"Skepticism is the chastity of the intellect" may seem a bit quaint in the age of Paris Hilton and Anna Nicole Smith, but I think it is a useful maxim for those assigned the dull and decidedly unsexy task of conducting monetary policy.

Regarding: "Social Security for the Well-Off:", "Medicare for the Well-Off:","Higher Education for the Well-Off:"

A "Libertarian Economist" should know better. These are essentially the same arguments that are made for higher marginal tax rates, and would have all of the advantages and disadvantages of a more steeply progressive income tax system. From a worker lifecycle point of view, payroll taxes paid are offset by benefits received. Reduced benefits for the "well off" would be the same as enacting a progressive tax. Collecting payroll taxes without returning benefits would exact a form of punishment those who responsibly save and invest their own money over a lifetime. The "well-off" already contribute disproportionately into the payroll tax scheme, particularly for Medicare, which has no income cap on contributions.

Corey Snow

Another problem with means-testing is that it does away with the selling point that "this is a program to benefit everyone", and the program loses any support it had from those means-tested out of it.

Pete Madsen

You must have "gone native" if you think their is anything libertarian associated with Jeff Miron's proposals. Social Security and Medicare are middle class entitlements and serve folks with incomes from maybe $30,000 to $200,000 (that is middle class in Washington DC). Libertarians would oppose both programs. Supplemental Security Income and Medicaid serve the truly needy. Of course, real libertarians are rare and few people believe these programs should be abandoned. Mend them, not end them is a reasonable policy position. Social Security is viable into the indefinite future with the across the board benefit cuts mandated by law and Medicare only needs a little help from the market (managed care).

Miron is simply spouting liberal propaganda when he claims "means testing" these programs is a policy everyone can agree on. What he is really proposing is a substantial tax increase on the most productive citizens in America who have based their retirement planning on promises of the government to provide health care and an income floor for their old age. While Bill Gates, John Kerry and possibly Professor Miron may never miss the money, the bulk of the beneficiaries are counting on some payments in exchange for their 40+ years of Social Security contributions. (Doesn't truth in advertising require Miron to mention cut-offs for his proposal, none made it into the press stories.)

And his attack on the State college system is particularly disingenous. Everyone knows Harvard and the other elite liberal schools serve the rich and the poor, while the middle class students often go to premier state colleges like University of Virginia. His suggestion that these middle class parents should pay Harvard tuitions at State schoools is extremely insensitive to a put upon economic minority group. I'll suggest we repeal the tax exemption for college endowments and have Harvard pay corporate income tax on their earnings. And maybe cut costs by mandating Harvard professors teach as many classes as community college teachers. If I had more time, I could add further suggestions.

Please in the future, limit the use of the word libertarian to truly libertarian positions. Miron is just one more socialist.

Malcolm B. Coate

Miron's ideas made me think the second letter of his last name should be an "o."

Social Security is already means-tested twice. First, upper-middle income people get less income replacement in retirement than those with lower middle incomes. Someone earning 25 grand might get a 12 grand benefit at "normal" retirement, while someone making 60 grand will get about 18 grand -- 50% more, even though he put twice as much into the system. That's classic means-testing. Then, upper middle and upper-income Social Security recipients have to pay income tax on either 50% or 85% of their Social Security benefits, while those who rely mostly on Social Social Security alone for their retirement sustenance pay none.

Medicare is already seriously means-tested. 2.9% of a every single dollar a person earns (the 1.45% for both employer and employee) goes into the system to pay for the same benefit i.e., a certain level of medical care in retirement, regardless of what your working-years income was. The rich guy making a million a year is paying 20 times as much to get that fixed benefit as someone making 50 grand a year. Forcing someone to subsequently not get the benefit or to pay more in the form of higher deductibles and copays can only be seen as unconscionable piling on.

College tuition is already ruthlessly means-tested to the point where a Tulane University president once bragged to the rough effect that it was income redistribution at its finest. Only the poor have access to the vast majority of grants (Pell, etc.). The "Expected Family Contribution" calculation is rigged against people who have higher incomes, and who save and invest. The pricier schools even dig deeper than the feds do into parents' finances to make sure that no source of wealth that "should" be expended on college is missed.

Like I said, I'm not sure that TCS Daily spelled Miron's last name correctly. I'm so fired up about the weakness in those three ideas that I'll probably burn three posts this weekend on them.

Tom Blumer

Rod Selem

If these letters from readers demonstrate anything it is the failure of the Libertarian argument. The crux should be individual rights yet Libertarians, lacking a clear and integrated philosophical system, tend toward the pragmatic. So really is it any wonder that most of those letters were quibbles on who should get what, yet again? One utilitarian argument is as good as another. The only reason required for cutting government programs is an ethical one based in individual rights, and that, crazy as it may seem, is the hardest sell of all. It must be done, clearly and without equivocation, or nothing will ever change.

"Taxation is, by far, the single most effective tool against smoking," said Health Commissioner Thomas Frieden. "It is now more critical than ever that New York State grant New York City the authority to raise the city's tobacco tax." Health officials say that if the city is allowed to add another fifty-cent tax, 10,000 people who would have died of smoking-related illnesses will instead be saved."

... the claim that government expenditure cannot be cut is dead wrong. I offer here a list that Democratic economists should embrace. The numbers after each item are the approximate annual savings in 2006 dollars.

Agricultural Subsidies: Everyone's favorite whipping boy, and for good reason. These subsidies are a handout to rich farmers, and they raise food prices for everyone. $20 billion.

Social Security for the Well-Off: Social Security is not means-tested; people with substantial retirement income get full benefits. This is insanity; recipients did not "save" the benefits they receive; these benefits come from taxes paid by current working generations. Cut Social Security expenditure, say, 20% by introducing a modest degree of means-testing. $100 billion.

Medicare for the Well-Off: Same deal as with Social Security. Raise premiums, deductibles, and co-pays in a means-tested manner to save 20% of current expenditure. $60 billion.

Higher Education for the Well-Off: State governments currently operate colleges and universities in a manner that makes no distributional sense. Children of millionaires pay the same highly subsidized tuition as children in poverty. State governments should emulate the private sector by setting a high tuition rate and then offering discounts on a means-tested basis. $50 billion.

Pork: Although many "bridges to nowhere" are small potatoes, the number of potatoes is large. A recent accounting by Taxpayers for Common Sense estimated 2005 earmarks at $24 billion; most of this is pure pork. Adding big ticket items like manned space flight, Amtrak subsidies, mass transit boondoggles like the Big Dig, senseless flood control projects undertaken by the Army Corps of Engineers, and subsidized disaster insurance, not to mention state and local pork, would easily yield substantial savings. $70 billion.

The grand total from this list is $300 billion annually, roughly the deficit projected for 2006.

Update... Reader Gordon Haave doesn't think it's this simple.

Miron's checklist is problematic: 1. By means-testing Social Security, you would have an admission that it is not in fact a real retirment program and that the money that one contributes to Social Security is not in fact invested in an account for you. It is this myth that keeps social security alive. This is why the Democrats aren't screaming for means testing social security. It might threaten the whole program.

The same deal basically exists for medicare. There is of course no trust fund. By means testing it, the wealthy will say "But what about what I put in the trust fund". The answer to which is that the trust fund is on paper only.

Children in poverty do not pay the same tuition as children of millionaires. Higher education is the greates price discrimination industry that there is. The colleges claim that there is one tuition rate. Then, they get your parents tax returns and figure out how much you can pay. That is what they charge you. The federal government should simply get out of the higher education business, and the tuition rates will come down. Take Harvard for example: Their endowment is large enought that they do not even need to charge tuition. Why do they then? Because much of it is paid for by the government. They would lose that money if they didn't charge tuition. If the government did not interfere in the tuition marketplace, Harvard would cut tuition if not eliminate it.

Of course they don't want to cut pork. But we all know that.

The deal made with the American people back there in the 1930s was that you paid into Social Security and you got something back from it when/if you made it to age 65. It was never intended to be a "means-tested" program, i.e., welfare. It was supposed to provide a floor of income in a day when individual and company retirement plans were almost nonexistent. In fact, the first Social Security recipients had paid nothing into the program; they simply had fulfilled the requirement of having lived long enough and having worked the requisite number of quarters.

With good reason, the Congress has preserved, more or less, the basic structure of the Old Age portion of Social Security. Where the original recipients' payments were tax-free (it was considered to be an insurance indemnification) we recipients of the Old Age benefit nowadays pay taxes on the benefit, so Congress has changed the benefit from an indemnity to a pension payment.

Miron also neglects the other three aspects of Social Security: the Disability portion, the Survivor Benefits portion, and the Medicare portion. Do you think Medicare is any less a drain that the Old Age benefit?

Things have change for the better in the last seventy years or so. No Kidding! Congress should take action to adapt Social Security to our modern age, but turning it into a welfare program isn't a bright idea.

Is the humor intentional in naming Jeff Miron as a libertarian? Means testing sounds egalitarian to me. i.e., lefty.

Dear Public Editor,

In your June 8 editorial on the flag burning amendment, you write: "Supporters of the amendment cannot point to a single instance of anti-American flag burning in the last 30 years."

But a simple Google search turns up an October 2001 flag burning incident at Amherst College. Protesters doused flags with gasoline, ignited them, and chanted anti-American slogans.

I hope you will correct this factual error. The Amherst College news release about the flag burning can be found here: [link]

Sincerely,

Ethan Davis

---

Dear Mr. Davis,

Thank you for your messages and for your patience. The editorial and Op-Ed pages are not within this office's purview except for monitoring factual erros [sic]. The example you provided does not seem to qualify as an error because the editorial says that "supporters" of the proposed amendment cannont [sic] point to a single issue of flag burning, not that there have been no instances.

Sincerely,
Michael McElroy
Office of the Public Editor
The New York Times

Update 2... reader Joe Reed has caught the Times red-handed:

Michael McElroy claims that "The example you provided does not seem to qualify as an error because the editorial says that 'supporters' of the proposed amendment cannot point to a single issue of flag burning," and he is wrong. The Citizens Flag Alliance, "a broad-based, nonpartisan, nonprofit, national organization, which was formed to persuade Congress to pass a constitutional amendment that would return to the American people the right to protect their flag," has an extensive list from 2005. They're unfortunately not hyperlinked to news articles, but they do list dates and sources.

Besides being an obvious mischaracterization of the editorial's intent, the fact is that it said "cannot" not "did not"! "Cannot", of course, means that it would be impossible for them to point out an instance, not whether they actually did or not.

Thanks to reader E. M. Schulze for the link.

Posted by Donald L. Luskin at 3:50 PM | link  

Posted by Donald L. Luskin at 3:44 PM | link  

Posted by Donald L. Luskin at 1:16 PM | link