I've written before about how the Washington drumbeat for a "commission" to slash Social Security and Medicare is starting in earnest -- and how that commission aims to artificially skew the terms of our tax and spending debate. If/when that commission is created, you can bet those parameters will be skewed even more, as evidenced by Fortune magazine reporter Allan Sloan.
You may recall that Barack Obama campaigned on a promise to supplement Social Security revenues by lifting the cap on income that Social Security payroll taxes applies to. His proposal is eminently logical. Why should the tax apply only to income below $106,800 and not above it? Put another way, why should someone making $106,800 pay the same total amount of payroll tax as a billionaire?
But fair taxation is anathema to the moneyed class, which, of course, includes elite reporters like Sloan. At about 12:57 in this recent C-Span interview, Sloan says that those like him making six figures would basically stage a tax revolt if a plan like this was ever even considered:
Q: If the income limit on the Social Security tax was eliminated wouldn't that fix Social Security?
MODERATOR: What's the income limit right now?
A: The income limit is $106,800. Let's say you took this limit off. What you would be doing is doubling, tripling, quadrupling the tax for a whole lot of people who make more than $107,000. And if you do that you are going - for 5 minutes you'll balance Social Security. But the first time there is a conservative administration and a conservative Congress, if you have imposed another 12.4% income tax - which is what this is - on everybody making more than $107,000...To say, well you've got to pay another 12.4% and no one else has to do anything, no one else has to retire later, nobody has to take a cut in benefits, we're just going to come and take your money. People in my income class will turn against Social Security en masse and the next time there's a change in administrations you won't have Social Security.
Sloan made essentially the same point in a recent Washington Post article, insisting that lifting the payroll tax cap would be "a huge new tax to middle-class workers." Though a financial reporter whose job it is to know the basic numbers, he conveniently ignores IRS data that shows people who make over $106,800 are squarely in the top quintile of income earners -- not the "middle-class."
But that's not nearly as significant as Sloan's class-war ideology. Setting aside a discussion about whether $106,800 is a significant yearly income or not (and I certainly think it is), it's a statement of verifiable fact that Sloan - theoretically an objective reporter - is on the extreme fringe when he lambastes the proposal to subject more income to payroll taxes. As a 2005 Washington Post poll showed, a stunning 81 percent of Americans believe there shouldn't be a cap at all. 81 percent!
Sloan, clearly part of the 19% minority, is no anomaly -- he's emblematic of most of the financial and political press corps who themselves are largely in the top quintile and therefore see proposals to more progressively tax that quintile as a threat. And if those proposals are carried out in order to avoid slashing benefits or raising the retirement age, the moneyed class will declare war on everyone else. As Sloan himself says, if Obama tries to fulfill his campaign promise,* "people in my income class will turn against Social Security en masse."
Of course, if people in Sloan's income class tried to destroy Social Security, they'd face pretty stiff opposition from the other four income quintiles. But who would win that battle is less interesting than Sloan making it this explicit.
Sloan, speaking for his fellow Establishment elite, is quite publicly saying that he and his rich friends believe they are entitled to a payroll tax that lets them pay a lower effective tax rate than middle- and lower-income people. In fact, Sloan isn't just saying the rich believe they are entitled to this -- he's actually saying the rich will wage an open class war against Social Security if anyone tries to change the situation, rather than slash Social Security benefits or raise the retirement age.
That is the hubristic threat those reporting on these matters are operating from. Despite the patina of "objectivity" imparted by a Fortune magazine title or Washington Post byline, we see that many people delivering business/political news are themselves purveyors of the most extreme conservative ideology -- the kind that threatens class war whenever anyone proposes to make Warren Buffett pay the same payroll tax rate as a janitor.
* Note: Obama proposed only to additionally subject income over $250,000 to payroll taxes. So his proposal is far weaker than what the public supports.