LAST fall, Democrats hung the fairness issue around George Bush's neck when he pushed for a cut in the capital gains tax. It was nothing more than a tax break for the greedy rich, the Democrats said. Last week, the Republicans showed why they have nestled in the White House for most of two decades. They took the fairness issue and threw it in the faces of the Democrats by calling for changes in the way some social programs are run.
For example, the administration wants to force elderly individuals with gross incomes of more than $125,000 every year, or elderly couples with a taxable income of $150,000, to pay for most of the cost of Medicare premiums. Instead of paying a mere $31.80 of the approximately $125 monthly cost of Medicare for outpatient and doctor visits, about 500,000 elderly taxpayers would be forced to pay $95 a month. The government, meaning us the citizens, would pick up one-quarter of the tab instead of the current three-quarters.
But why should we pay one cent of the premiums? Why should retired Wall Street gurus living off stock dividends get the same health-care benefit as old ladies who eat cat food because they can't afford to buy anything else?
This change makes too much sense for it to pass without protest on Capitol Hill. Groups that speak for the elderly, like the American Association of Retired Persons, are already squawking.
But if the Democrats were smart, they would let the lobbyists squirm and go along with the GOP on this issue. The federal budget is going to be out of whack by $318 billion this year. Some domestic programs have become like Pac-Man, gobbling up the federal treasury. Already, 41 percent of federal money is doled out on direct payments to individuals.
If that isn't changed, I can't wait to see what that portion of the government pie chart will look like when members of the baby-boom generation begin to retire in a decade or two.
SOME elderly fear that, if Medicare changes, the government will take a chain saw to the way Social Security is distributed. Let's hope it happens. Social Security ought to be distributed according to income, and the sooner the better.
There is a tremendous sense of entitlement among most retired people regarding Social Security because they figure, with some justification, that they paid for their pensions.
But what present retirees put into the system was generally much smaller than any benefit they reap.
In the first 13 years of Social Security - from 1937 to 1949 - only 1 percent of an individual's paycheck was deducted up to a maximum of $30 a year. A person who worked from 1937 to 1980 and had the absolute maximum payments deducted from his salary every year still would only have shelled out a total of $1,790.94 in Social Security payments, according to the Social Security Administration. That would be recouped during the first 18 months of retirement.
Those were the days. The Social Security tax has gone up eight times since 1977. Now the bite out of workers' paychecks exceeds 7 percent. The maximum deduction taken in a year is more than $3,000. And many people, especially those of low income, pay more in Social Security deductions than in federal income taxes.
Few workers under the age of 40 believe that Social Security will support them in retirement. There will be too many depending on the same system. By 2025, some projections say, there will be one retiree living off Social Security for every two workers. It's a fiscal time bomb.
So if the Democrats were smart, they would see the handwriting on the wall. If rich people don't deserve a capital-gains break, it seems hard to justify soaking middle-income taxpayers to pay the tab for health-care premiums or retirement pensions of the wealthy.