On Means Testing

My piece on Marco Rubio’s plan to reform Social Security yesterday drew a reaction from some on the left, in particular with regards to means testing. Rubio proposes increasing the growth rate of benefits for poor seniors and decreasing it for rich ones. It isn’t a direct form of means testing, but it does change the program in a similar manner. In the article, I argued that it would strengthen Social Security and that means testing would do so as well. (When I use means test here, I’m referring to using different benefit levels, not a cutoff test as is often proposed.) There are two parts to this debate: policy and politics—and they impact each other.

Policy

The first question is whether you would means test Social Security benefits in a perfect world. In other words, if you could set up the federal government to your exact specifications, would it include means testing? I think it would. I believe the federal government should marshal its resources to help those at the bottom of the income distribution. It does not need to do anything for those at the top. There are certainly situations where government policies will benefit those at the top in order to correct market failures, but our tax and transfer system should focus on those at the bottom. If I’m given the option of giving the rich unnecessary retirement funds or not doing so (regardless of how those funds could be usedslightly lower taxes or increased spending on the poor), I would choose against it.

There are also some labor effects. If we began means testing Social Security, the rich will alter their work decisions. Some may choose to work more to make up for the lost benefits, others less since they will collect more in benefits as their income drops. It’s unclear which of those effects dominates, but I’m not particularly concerned that it will cause a sharp drop in labor force participation.

Politics

Of course, means testing wouldn’t happen in my theoretical policy world. It would happen in the real world where politics play a big role. Jesse Myerson put the liberal fear succinctly on Twitter: “Means-testing programs make them politically vulnerable, thereby *weakening* them.” I generally agree with that statement. Paul Ryan’s Hammock Theory of Poverty would have much less support if we had a universal basic income. But my inclination is that this political fear does not exist with Social Security for a couple of reasons.

First, I don’t really buy the Matt Yglesias theory that elites hate Social Security because they want everyone working. It’s impossible to prove this one way or anotherif elites do hold that belief, they aren’t going to come out and say it. But I believe the right to a comfortable, non-impoverished retirement is almost universally held in America. Even elites have grandparents and even they see that, at some point, their grandparents deserve to retire.

Secondly, seniors are a hugely important voting block for Republicans. The GOP won’t even propose using chained-CPI to change the inflation adjustment for Social Security benefits. Not that I support doing so, but the Republican refusal to do so shows their hesitance to support cuts to Social Security of any kind. Even Rubio doesn’t propose full means testing, just a change to the growth formula. In order for Republicans to apply the same “moochers vs. makers” framework to Social Security benefits, they would have to openly argue that they want seniors working more. It’s hard to imagine any situation where that’s a smart political position.

Thirdly, while Social Security’s funding problem is based an arbitrary accounting distinction, it’s a real political problem. Policymakers are going to try to find a way to close that funding gap and the larger that gap is, the more likely benefit cuts will be on the table (such as through chained-CPI). The longer that the Social Security trust fund stays solvent, the lower the chance that policymakers settle on some type of benefit cuts that also hurt low-income seniors. In that sense, means testing does strengthen the program by increasing the time until the trust fund runs out of money.

Finally, if we did means test Social Security, Republicans would have to give their assurances that they have no intent to cut the benefits for poor Americans. They will have to promise to continue treating Social Security as an entitlement program, and not as welfare. That may be a false promise, but that will also be a tough political position for Republicans to take.

For all those reasons, I have trouble seeing how means testing Social Security actually makes it politically vulnerable. Now, I wouldn’t just propose it either. It’s something Republicans want and can be used as a bargaining chip. But it’s also a smart policy idea. If Democrats could trade it for an increase in the EITC or using CPI-E to adjust Social Security benefits (once the BLS perfects it), that would be a win-win.

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2016 Republican Hopefuls Must Show Their True Stripes

I said I wasn’t going to post on Syria today, but I couldn’t help myself. This is just a quick one on the politics of it.

Matt Lewis has a smart post today noting that Rand Paul benefits the most from a vote on a strike on Syria. After all, the junior senator from Kentucky has already declared himself as an anti-interventionist (or, not pro-interventionist) and he can simply continue to lead that group. For others though, this vote will force them to choose sides. The New York Times‘s Jonathan Martin notes the difficulty of the situation:

But the Syria measure also has important implications for the 2016 Republican presidential contest. White House hopefuls in Congress will be forced to choose between the wishes of Tea Party activists opposed to a strike and the wishes of more traditional Republicans, whose ranks include some major donors and Israel supporters with whom presidential candidates typically align themselves.

And as the hawks are aware, a “yea” vote on taking action in Syria would put potential opponents of Mr. Paul, like Senator Marco Rubio of Florida and Mr. Cruz, on the same side as Mr. Obama.

This is a serious topic obviously and has grave implications for the Middle East and U.S. foreign policy. But, it’s also one of the first legislative battles in a while that forces Congressmen to do more than just stick to their side. It’s not President Obama vs. Speaker Boehner. It’s not Senate Democrats vs. Senate Republicans. For once, the entire focus is on doing what is best for the country. Of course, it’d be better if Assad never used chemical weapons and we didn’t have to debate whether to go to war with him. But it also would’ve been nice to not have to debate raising the debt ceiling or sequestration. In the midst of those crises though, partisan politics prevailed. This one is different.

It’s about time that Rubio, Cruz and other 2016 hopefuls had to support a policy on its merits, instead of for political reasons. Rubio deserves credit for sticking with immigration reform and pushing for its passage, but he also walked a tight line the entire time, worried about how his support for the bill would play with the Tea Party. As for Cruz, he’s spent his first nine months in Congress opposing everything the President has done. That’s it. It’s time that he had to face tough questions and do more than repeat the angry Tea Party talking points. The politics of voting for or against a Syrian strike are very unclear. That means that everyone in Congress will get to look at the entire situation and decide based on pure policy grounds what they believe is the best strategy going forward. Politics, for once, will be almost entirely absent from the conversation. It’s about time Congressmen voted for what was in the best interests of America, instead of their own.

The Trouble Securing the GOP Nomination for Senate Republicans

Ed Kilgore, Josh Marshall and Kevin Drum each had posts today basically declaring Marco Rubio’s (R-FL) 2016 presidential aspirations dead after immigration reform has stalled in the house. Marshall says so defiantly. Kilgore believes that, after “settling” for candidates that were too moderate in 2008 and 2012, the Republican base will stay away from Rubio in ’16. Drum agrees, but adds that Rubio is young and has potential in 2020 and 2024.

I agree with all of that, but I want to expand the scope of this beyond just Rubio. Every senator with presidential aspirations – from Rubio to Ted Cruz (R-TX) to Rand Paul (R-KY) – is going to face the same critique from the general public: you haven’t done anything.

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Rubio’s 2016 presidential chances are falling.

It’s well known that Americans disapprove of Congress by large numbers. They also blame both sides for the gridlock, although the GOP gets slightly more of the blame in most polls. This presents a big problem for Republican presidential candidates over the next couple of years. How can they continue obstructing the Senate without continuing to seem like they’re the ones to blame? Rubio has seen over the past few weeks what happens when a senator steps across the aisle and tries to accomplish anything. Whatever passes the Senate is unacceptable to House Republicans, who are content to let the legislation die. Now Rubio faces the wrath of the base without anything to show moderates or Hispanics. That’s why Kilgore, Marshall and Drum have dug a grave for his 2016 presidential ambitions.

But Paul and Cruz are going to be expected to do more than shoot down every piece of legislation. Dave Weigel summed up Cruz’s six month in office today and his only accomplishments are disrupting lawmaking:

“That’s the story of Ted Cruz’s strategic acumen in the Senate. The paradox is that the theatrics that completely backfire in D.C. are embraced by activists in the bright world outside.”

We’re only six months into Cruz’s Senate career and it’s easy to rouse the base by refusing to compromise at the beginning. But at some point, most voters are going to want to see Cruz actually try to pass a law. The current Ted Cruz could certainly win the Republican primary, but he wouldn’t have a chance in the general election, because he won’t appeal to independents whatsoever. Three and a half more years of obstruction will just turn them off more.

That’s Republican senators’ problem: anyone in Congress will have trouble winning an election in 2016. It’s a lose-lose proposition for Republican Senators. If you support major legislation, help it get passed with bipartisan support and thus prove to moderates you’re willing to compromise, then the House will kill the bill (preventing you from taking credit), the Tea Party will withdraw their support and you will lose in a Republican primary. If you don’t support any legislation and just spend time arguing against all proposed policies, then independents will see you as an obstructionist who can’t govern. You’ll have Tea Party support, but moderate Republicans will be wary of your electability. If you do survive a primary, the Democratic candidate (likely Hilary Clinton) will beat you in the general election.

Rubio will top the list of 2016 Republican presidential candidates if immigration reform passes, but it’s unlikely it will. He took option one and lost. Cruz and Paul are eventually going to have to make a decision as well. Will they contribute to any policymaking and attempt to endear themselves to independents looking for compromise? Can they find a piece of legislation that is worth risking Tea Party support? Or will they continue to obstruct everything in the Senate, fight for support of the base and worry about pivoting in the future? That’s what makes any Republican congressman’s presidential campaign (pre-campaign in this case) so challenging. Anyone from the Senate faces structural political challenges that are nearly impossible to overcome. Rubio has already been taken down by them. Who will be next?