - conservatism, which, at its very best, draws lines that should not be crossed; and progressivism, which, at its very best, breaks down barriers that should never have been erected." -- Bill Clinton, Dedication of the Clinton Presidential Library, November 2004

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Saturday, August 09, 2003


Social security reform

posted by Aziz P. at Saturday, August 09, 2003 permalink View blog reactions
Dean Nation citizen Dwin ties together Dean's stated social security reform goals with one proposed by Robert Reich, into a potentially devastating combo:

[Dean] has already stated that he would try to fix social security by removing the cap on maximum amount of income subjected to the tax. Currently that amount is $87,000. After you make $87,000 you cease paying the 6.2% social security tax. What this basically does is make it so employment taxes operate on a regressive system, where the marginal tax rates for those under $87k of income is greater than those over. And the farther you are over the cap the lower your marginal income rate on employment taxes.

If Howard Dean implemented a plan that removed the cap, it would effectively be a tax increase on those making over the cap amount. Which sounds bad until you think that this would make employment taxes like a flat tax as opposed to the regressive system we have now.

The only problem with this idea is it will be spun into a massive tax hike by the right. The way to avoid this is to follow an idea proposed by former Clinton Labor Secretary, Robert Reich. He proposed that in addition to removing the cap we should exempt the first $10k of income from Social Security taxation. This would in effect give a tax cut to all those under $100k of income and a tax hike to all those above that level. His plan would reform the social security system, changing from a regressive system to a progressive one.

This is brilliant. As Dwin points out, this "double whammy" achieves two goals: 1. it raises revenue for Social Security, which is the most important goal to keep it afloat (and which might defuse the retirement age flap). 2. It actually reduces taxes on the majority of the population, insulating Dean from any "tax and spend" accusations (and emphasising the servitude of Bush to the upper class).

But Social Security reform shouldn't stop there. What other ideas are out there for reforming Social Security? (I recall reading that there was some kind of verification requirement once, but this was abolished by Reagan. Anyone know what that's about and whether it could be meaningfully repealed?).


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About Nation-Building

Nation-Building was founded by Aziz Poonawalla in August 2002 under the name Dean Nation. Dean Nation was the very first weblog devoted to a presidential candidate, Howard Dean, and became the vanguard of the Dean netroot phenomenon, raising over $40,000 for the Dean campaign, pioneering the use of Meetup, and enjoying the attention of the campaign itself, with Joe Trippi a regular reader (and sometime commentor). Howard Dean himself even left a comment once. Dean Nation was a group weblog effort and counts among its alumni many of the progressive blogsphere's leading talent including Jerome Armstrong, Matthew Yglesias, and Ezra Klein. After the election in 2004, the blog refocused onto the theme of "purple politics", formally changing its name to Nation-Building in June 2006. The primary focus of the blog is on articulating purple-state policy at home and pragmatic liberal interventionism abroad.