Green Room

Calling a spade a spade: most forms of entitlement reform are theft

posted at 1:48 pm on May 25, 2012 by

In the debate over how to deal with America’s looming budget problems, liberals and conservatives have starkly different solutions to entitlement reform. Necessary for the financial security of America, entitlement reform is difficult for a myriad of political, ethical and financial reasons. As Michael Linden of the liberal Center for American Progress stated last year: “It’s true in the long run…the major drivers of the federal deficit are an aging population, which means higher costs for Social Security, Medicare and Medicaid, and also rising health care costs generally…we are going to have to have some really serious conversations about how to get those things under control.”

How serious will these conversations have to be? Social Security and Medicare spending alone totaled about $1.217 trillion in 2011, or one-third of the federal budget, according to the Center for Budget and Policy Priorities. This budgetary impact will reach 50% of federal spending in the next 20 years, as Veronique de Rugy calculates here. By 2020, according to the Government Accountability Office, 92% of the federal budget will be taken up by Medicare, Social Security, Medicaid and interest on the national debt. Lastly, Social Security and Medicare alone will eventually require 100% of federal tax revenues to cover their costs.

So what is the solution to our growing Social Security and Medicare cost problems? Regardless of one’s political leanings, it boils down to one word: stealing. Despite having taxed employers and workers at a combined 15.3% of each employee’s paycheck at the point of a gun (AKA the rule of law), reforms are discussed primarily with the following four politically-viable options in mind:

  1. Raise taxes on some or all earners. Given payers into the Social Security and Medicare programs were initially given a promise of sorts from the federal government that they would receive a certain level of benefits for a certain level of taxation, this is theft.
  2. Directly cut benefits for current and/or future seniors. This is similar to Point 1 except benefits are being directly diminished instead of increasingly taxed.
  3. Means-test Social Security and Medicare. While a popular option for both Republicans and Democrats, it would take away retirement monies from wealthier seniors who were promised the same benefits as everyone else.
  4. Raise the retirement age for those receiving Social Security and Medicare. Average life expectancy for 65-year old Americans is over 40% greater than that of 65-year old Americans in 1940, yet the retirement age has yet to increase by even one year since that time. Unfortunately, raising the retirement age for anyone who has paid into the program – and especially for older workers – is to change the unwritten promise around which people organize their retirement plans.

 

(Note: Other options are available, and popular in certain circles, for reform. One of these is the partial or full privatization of Social Security to be received by seniors. This would not be stealing, but it is for all intents and purposes very politically difficult, if the 2005 failure of then-President Bush’s partial privatization plan to get through a GOP-controlled Congress is any indication. Payment reform related to greater efficiencies in Medicare is also often discussed and would not be stealing. This was included in the Patient Protection & Affordable Care Act, but those reforms are still in the experimental stage and thus their impact is as of yet unknown. Medicare voucher proposals such as those in the House-passed budget proposal are also of somewhat experimental value, and so far have received little Democratic support.)

Given the fiscal impossibility of maintaining retirement benefits as they currently stand, how should this theft be enacted? Is it right to take from current seniors, who are in the middle of retirement but who are also much wealthier as compared to younger people? Is it right to take from middle-aged people, who are years from retirement but have spent decades preparing for it with expectations of certain levels of federally-funded retirement dollars? Or should the focus of reforms be on young Americans, who have more time to change personal habits and prepare financially for lower benefits…but who as the Debt-Paying Generation are likely to face dire employment and other financial challenges that could prevent them from having the kinds of financial means in retirement today’s seniors possess?

Options abound for how to fix the programs, but in the final calculation stealing is likely to be most or all of the answer. Whether it be the financial collapse of Social Security and Medicare with no changes (thus stealing from all citizens), raising taxes on the wealthy or means-testing benefits (thus targeting the most successful of us for doing nothing intrinsically wrong or illegal) or increasing the retirement age for all recipients (thus forcing people to work for more years before receiving benefits), the federal government’s retirement promise to America’s citizens is going to significantly change in the next two decades. The only question that remains is to whom that promise will be broken, and how drastic the break will be.

To clarify: from a strictly legal perspective, the federal government is not actually stealing from seniors by doing any of the above. The original language of the legislation which created Social Security, for example, stated “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” Additionally, the 1960 Supreme Court case Flemming vs. Nestor declared that American taxpayers are indeed not legally entitled to the dollars they think they are. However, the implicit promise still exists, if the language of politicians and special interest groups is to be believed, and most Americans believe they are indeed entitled to receiving retirement dollars for which they have been taxed. Use of the word “stealing” is thus applied more from a moral, ethical and “if it weren’t Congress it would be illegal” perspective.

[This was originally published at Right Wing News.]

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Not paying someone MORE than they contributed is NOT “stealing”.

Dumb piece.

Ragspierre on May 25, 2012 at 1:54 PM

Ragspierre,

Seniors were implicitly promised certain benefits and they probably won’t get them. Middle-aged and young people certainly won’t.

Money was taken at the point of a gun (AKA the rule of law), and is likely to be pulled again in later years. That’s not theft?

Dustin Siggins on May 25, 2012 at 2:08 PM

Uh, you forgot the option they’ve been trial ballooning every couple of years – taking all the money in 401k accounts to put it back into the black. The “Here, we’ll manage that for you…” Plan.

Abiss on May 25, 2012 at 2:12 PM

Money was taken at the point of a gun (AKA the rule of law), and is likely to be pulled again in later years. That’s not theft?

You seem deeply confused.

The theft has occurred.

Correcting the problem is not “theft”.

Dealing forthrightly with a Ponzi scheme is NOT to victimize the people involved. They HAVE BEEN victimized.

The moral offense would be to BRING IN NEW VICTIMS.

As a senior, I have already made provisions to NOT further victimize my children and grandchildren to the very modest extent I can.

Ragspierre on May 25, 2012 at 2:18 PM

Ragspierre,

Let me rephrase:

Theft has occurred. It will keep occurring unless we fix the problem forthrightly, as you state. However, since the government has promised certain benefits, breaking that promise is theft. That promise is going to be broken in some way, regardless of what we will do. The only question is whether EVERYONE will suffer, some people, or a smaller group. We can try to spread the pain, or not.

I believe we are on the same page… as a twenty-something I am willing to pay taxes for programs I won’t receive, in order to make the programs more affordable as we phase in aggressive reforms.

If you look at my post here (http://hotair.com/greenroom/archives/2012/05/25/thou-shalt-not-steal-unless-you-have-to/), I outline some of those reforms.

Dustin Siggins on May 25, 2012 at 2:23 PM

Dustin,

If I say to you, “I’m going to give you $20 tomorrow” and then tomorrow I say, “I’ve changed my mind” and don’t give you any money, is that theft? I realize this is a question of semantics, but that would not generally be defined as theft. I’m not quarreling with your argument, but I think your terminology is off.

-Shump

Shump on May 25, 2012 at 3:03 PM

However, since the government has promised certain benefits, breaking that promise is theft.

No. A promise to do things that REQUIRE a present and future theft is NOT a theft as to the people the promise was made.

For many of us (the people to whom that promise was made) it WILL work a hardship to set right. The question is HOW to humanely address that hardship. There are SOME members of my generation who simply will need to be cared for.

We have ALWAYS had that capacity…and that inclination.

For others, there will be no hardship whatsoever.

Ragspierre on May 25, 2012 at 3:05 PM

You are making the mistake of assuming that the Government is not the people. Reagan may not have been popular with the leftists, but when they said “Reagan was not MY President” they were wrong, just as Conservatives are when they say the same about President Obama. As long as you are claiming to be a Citizen of the United States, the sitting President IS your President… and you ARE your Government.

So you say today’s Seniors were promised certain benefits… okay, true. Once. A long time ago. Then, we all decided (or more properly had decided FOR us by our Representatives in the House, Senate and White House) that the money we had taken would be spent on other things. THAT is when the ‘promise’ was broken.

Now today’s Seniors assume they can have the ‘benefits’ of the money they chose to spend back then, AND personally collect the same money today. In recognizing the impossibility of that, I disagree with them. That is not a broken promise… that is a debate.

There is nothing sacred, morally or legally about Social Security or Medicare benefits. Politically, yes… for now. But the system was set up by the very people who are going to suffer by it… that is NOT the fault of the future taxpayer!

I agree that people have made bad decisions about their future finances… and that the People of the U.S. should help them out financially as they are able. But due to the decisions made by today’s Seniors, we are significantly less able to help them.

Mr Michael on May 25, 2012 at 3:20 PM

Shump,

If I borrow money from you (or, in the case of the federal government, take it with the benevolent promise of giving it back when you retire) and don’t return it per our implicit agreement, I would consider that theft.

Ragspierre, I’m not quite sure what you are saying in this last comment, but here’s how I read it: You want people who are paying into the program to stop paying into it, and the program to exhaust its resources to pay what it can to those currently unable to afford retirement with what’s left?

If I’m correct as to what you’re saying, I could agree to that except it would put the entire hardship on the shoulders of your generation, and some on middle-aged people. I believe it is most humane to spread the hardship among multiple generations.

Dustin Siggins on May 25, 2012 at 3:21 PM

I believe it is most humane to spread the hardship among multiple generations.

Very well.

The question is, HOW? Do you do that by compulsion, or by volition.

I chose volition. And, since I am one of that population, I TRUST volition.

Ragspierre on May 25, 2012 at 3:26 PM

Ragspierre, I’m taking off to go grocery shopping, but before I do I would like to answer your question with a question: How would “volition” work? I’ve never heard someone argue the point before, and I’m honestly interested to learn more.

Thanks.

Dustin Siggins on May 25, 2012 at 3:39 PM

And by “work” I mean how would policy be spelled out, etc. etc.

Dustin Siggins on May 25, 2012 at 3:40 PM

Dustin, you keep thinking in terms of institutionalized action (i.e., “policy”).

“Volition” means people are left free to recognize the problem, feel the need to deal with that problem, and fashion effective responses to that problem. “Policy” is about government. Volition is about people.

It has been something Americans have done better and more effectively than any people in time or space have ever done.

Ragspierre on May 25, 2012 at 3:59 PM

LETS CUT, “REFUNDABLE TAX CREDITS”, WELFARE, WIC, SECTION 8 HOUSING, FOODSTAMPS, MEDICAID, FREE SCHOOL LUNCHES AND FREE CELL PHONES, CUT S.S.I FOR WELAFRE PARASITES ,, THEN THE MOOCHERS WILL HAVE TO GO TO WORK OR_CROAK!!!!.. THAT OUGHT TO REDUCE THE DEFICIT BY 100 TRILLION AND BRING IN TAX REVENUES FOR FED AND STATE COFFERS!!!!!!

ARIZONAVETERAN on May 25, 2012 at 5:29 PM

It has been known from the beginning that the Social Security program was a scam. So the “promises by the government” cannot be taken seriously. The best course is to simply end the scheme.

The government owns a lot of land, so divide that up to pay off everything that has been paid into the system — and abolish Social Security as a government program.

Steve Stoddard on May 25, 2012 at 5:29 PM

Average life expectancy for 65-year old Americans is over 40% greater than that of 65-year old Americans in 1940, yet the retirement age has yet to increase by even one year since that time.

Incorrect. Several years ago, retirement age was raised to age 67 for people born in 1959 and later. Check the Social Security site.

AZCoyote on May 25, 2012 at 5:35 PM

All taxation is theft, Dustin, no matter what it’s used for.

Dante on May 25, 2012 at 5:49 PM

LETS CUT, “REFUNDABLE TAX CREDITS”, WELFARE, WIC, SECTION 8 HOUSING, FOODSTAMPS, MEDICAID, FREE SCHOOL LUNCHES AND FREE CELL PHONES, CUT S.S.I FOR WELAFRE PARASITES ,, THEN THE MOOCHERS WILL HAVE TO GO TO WORK OR_CROAK!!!!.. THAT OUGHT TO REDUCE THE DEFICIT BY 100 TRILLION AND BRING IN TAX REVENUES FOR FED AND STATE COFFERS!!!!!!

ARIZONAVETERAN on May 25, 2012 at 5:29 PM

I’ll raise my glass to that! Cheers!

DanaLynn on May 25, 2012 at 5:59 PM

AZCoyote, they raised the age, yes, but it is CURRENTLY not 67.

Ragspierre, this is what I thought you meant. Thank you for clarifying.

I’d be fine with what you propose except that I think we’d be throwing a lot of people to the proverbial wolves, at least financially.

Dustin Siggins on May 25, 2012 at 6:05 PM

I’d be fine with what you propose except that I think we’d be throwing a lot of people to the proverbial wolves, at least financially.

Dustin Siggins on May 25, 2012 at 6:05 PM

Not necessarily. We can still have “safety net” programs such as welfare and Medicaid that help the poorest among us who legitimately cannot survive on their own. However, I would argue that those are best managed at the state level, without federal involvement, and with very strict rules to ensure that they are safety nets and not hammocks.

Regardless, though, throwing some people to the proverbial financial wolves may very well be the only way we are going to get this country back on track, either financially or societally. We have to break both our addiction to spending and the idea that the government should be providing for you. You are never going to “nickle and dime” the country back to prosperity. You’re going to have to make drastic changes.

Shump on May 25, 2012 at 6:10 PM

Shump, I stand corrected on my last statement. You’re right; only a few people would be thrown to the wolves. I concede that point, though I still think it’s unjust to just ditch the program now instead of phasing it out.

Dustin Siggins on May 25, 2012 at 6:22 PM

Dustin, are you going to let people go to the wolves?

I won’t, and I don’t know many…if any…people who would.

Americans can deal with the displacements correcting TERRIBLE wrongs will cause, and do it humanely.

Ragspierre on May 25, 2012 at 6:31 PM

Ragspierre, you’ve given me a lot to think about, especially with this last comment. Thank you.

Dustin Siggins on May 25, 2012 at 6:56 PM

This post has been promoted to HotAir.com.

Comments have been closed on this post but the discussion continues here.

Allahpundit on May 25, 2012 at 10:56 PM

Americans can deal with the displacements correcting TERRIBLE wrongs will cause, and do it humanely.

Ragspierre on May 25, 2012 at 6:31 PM

Not if they keep lying to themselves and each other about the nature of the problem.

We have to deal with the reality of the lie before we can solve the problem, and too many people are still unwilling to do that.

The money was stolen and wasted. It’s GONE. It can’t be “paid back” because it’s GONE.

That leaves us with a new problem to deal with, and we have to deal with it, but first we have to accept the nature of the problem, or our solutions will be based on the same bad information that got us into this mess.

If you start from “we have a program we have to fix,” you have already failed. You need to start with “it’s gone, it was stolen, it’s not coming back,” and then try to deal with the consequences.

People have been trying the “lie version” for 30 years, and it’s only made things worse, and now we’re broke.

Merovign on May 25, 2012 at 6:57 PM