What Entitlements?

For the past few years, a common refrain among conservatives (and to be fair, many other Americans concerned about their government), is the notion that we live in an “entitlement society”. Large programs like Social Security and Medicare have been known as entitlements because of the founding belief of those two programs; that all Americans are entitled to a secure future. In the first decade of this century, however, the term entitlement has become a pejorative; much like the word “liberal”, entitlement is being hurled around the universe of politicians and pundits like a curse word.

The Rational Middle would like to know why.

Social Security and Medicare guarantee both a modest income as well as health care for American seniors. Setting aside the moral foundations for these programs, the two constructs reduce the pool of working Americans by tens of millions, reducing pressure on the job markets. And then there is the way that these programs are paid for:

Everybody whose employer practices withholding, pays for Social Security and Medicare. That includes, by the way, illegal aliens working on stolen s.s.n. numbers who will never collect a retirement check.

Furthermore, the tax that supports Social Security and Medicare is a flat tax…almost. That is to say, it is a flat tax for the Working Class, because if you made more than $110,100 in 2012, you and your employer paid less than the rest of us. This year, employers paid 6.2% of an employees wages up to $110,100, and employees paid 4.2% up to the same threshold. Medicare does not have an income threshold, meaning the “evil program” that Reagan likened to Soviet Communism is the only federal program paid for via a truly flat tax.

So, the programs are as universally popular as any in history, and are paid for by taxes that are flat to regressive. Even better, Social Security was designed to save money while the Baby Boomers were working in order to have the money available once they retired. Which is why the deficit in Social Security is being paid for out of the Trust Fund…as it was designed to do.

Universally popular program, necessary program, program paid for by a flat tax (actually, a regressive tax), program built to save during flush times in preparation for lean times. You would think that Medicare and Social Security would be two programs that Mitt and Paul would want to leave alone. You would be wrong.

Paul Ryan cosponsored legislation with John Sununu in 2004 that would privatize Social Security; diverting its annual receipts into Wall Street hands (yes, the very same hands on the rudder of the housing market). You can read about the plan here. Wall Street made billions in commissions and fees after needing the Bush TARP to cover their poor performances, what do you suppose they would make on $10 trillion (the amount Social Security will collect in the next decade)?

Of course Mr. Ryan is more famous for the Medicare “plan” he proposed in his far less intelligent than reviewed budget proposals. Democrats have said that he plans to eliminate Medicare. Republicans have said that is a lie. What is true is that Ryan did more with Medicare than he and his party have proposed doing with health care in general. But his method would clearly, and without dispute, eliminate the guarantee that seniors have with health care right now. The Ryan Plan would also, by extension, eliminate a major source of hospital and clinic revenue  for the foreseeable future.

I don’t know what Romney thinks about Ryan’s plans for Social Security and Medicare, but he did pick the guy for the V.P. job, and Ryan’s resume is thin where everything else is concerned. Does Ryan want to destroy Medicare and Social Security…no, I don’t think so. Would his plans destroy the two programs for millions of Americans who have paid their fair share for a lifetime?



The Rational Middle is listening…