If you closed your eyes for a minute Wednesday night during the third Republican presidential debate, you might have thought it was a debate between socialist Senator Bernie Sanders and left-wing Democrat Elizabeth Warren rather than the party of Ronald Reagan.
"What we're seeing now in America is the rich are getting richer and the poor are getting poorer. We have to go and start beefing up the middle class," was an answer that Nikki Haley volunteered in response to a question about how she'd help rural Americans squeezed by inflation. One of Haley's opponents, criticizing her foreign policy, described her as "Dick Cheney in three-inch heels," but her class-warfare answer sounded more like Sanders or Senator Schumer. Cheney, at least, knows that a rising economic tide lifts all boats, and that America is a land of upward mobility rather than a place of entrenched, permanent class divisions. Also, if you look at post-tax, post-transfer income, it's not even clear that Haley's claim about widening inequality is accurate.
Another Republican candidate, the former governor of New Jersey, Chris Christie, responded to a question about Social Security by declaring, "Rich people should not be collecting Social Security."
Haley piped in by calling for cutting back Medicare and Social Security benefits that people have paid for in their payroll taxes: "We should limit benefits on the wealthy. Bernie Marcus can tell you he hates getting that check. Limit the benefits on the wealthy."
For this we need Republicans?
Social Security and Medicare are universal programs, not welfare for the poor. That accounts in part for their popularity. Changing that would be a fundamental shift in approach, a takeaway from Americans who have worked hard, created value, saved, and become economically successful.
Neither Christie nor Haley offered a clear definition of what they mean by "rich people" or "the wealthy." Does it have to do with assets, or with income? What assets and income counts, and what doesn't? None of this is simple. If someone has lived frugally to pay off a mortgage on a primary residence off over 30 years and the residence has grown in value, the government may see them as "rich" and take away their Medicare and Social Security—in essence punishing them for their prudence. Does a retired local government employee with a pension and retiree health benefits count as "rich," or just private-sector people who saved in a 401k or IRA and now have required minimum distributions?
Experience has shown that definitions of "wealthy" and "rich" begin high and then move lower once government accountants need to come up with more money. Before you know it, those terms capture vast swathes of ordinary Americans, that is, the regular voters whose support Haley and Christie would need to win if they have any hope of getting elected president over Joe Biden or Donald Trump. What's more, what's "rich" in low-cost areas may be "barely getting-by" in more expensive areas such as coastal cities. What used to be rich may not feel so rich as inflation has eroded the purchasing power of sums that used to define a lot of money.
Once the government starts means-testing these programs, people wind up making decisions about getting married or divorced or transferring assets to their children or charitable remainder trusts to avoid looking "wealthy" to the government. This already happens with spend-downs to qualify for Medicaid in long-term care, and it's a giant hassle that enriches lawyers and accountants while serving little social purpose.
There are, in other words, plenty of good reasons that government has decided to avoid these issues by making Medicare and Social Security universal rather than means-tested programs. Medicare premiums already do vary based on income, and the income tax system is already plenty progressive, with the top 1 percent of filers earning 22 percent of the income and paying 42 percent of the federal income taxes. (The story is less dramatic if one includes payroll and excise taxes, but the basic tilt remains the same.)
Anyway, if Home Depot co-founder Bernie Marcus, who is 94 years old and seems like a wonderful American, doesn't want a Social Security check, nothing's stopping him from donating the sum to the Treasury as a gift to the U.S. government. Changing the basic Social Security and Medicare arrangements with the public to transform them from whole-society insurance programs to welfare programs for the poor is a more drastic step. It's not clear the political support or the policy rationale is there for such a sweeping change. If Haley or Christie want to sell voters on this idea, they'll need to get beyond mere rich-bashing. It's not an area in which the GOP, the efforts of the current presidential candidates notwithstanding, is going to be able to outdo the Democrats. The country would be better off if on this issue the Republicans offered voters a unifying, optimistic choice rather than a class-warfare, soak-the-rich echo.
