Slog News & Arts

Line Out

Music & Nightlife

« Bittergate Births a T-Shirt | Typo Hunt Comes to the Northwe... »

Thursday, April 17, 2008

What Was Really Wrong with the ABC Debate

posted by on April 17 at 11:40 AM

In the Morning News comments on last night’s ABC debate, commenter el makes the following worthwhile point:

I love this catch-all phrase “stick to the issues”, as if somewhere there were a list of the “issues” and the “non-issues”. Magically, I am back in high school and my english teacher is warning me about the “real world” as opposed to apparently fabricated world i was then inhabiting. It’s a bullshit distinction.

I agree, for the most part, and so I think it’s fine for journalists to ask Obama about his relationship with William Ayers (whose belligerent 9/11 quotes were published the morning of 9/11, when, recall it or not, we all talked about domestic terrorism quite differently) or to ask Clinton to explain why she felt the need to exaggerate the degree of danger she was in in Tuzla (after all, 58% of voters now say that she is isn’t honest or trustworthy).

But the most useful thing about a debate format is getting the two candidates into a room to compare and aggressively contrast their ideas. When the idea contained in a given “issue” is “Is this candidate honest?” or “Does that candidate keep shady company?”, you’re basically throwing away time (and this in one of the only debates that was broadcast on network television, so people without cable could watch it at home). The opposing candidate is not going to have a useful opinion on these subjects. There is no legitimate pro and con to be argued. The clearest demonstration of this fact is that Clinton voluntarily gave up speaking time at one point, and probably should have conceded her second opportunity to attack Obama on Jeremiah Wright, because it just made her sound ruthless and repetitive.

Basically, I don’t think the debate completely lacked issues, but it was noticeably deficient in debatable ideas.

That said, there were some opportunities late in the debate for the candidates to clarify the Democratic position on taxes, and they flubbed it. Obama needs to get a better answer on raising the Social Security payroll cap, which is one of the ways he’s shown he has a more progressive view of taxation.

My dream response to those tax questions would have been something like this: First, a joke about how everyone seems to see the ceiling of the middle class hovering just above their own income level. Then, stats. The median household income in 2006 was just $48,201. In affluent, expensive Manhattan, where Clinton has her offices, the median household income is just $47,030. The vast majority of people pay Social Security payroll taxes on their entire income. Everything they earn gets taxed. A lucky few individuals who personally—not as a household—earn more than $97,500 a year (that’s between 6 and 7% of the population) stop paying Social Security taxes on any income above that level. It really shouldn’t be controversial, but here it is: If you personally earn more than $97,500 a year, you’re upper middle class. You should shoulder the same burden for maintaining the social safety net as people who earn less than you do. (Here, Obama would probably say he’s open to a donut, where the additional income between $97,500 and $200,000 isn’t taxed, but then the tax kicks back in on income over $200,000. But I prefer eliminating the cap altogether.) Reforming the payroll tax wouldn’t be particularly burdensome, it would help deal with the coming generational strain on the Social Security system, and it would be fairer to the middle class, who right now are shouldering a disproportionate amount of responsibility for Social Security.

RSS icon Comments


On the payroll tax, I've been using an example to demonstrate what the ceiling really means. The example is Alex Rodriguez.

Under his new contract, his salary is $28,000,000. Which means that he stopped paying the payroll tax in the top of the 6th inning on Opening Day. Just requiring ARod to pay the payroll tax for one entire game would raise the ceiling to a bit under $173,000.

Posted by N in Seattle | April 17, 2008 11:54 AM

Thank you for addressing one of my pet peeves, the ridiculous belief that $250,000 is middle class. It is not. It's fun for everybody in America to believe we live in a classless society, but we don't.

Couldn't agree more with N in Seattle, either.

Posted by Fnarf | April 17, 2008 12:01 PM

My understanding is that if you raise or eliminate the cap, you either have to pay those people more in Social Security benefits when they retire or you have to chip away at the entitlement aspect of Social Security. That is, it ceases to become something that you pay into and get your money back later and turns into more of a social welfare program.

I personally have no problem with that. A country as large, diverse, and difficult to maintain as the U.S. must have progressive taxation, but Social Security as an entitlement is probably the only thing that has kept it immune to right wing attacks.

Posted by keshmeshi | April 17, 2008 12:04 PM

@1 has the best view. And don't forget, that's just salary - most people with inherited wealth "earn" little, but have massive expenses and property.

Face it, if you have to file AMT, you're not Middle Class either. You may think you are - but you aren't.

Posted by Will in Seattle | April 17, 2008 12:04 PM

If $250,000 is middle class, then I'm so far below the poverty line that I demand my ALL my taxes back until I make significantly closer to that number.

I (and everyone else) should get it back as an apology for the media not doing their fucking homework on a primetime, national debate.

Posted by Me | April 17, 2008 12:06 PM

oh, and keshmeshi - it's an Insurance Program, not a Wealth program - raising the cap alters the payout ZERO. It's INSURANCE against you being broke when you retire.

Try telling your car insurance firm that they need to give you more money because your premiums went up - they'll laugh in your FACE.

Posted by Will in Seattle | April 17, 2008 12:08 PM

Back when I made less that 20k and was trying to support myself, that 6% was a huge burden. I couldn't make ends meet. Now, later in life, my bf and I are both above the cap, and it's extra money that doesn't make a real difference in our lives. I think we should remove the cap altogether.

Posted by Taxpayer | April 17, 2008 12:19 PM


Soo... Its an insurance program where the people with the least risk of being broke when they retire (the ones with the best driving record as it were) should have to pay more?... Better call Geico.

(Thats not how insurance works... High risk individuals pay more because they are more likely to have a claim.)

It pains me to say it but keshmeshi is spot on (though I disagree that massive social welfare programs are no problem.)

Posted by You_Gotta_Be_Kidding_Me | April 17, 2008 12:28 PM

97,000 isn't upper middle class, its a bit beyond middle class. Sorry to have to differ with you. At that salary range one should be able to afford pretty much everything you need and have a comfortable savings on top of that.

If you don't think you have enough money at that range of salary, you're overspending and need to manage your money better, plain and simple.

Posted by Brian in Seattle | April 17, 2008 12:32 PM

97,000 isn't upper middle class, its a bit beyond middle class. Sorry to have to differ with you. At that salary range one should be able to afford pretty much everything you need and have a comfortable savings on top of that.

If you don't think you have enough money at that range of salary, you're overspending and need to manage your money better, plain and simple.

Posted by Brian in Seattle | April 17, 2008 12:33 PM

If you do away with the cap, it just becomes a massive wealth redistribution program.

If we, as a society, believe that wealth redistribution is a good thing, then lets stop fucking around and go for it!

Take off the cap, make people pay in at 100% of their income after taxes and start paying out equal amounts to everyone at birth.

Posted by You_Gotta_Be_Kidding_Me | April 17, 2008 12:37 PM

@3: Yes, as far as I understand, that would be the effect. Two things: 1) The nice thing is, it's the Republicans who are arguing that Social Security is in crisis right now. That's the way you get it through initially. 2) The tax could be structured so that say, anything from 50K to 200K (or some deviation from the mean) is strict entitlement still, but the gov't reserves the right to add and subtract some from the upper and lower reaches. I'm not sure the math would work out perfectly, but it seems like it could be basically an entitlement program and therefore unobjectionable except for people who earn obscene amounts of money--a very small percentage of the population.

Posted by annie | April 17, 2008 12:40 PM


To argue that a cap at $97,000 is wrong because that's not upper middle class implies that the cap should be at a number that is upper middle class. Which would be a number lower, not higher, than $97,000...

Posted by You_Gotta_Be_Kidding_Me | April 17, 2008 12:44 PM


You guys need to at least educate yourselves enough to know that progressive taxation is the norm. It has been the accepted, established practice virtually everywhere for centuries. Trying to label progressive taxation a "wealth redistribution program" as if people needed to gird themselves for a brave new world is simply a lie.

The truth is that flat taxes and regressive taxes are a bizarre aberration with little or no track record. Fixing the regressive nature of payroll taxes is the more cautious, prudent and conservative thing to do. Going the opposite way is too risky to try in an economy of our size.

Posted by elenchos | April 17, 2008 12:56 PM

The argument that affluent people who claim the "middle class" label have going for them is that traditionally, the middle class were regular workers--neither peasants nor landed nobility. Obviously, people who earn 97,500 on payroll stubs are, indeed, workers. But that sort of income means they're probably in the professional managerial stratum--they have more political power (hence politicians' crazy deference to their definition of "middle class") and few urgent material worries. I don't think it's particularly useful to think of them as middle class, but if they want to say "upper middle class," that's cool with me. They're basically trying to point out that they don't drink tea, play golf, and tend their stock portfolios all day while private tutors tend to their brood.

Posted by annie | April 17, 2008 1:09 PM

Payroll taxes are regressive, but the term is a misnomer because that money supports social insurance programs, the largest of which (Social Security) pays benefits mostly proportional to income. I don't have a problem with busting the cap, but I think doing so would create a political problem by undermining the notion of social insurance and replacing it with a welfare program.

The deductions from paychecks do hurt lower income Americans, which is why we need a concerted effort to raise lower incomes, through higher minimum wage and investment in green jobs. We could also make the rest of our tax code more progressive by raising the standard deduction for income tax, and then recouping the money with a carbon tax. People can reduce their carbon tax by driving less and indirectly by being more efficient about electrical, heating, and cooling use, but with a higher standard deduction the unavoidable income tax would be less for everyone, and proportionally much less for lower-income people.

Posted by Cascadian | April 17, 2008 1:12 PM

So, for reference, I looked at how Canada does it. Believe it or not, they pay much less for Social Security. They pay 5%, with an employer match of 5% (we pay 7.65% with a match). It's capped at Canada's median income (~$45000, we cap at $97000).

So how the hell do they do it?

They only pay out a maximum of 25% of the median income (~$11000).

Food for thought.

Posted by F | April 17, 2008 1:26 PM

F@17, Social Security is 6.2% with a match. Medicare is the additional 1.45%. Canada's Medicare is a full-on single-payer health care system that is not part of the 5% match for the Canada Pension Plan, their equivalent of Social Security.

So to compare, we pay 6% and they pay 5%, but our benefits are higher. It's basically a wash.

Posted by Cascadian | April 17, 2008 1:56 PM


... and their cap is lower also ...

Posted by You_Gotta_Be_Kidding_Me | April 17, 2008 1:59 PM

There's a difference though. People who make less than $97,500 will get social security back for all what they paid into.

Unless they pay back the benefits for those who make more than $97,500 this is pretty unfair. If you make $150K in the Bay Area with a family of four you're really not all that well off, and not better off than someone making $96K in Florida. But you'd be paying taxes into a social security fund that you'd never be able to get back.

But if they do pay back the benefits then it does nothing to help social security.

Posted by Andrew | April 17, 2008 2:46 PM

YGBKM - screw the cap. Remove it.

Then we have SS funded until the sun goes nova.

And the negative tax burden on the middle and working class disappears.

Again - you drive a car, you have to have insurance, no matter how rich you are. Period.

Posted by Will in Seattle | April 17, 2008 3:31 PM

plus, the reason Canada doesn't have to worry about CPP, OAS payments is everyone has health care - the biggest expense when you retire.

So, effectively, a retiree there is way better off, even with less money from CPP/OAS.

Posted by Will in Seattle | April 17, 2008 3:34 PM

More on ARod's payroll tax...

You and I pay 6.2% of our salaries into the Social Security tax; ARod pays 0.02% of his.

ARod pays the maximum payroll tax -- $6045 (6.2% of $97,500). If he was required to pay the tax for an entire game, his tax payment would be $10,716. Do you think he'd even notice that his bank account was $4671 smaller?

If ARod paid the payroll tax on his entire salary, like you and I do, his annual contribution to Social Security would be $1,736,000. That he might notice.

I have a couple of proposals for redoing the funding of Social Security. Both require decoupling the program from the usual image of an individual account composed of our accumulated contributions ... it isn't actually run that way, of course, but that's how it's often portrayed. I don't have numbers to plug in, just overall strategies. The two ideas:

1) Lower the tax rate, but apply the tax to income beyond payroll, such as interest, dividends, and capital gains. In other words, apply it to the Adjusted Gross Income instead of what shows up on your W-2.

2) A floor instead of a ceiling. Don't tax the first $X of income, then apply the Social Security tax to income above $X or between $X and $Y.

Note: These could be applied together or separately, and the rates and boundary-points would be adjusted accordingly.

Posted by N in Seattle | April 17, 2008 4:24 PM
Posted by Nick | April 17, 2008 5:25 PM

I like the floor, @23. Much better than a ceiling (cap).

Posted by Will in Seattle | April 17, 2008 5:38 PM

Comments Closed

In order to combat spam, we are no longer accepting comments on this post (or any post more than 14 days old).