The Grabbing Hand

By Ross Douthat

This strikes me as a rather odd argument from Michael Kinsley. He notes that as of 2004, the typical American couple aged 65-74 had accumulated a net worth of $691,000. He further notes that many of these couples will die well before they've spent their way through their nest egg, "passing hundreds of thousands of dollars on to the next generation in their wills." Then he points out that at least some of the money these well-heeled retirees pass on to the heirs will come, not from their own savings, but from Social Security and Medicare - which "are supposed to be insurance against the perils of old age," rather than "gifts or subsidies to the children of retirees." Which leads him to this conclusion:

... if our elderly woman dies with $691,000 in the bank, it's evident that she didn't need the government money to pay for her health care or to avoid plunging into poverty. She wasn't lying or cheating--she might have been legitimately worried--but her worries turned out to be unnecessary. And society, having kept its promise to her, should get at least part of that money back. Oh, yes, designing a system to achieve this would be a nightmare--maybe impossible. The incentive for old folks to squander their savings would be enormous. Maybe it can't work. But the point is worth keeping in mind as we enter President Obama's "new age" of "hard choices."

Maybe I'm missing something, but isn't Kinsley's premise just an argument for the well-worn but nonetheless-correct idea that we ought to keep entitlements solvent by means-testing them? And if that's so, why in God's name would you possibly want to devise some sort of cumbersome system in which "society" (i.e. the government) reclaims unspent Social Security checks after a retiree shuffles off this mortal coil, when you could just cut smaller checks to well-off retirees in the first place? With means-testing, people would pay Social Security taxes, and then be paid benefits proportionate to their ability to support themselves in old age. With Kinsley's system, people would pay Social Security taxes, be paid benefits once they retire, and then have those benefits reclaimed, somehow, after they die, to be re-spent on other worthy causes. In other words, the government would take your money, give it back to you, and then take it back again, this time permanently, if you don't spend it before you die. Which approach sounds more efficient and reasonable to you?

I understand that means-testing is anathema to many liberals, who want to keep the "middle class" in middle-class entitlement, lest public support for the system erode.  (And not, of course, because they have an ideological bias toward bigger government - perish the thought!) But Kinsley isn't one of them: He even argued for means-testing in the midst of great liberal freakout over Bush's Social Security reform package. So why would he trade an idea that makes all kinds of sense for an idea that's at once cockamamie and unworkable? It can't just be for the sake of having something new to say about the issue, can it?

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