“Robert J. Samuelson: Social Security is simply welfare ? - MySanAntonio” |
| Robert J. Samuelson: Social Security is simply welfare ? - MySanAntonio Posted: I recently wrote that Social Security is often middle-class welfare that bleeds the country. This offended many. In an e-mail, one reader snarled: "Social Security is not adding one penny to our national debt, you idiot." Others were more dignified: "Let's refrain from insulting individuals who have worked all their lives and contributed to the system for 50-plus years by insinuating that earned benefits are welfare." Some said Social Security, having $2.6 trillion in reserve, doesn't affect the budgetary predicament. As a rule, I don't use one column to comment on another. But I'm making an exception, because the issue is so important. Social Security, Medicare and Medicaid, the main programs for the elderly, account for more than 40 percent of federal expenditures. Exempting them from government cutbacks, as polls indicate many Americans prefer, would ordain massive deficits, huge tax increases or draconian reductions in other programs. That's disastrous for the future. I don't call Social Security "welfare" because it's a pejorative term, and politicians don't want to offend. So, their rhetoric classifies Social Security as something else, but it isn't. A welfare program, by my definition, taxes one group to support another group, not a scheme where people's own savings pay their later benefits. Also, Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics. Social Security qualifies on both counts. Let's start with its $2.6 trillion reserve. Does it prove that people's payroll taxes were saved to pay for future benefits? No. Since the 1940s, Social Security has been a pay-as-you-go program. Most benefits are paid by payroll taxes on today's workers; in 2010, those taxes covered 91 percent of benefits. Without continued revenue from payroll taxes, the reserve's $2.6 trillion would provide 3.5 years of benefits, which in 2010 totaled about $700 billion. The Social Security trust fund serves mainly to funnel taxes to recipients, and today's surplus is an accident, says Charles Blahous in his book "Social Security: The Unfinished Work." In 1983, when the trust fund was nearly exhausted, a presidential commission proposed fixes, but underestimated their effects. The large surplus "just developed. It wasn't planned," the commission's executive director said later. Even so, the surplus in time will disappear as the number of retirees rises. And, Congress has repeatedly altered benefits. From 1950 to 1972, it increased them nine times, including a doubling in the early 1950s. In 1972, it indexed benefits to inflation. People didn't complain when benefits rose, but possible cuts trigger howls that a contract is being broken. Not so. In a 1960 decision, Flemming v. Nestor, the Supreme Court rejected the argument that there is a contractual right to Social Security. It cited the 1935 Social Security Act: "The right to alter, amend, or repeal any provision" is reserved to Congress. Congress can change the program whenever it wants. All this makes Social Security welfare. Benefits shift; they're not strictly proportionate to wages, but are skewed to favor low-wage earners — reflecting a judgment of who most deserves help; and they aren't paid from workers' own contributions. But, we encouraged people to think they "earned" benefits and that Social Security is distinct from the larger budget. Politicians, pundits, think-tank experts and journalists engaged in this charade to spare Social Security's 54 million recipients the discomfort of understanding they're on welfare. A relatively small elderly population sustained these fictions. This is no longer possible. Social Security affects the larger budget problem. Annual benefits are exceeding payroll taxes now. The gap will grow. The trust fund holds Treasury bonds; when these are redeemed, the cash must be raised by the government. The arcane accounting of the trust fund obscures what's happening. As important, how we treat Social Security will affect how we treat Medicare and, to a lesser extent, Medicaid. Because these programs involve middle-class welfare, cuts could occur without inflicting widespread hardship. All the elderly aren't poor. In 2008, a quarter of families headed by someone 65 or over had incomes exceeding $75,000. No doubt, people would be outraged. Having been misled, they'd feel cheated. They paid their taxes, why can't they get all promised benefits? But, the alternative is much worse: imposing all the burdens on current taxpayers and cuts in other government programs. Shared sacrifice is meaningless if it excludes older Americans. Robert J. Samuelson is a syndicated columnist. Write to him at the Washington Post Writers Group, 1150 15th St. N.W., Washington, D.C. 20071. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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