The further to the left or the right you move, the more your lens on life distorts.

Tuesday, February 02, 2010

Helping Hef

The electorate wants meaningful spending reductions in the Federal budget, not the insultingly cosmetic “freeze” (addressing 1 percent of budgetary expenditures) suggested by President Obama. To reduce federal spending, the President and his majority congress should address the real source of budgetary pressure—and that’s entitlements.

In fact, it seems that the President and his speaker of the house can follow their natural class warrior instincts on this issue and actually accomplish something meaningful for our country. Let me explain.

I stumbled across the following breakdown, prepared by TMZ, of Playboy founder Hugh Hefner’s income, filed as part of a divorce proceedings. Here’s a breakdown of Hefner’s monthly income:
-- Salary from Playboy: $116,667
-- Social Security: $1,896
-- Dividends and interest: $121,099
-- Rental property: $17,058
-- Income from HMH Productions: $15,808
-- Pensions and retirement: $413
-- Other miscellaneous income: $17,639

--Total monthly income: $290,580

Do you notice anything interesting about Hefner’s monthly income statement? Although he makes almost $300,000 per month, he’s still qualified for a social security payment of $1,896.00. Hmmm.

For years, I’ve listened to ridiculous claims that social security is “an insurance program” that we all pay into and therefore, all of us have a right to “collect.” In reality, social security is a social welfare program that was intended to assist those retirees who truly do need financial help during their sunset years. It’s a payroll tax—nothing more, nothing less.

It’s time to means-test social security. There are millions of Americans of means who collect it, but do not need it. They shouldn’t get it.

It’s likely that within the next decade, there will be 80 million retirees in the U.S. Let’s consider only the "rich" among them—the top five percent in assets and (passive) income. That amounts to 4 million people. Let’s further assume that each of these “rich” retirees collects $1,000 per month from social security (a conservative estimate). The resultant payout to the top five percent—people who really don't need welfare—costs our children and grandchildren half a trillion dollars a year.

I know that social security is considered the third rail of American politics, but it and Medicare (an entitlement that should also be means-tested, among many other reforms) are going to bankrupt our country. If the Obama administration is serious about “reform” and deficit reduction, it might want to focus on items within the federal budget that account for just a bit more than one percent of spending. The President should realize that real budget reductions focus on big ticket items (like social security), not grants to national parks. But he's never actually had budgetary responsibility for a business or an organization, so I suppose this oversight is predictable.

Means-testing entrenched entitlement programs would lead to meaningful spending reductions and deficit control. Then again, that takes leadership, bipartisan cooperation, and political courage. Thinking about that for a moment conjures the image of the legendary "Emily Latella" of early SNL fame. "I’m sorry, never mind."