Learn­ing while grow­ing up to think like chil­dren

The Washington Times Weekly - - Commentary -

We spend the first part of our lives try­ing to grow up, and, ap­par­ently, mil­lions of us spend the rest of our lives hop­ing to live like chil­dren. How else to ex­plain the de­sire to “save” So­cial Se­cu­rity and Medi­care?

Since 1935 for So­cial Se­cu­rity and 1965 for Medi­care, older Amer­i­cans have ex­pected gov­ern­ment to take care of them, as if they are chil­dren in­ca­pable of tak­ing care of them­selves. Nanny state, in­deed.

We don’t need gov­ern­ment to tell us tell us to feed our­selves, clothe our­selves or bathe our­selves. And we don’t need gov­ern­ment to tell us we need to save for old age.

If gov­ern­ment wasn’t guar­an­tee­ing us in­come and health care in old age — and tak­ing more than 15 per­cent of our earn­ings to pay for it when we’re young — most peo­ple would be set­ting aside money on their own.

We had a chance to start work­ing to­ward a phase­out of So­cial Se­cu­rity in the 1980s, when it was about to go broke. In­stead, Pres­i­dent Rea­gan worked with lawmakers to “save” So­cial Se­cu­rity through a huge in­crease in the pay­roll tax.

Un­til last year, that tax in­crease brought in more money than was needed to pay ben­e­fits. We were promised the decades of ex­tra money would be set aside to be­come a moun­tain of money for fu­ture gen­er­a­tions when they re­tire.

In fact, none of those tril­lions of ex­tra dol­lars was set aside. We’ve been robbed. The gov­ern­ment has spent the ex­cess pay­roll tax money on the mil­i­tary, roads and bridges, so­cial pro­grams, cor­po­rate wel­fare — ev­ery­thing but re­tire- ment.

Jack Lew is Pres­i­dent Obama’s di­rec­tor of the Of­fice of Man­age­ment and Bud­get (OMB). Mr. Lew also worked in the OMB dur­ing the Clin­ton ad­min­is­tra­tion in the 1990s and wrote a re­port that ex­plained that So­cial Se­cu­rity Trust Fund “bal­ances” are noth­ing more than a “book­keep­ing de­vice.”

Mr. Lew wrote, “They do not con­sist of real eco­nomic as­sets that can be drawn down in the fu­ture to fund ben­e­fits.” The OMB says the Trea­sury Depart­ment’s So­cial Se­cu­rity IOUs are “claims on the Trea­sury that, when re­deemed, will have to be fi­nanced by rais­ing taxes, bor­row­ing from the pub­lic, or re­duc­ing ben­e­fits or other ex­pen­di­tures.” Mr. Lew is right. There is no money in the So­cial Se­cu­rity Trust Fund.

As more peo­ple re­tire and live longer in re­tire­ment, the gov­ern­ment will in­crease taxes fur­ther, pile up more na­tional debt, cut ben­e­fits or cut other gov- ern­ment pro­grams.

Ditto for Medi­care. It, too, re­lies on book­keep­ing de­vices and has no real eco­nomic as­sets.

In 1939, a woman named Ida May Fuller be­came the first So­cial Se­cu­rity re­cip­i­ent.

She paid in $24.75 and by the time she died had re­ceived nearly $23,000 in pay­ments. Name any in­vest­ment for which a per­son could get back nearly 1,000 times more than was in­vested, with ab­so­lutely no fi­nan­cial risk.

But how things have changed. When Fuller started col­lect­ing, there were 33 work­ers for ev­ery re­cip­i­ent. Now the ra­tio is 2.9-to-1. In 20 years it will be 2.1to-1.

The Ur­ban In­sti­tute last year is­sued a re­port es­ti­mat­ing that a mar­ried cou­ple in which both hus­band and wife earned av­er­age wages and re­tired in 2010 can ex­pect to re­ceive $539,000 in life­time So­cial Se­cu­rity ben­e­fits af­ter hav­ing paid $581,000 in So­cial Se­cu­rity taxes. That’s a $42,000 loss.

The Ur­ban In­sti­tute says when Medi­care ben­e­fits are thrown into the mix, peo­ple come out ahead be­cause Medi­care spends so darn much.

But Medi­care taxes don’t come close to cov­er­ing the ben­e­fits, and Medi­care pay­ments go to health care providers.

Re­tirees in good health will re­ceive lit­tle from Medi­care.

At least So­cial Se­cu­rity checks ar­rive re­gard­less of a per­son’s health.

“Gov­ern­ment is the great fic­tion through which ev­ery­body en­deav­ors to live at the ex­pense of ev­ery­body else,” wrote the great 19th-cen­tury French po­lit­i­cal the­o­rist and econ­o­mist Fred­eric Bas­tiat.

So­cial Se­cu­rity and Medi­care have led gen­er­a­tions of Amer­i­cans to be­lieve they can live at some­one else’s ex­pense.

One of these days, we’ll all pay the price.

Steve Stanek is a re­search fel­low at the Heart­land In­sti­tute in Chicago.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.