`Means Testing' Grows as Fiscal-Planning Tool as Budgets Tighten across the Nation, Legislatures Look for Ways to Limit Entitlements for the Well-Off

By Ron Scherer, writer of The Christian Science Monitor | The Christian Science Monitor, July 8, 1993 | Go to article overview

`Means Testing' Grows as Fiscal-Planning Tool as Budgets Tighten across the Nation, Legislatures Look for Ways to Limit Entitlements for the Well-Off


Ron Scherer, writer of The Christian Science Monitor, The Christian Science Monitor


FOR years the United States has limited entitlement programs such as food stamps to people of low income. Now, there are some new attempts to do means testing for the rich.

* Last week, the New York Legislature decided to provide a "means test" to ensure that wealthy New Yorkers could not continue to live in rent-controlled apartments.

* In Washington, the Senate Finance Committee recently passed a means test that would have made the children of wealthy parents ineligible for a federal immunization program. The full Senate eliminated the test, but congressional aides expect it to resurface when the legislation goes into conference this month.

* And recently Sen. David Boren (D) of Oklahoma and Sen. John Danforth (R) of Missouri tried to get a means test for certain Medicare benefits. Their proposal never became part of the budget package that was signed into law recently. The same fate happened to another indirect means test - a proposed increased tax on Social Security benefits on individuals making over $25,000 a year or couples making $32,000.

Such attempts at means testing are likely to continue as Congress and states grapple with budget and policy issues. "Means testing is becoming a popular concept because there is a feeling that our economy cannot sustain the level of benefits," says Evelyn Morton, a legislative representative for the American Association of Retired Persons (AARP). That group has generally battled against benefit cuts, but Ms. Morton notes that most discussions assume that higher taxes are not possible, "so you must look at what must be eliminated."

John White, an economist at Harvard University's Kennedy School of Government, argues there is cause for policymakers to consider some form of means test. "You are more likely to get more {benefits} if you make $100,000 than if you make $10,000. We have working middle-class people subsidizing high income people who live in Sun City or Palm Desert, drive Town Cars, and play golf," he says.

Mr. White, who advised the Perot campaign, recalls a meeting with a wealthy individual who wondered why he was getting Social Security. A trade union official was at the meeting and replied, "We would object to you not getting Social Security."

AARP's Morton argues that Congress cannot means-test a program such as Social Security. "It would violate the earned right principle," she states. "You paid a cash payment, and you are entitled to a certain level of benefits," she explains.

However, some economists say that the level of benefits is disproportionate for the wealthy. Economist and historian Neil Howe has found that between 1980 and 1991 households with more than $200,000 in income saw their federal benefits double while households from $10,000 to $20,000 had no increase. …

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