Mail Magazine 24...
The lion in the room… ENTITLEMENTS
by Michael Becker  
May 12, 2012 

…and it’s going to eat us. 

Let’s take a look at the essay in Forbes that outlines ten reasons why we should be scared. The lion in the room: ENTITLEMENTS. 

There are three problems with entitlements – and those would be federal government programs like social security, Medicare & Medicaid and ObamaCare. 

The first problem is one of language: entitlements. The left has co-opted the language and defined terms in their political leaning. As the adage goes, repeat a lie often enough and people will believe it. We on the right side of the political spectrum have allowed the left to get away with this and now the nation is getting ready to pay the price. 

Why, in a free society – and to be clear, I’m talking about a society that embodies individual freedom, not a society that gives people “free stuff” – should anyone be “entitled” to anything beyond the opportunity to pursue their dreams? Why does society – the government – “owe” me a retirement plan or medical insurance? And, if you’re going to try to scramble some answer to that question, please include a reference from the U.S. Constitution. Bottom line, there is no reason, either constitutional or moral, why you should pay for my “stuff”. 

The second problem is the mindset of politicians, the major media and probably most people, and that mindset is captured in this from Forbes. 

When Medicare was introduced in 1960’s, it was described as “brazen socialism” in the Senate. When Truman proposed a national healthcare program in the 1940’s, the plan was called a Communist plot by a House subcommittee. And when President Roosevelt introduced Social Security in the 1930’s, he was branded as a Communist sympathizer by Republican Senators from Ohio, Pennsylvania and Minnesota, publisher William Randolph Hearst and Alf Landon (Roosevelt’s GOP opponent in the 1936 Presidential election). So in 1969, when the US Census found that one quarter of Americans over the age of 65 lived in poverty, politicians showed courage in creating a larger social safety net. 

Bolding is mine. Politicians showed courage… Please. Politicians found a way to permanently link a population group – seniors – to the growth of the federal government. And, those who opposed Social Security and Medicare were absolutely right and I hope there’s a hot place in Hell for those who voted to approve those programs. 

Now for the third problem, and that’s the cost of the programs. They are not sustainable in any way, shape or form. These programs need to be privatized and the federal government needs to be out of the retirement and health care business. Let’s look at Medicare, again from Forbes. 

In the late 1960’s, the government estimated that Medicare expenses would grow by 7 times by 1990 (unadjusted for inflation); they grew by 61 times instead. 

Just a little miss, but typical of government accounting and an example of exactly why the critics of Medicare were absolutely right. 

Social Security is no better. The program was originally passed as a “supplemental” retirement program and was structured in a manner that had double digits of workers for every retiree. It was also scheduled to pay out in a manner that most Americans would never collect a penny given that the SS retirement age was several years older that the average life expectancy. Today there are approximately two workers paying into the SS system for every retiree and the system is funded from cash flow not investments. THERE IS NO SOCIAL SECURITY “FUND”. The estimated “benefit” you see on your periodic Social Security junk mailing – recently put online to save mailing cost – is not guaranteed and can be modified or eliminated at any time. The money you pay into the system in taxes is not yours, it’s not part of your estate, as a 401K or IRA would be, it’s the property of the U.S. Government. 

Between Social Security and Medicare, the U.S. – make that my kids and yours – are facing an unfunded liability of over $100T. One hundred trillion dollars. To be paid for with future tax increases. 

Here’s what Forbes says about those tax increases. 

How much would tax rates have to rise to support entitlements growing at 5%-7% per year, if nominal GDP grew at 4%-5%? First, the 2001 tax cuts would have to expire on all brackets, and then tax rates would have to be raised by the same amount on everyone. At that point, federal debt to GDP would still be well above 2007 levels, but at least it would create some borrowing capacity to fund entitlement payments. The question is what such a policy would do to growth and employment. 

I usually like Forbes, but this is simply a sappy analysis. They provide absolutely no facts in terms of where the money could possibly come from or how much. They also don’t bother to note that the U.S. is currently carrying debt that puts our “debt-to-GDP” ratio over 100% and all they’re talking about is “creat[ing] some borrowing capacity to fund entitlement payments.” In other words, roughly doubling the current tax rates will give us the cash flow to borrow enough money to pay the light bill. 

And they’re final sentence makes me wonder what planet the editors of Forbes live on. Certainly not earth. There should be no question about what will happen to growth and employment, and if you wonder at all, look at Greece. Unemployment is roughly 50%, there is no “growth” in the economy and their stock market closed today at a 20 year low and don’t count on a rebound any time soon. 

“Entitlements” must be dealt with, and very soon or we’re looking at the explosion of the economy. Half measures are no longer acceptable; the system is so broken that tweaking won’t work. (Interesting side note to consider when listening to politicians who want to make minor changes to entitlements – “tweak them” – on the street, crystal meth users are known as “tweakers”.) Paul Ryan’s plan is a start. The Tea Party Senators plan is a better start. None, however, go nearly far enough. 

Will a man or woman of principle raise up with the courage to address moving retirement and health care out of Washington DC? I certainly hope so but I’m not holding my breath. 

Source: LibertyNews 

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