A news article in the washington Post insists that President Bush's health care tax break, which would lead to large cuts in the Social Security benefits received by low wage workers, is progressive. It tells readers that the White House can't understand why Democrats aren't interested. As I wrote before, I question whether the plan was ever intended to be taken seriously, but one implication is that low wage workers could lose much of their Social Security income. The basic story is that the Bush plan refunds Social Security tax payments on the first $15k of wages for workers who have a family insurance policy. For a worker earning $20k a year, this would mean most of their SS taxes would be refunded, but they would also see their benefits cut by close to 60 percent when they retire. In other words, this proposal would imply a massive change to the SS system, with the greatest impact on the benefits received by low wage workers. If the Post reporters can't understand why Democrats aren't biting, maybe they need to do some more homework.
--Dean Baker
