The Cap on FICA Contributions

One December in the earlier 1990s — while I still was getting paper paychecks instead of direct deposits — I looked at my paper paycheck and discovered my net salary was higher than expected.  When I received my second December paycheck, my net was even higher.  I pulled out some earlier pay stubs, and discovered the difference resulted from reduced FICA contributions.  Thanks to a good union, years on the job, and earning enough extra post-graduate credits, I'd gone past the cap on Social Security contributions.

January came around, and my net pay went down again.  I remember thinking, back then, that if my pay hadn't gone up in December, I wouldn't have noticed.  So why was there a cap on FICA contributions?  Frankly, it didn't seem fair.  It was a regressive tax.

Right now, the FICA cap is a bit over $114,000.  To me, that sounds like a pretty high income for one worker, and I doubt that if those making $120,000 didn't get their December "bonus," nor if those making over $250,000 didn't get their October through December bonuses, they really would have paid much attention.  I guess those making seven million would notice because the $434,000 they owed all would come out of their first paychecks of the year, so they'd get only about 150 grand for January, and to which I say, tough shit.

Eliminating the cap would make Social Security solvent, with no "chained CPI" needed.  Even if we increased maximum Social Security payments to those who paid more, it would work.  A "sliding scale" for the super-rich would make it work even better.  If Jaimie Dimon collected five or six grand a month in Social Security payments, it wouldn't make a hell of a lot of difference to the rest of us — nor to Jamie Dimon.

Will somebody please slap Obama upside the head and knock a little sense into him?  Michelle?

Compromises

The chained consumer price index, as a measure of inflation, makes a certain amount of sense.  It certainly is true that consumers will substitute cheaper goods for more expensive goods when prices increase.  Old people like me, whose Social Security payments are not the greatest part of our income, can cut back from shell steak to pork tenderloin; or from 85% lean chopped meat to 70% lean chopped meat; or from fresh asparagus to canned string beans.

The substitution effect makes sense, up to a point.  If you're already eating cat food as your primary source of protein, what in hell do you substitute?  People actually trying to live on Social Security cannot survive a chained consumer price index.

If Social Security were means tested, I could survive it — but if it were means tested, Social Security would be eroded down to nothing.  Nobody really gives a shit about the people who depend on it for their survival.  The most important thing about Social Security is that everybody gets it, so even rich people get it (and generally more than poor people do.)

So, if a "grand bargain" comes about, and it includes a chained consumer price index, you should be aware that Obama has sold you out to the fucking plutocrats.  Okay, he's looking for a deal.  I don't care.  We don't need a grand bargain.  We need justice.