The interesting politics of social security
I was discussing a popular Democratic talking point with one of my buddies ("Bush's social security plan is bad because its cuts benefits for 70% of workers") which uncovered an interest fact about SS. The FICA tax cap (which kicks in at $90K) limits the amount rich people contribute to SS, but this also limits the amount that rich people take out of SS. Someone who makes $1M a year puts in, and gets out, exactly the same amount as someone who makes 10 times less. (See details here.) This means that you cannot soak the rich to save social security (at least, not in terms of benefit cuts) because the rich don't participate much in the system -- they don't put much in and they don't get much out. In essence, social security transfers money from young, middle class working people to old middle class working people. If you are going to cut benefits, you need to cut them for the middle class.