Rant on “Entitlements”

Posted: February 16th, 2011 | Author: | Filed under: Misc | Comments Off on Rant on “Entitlements”

What’s the point of having your own blog if you can’t engage in a political rant every once in a while? 😛 For anyone reading who prefers to avoid US politics entirely (and I don’t really blame you), just skip this post. My blog will return to its normal fare in the morning.

So, for those who don’t mind a little political ranting from time to time, I’m going to focus this one on the issue of the deficit and so-called “entitlement programs.” First, I would like to say that I really wish we had some viable form of “the press” left in this country that could expose political propaganda rather than simply parroting it. (Or, in the case Fox, actively generating their own propaganda expanding and sometimes shaping the propaganda from right-wing politicians and political groups.) The widespread use of the blanket term “entitlement programs” precisely illustrates the ease with which even the most transparent manipulations are repeated almost without challenge.

The term itself is a deception. It’s used to lump entirely disparate programs together. Why? Well, that’s where it gets interesting. The two main programs so lumped together are Social Security and Medicare. Let’s see what happens when we don’t lump them together, but consider them separately. I believe doing so exposes the nature of this deliberate act of deception.

What is Social Security? People try to categorize it, but the truth is it’s not one specific thing. It has some of the features of a defined benefit pension plan. And it also has some of the features of an insurance program. It’s a social safety net administered (with extremely small administrative costs) by the government and funded through payroll taxes. Contrary to much of the noise you are hearing, Social Security does not have any major problems and is not a significant contributor to the budget deficit. It does require some minor tweaking — not least raising the current cap on the payroll taxes which fund it — but it doesn’t require any major overhaul.

We are entering a period where, instead of taxes collected exceeding the amount paid, Social Security will have to tap its reserves. Mostly that’s because Generation X, my generation, is significantly smaller than the Baby Boomer generation. By all the demographics I’ve seen, though, the Millenials are a much larger generation and as they continue to enter the work force much of that generational imbalance will be self-correcting. That’s not to say that there may not be some minor tweaks required to the tax or benefits in the long-term, but that should be based on actuarial data, not political rhetoric.

Nor is it true that the Social Security trust fund has been “raided.” While I think politicians, especially over the last thirty years, have used the trust fund to disguise the impact of their actions (especially when it comes to tax cuts), the fund itself is intact. It’s invested in the safest of government securities — exactly where the safest and most conservative funds keep their money. Yes, that provided additional funds to our Federal Government “account” in years when those securities were purchased, but they are not worthless “IOUs” any more than our currency is just paper. Those are government securities backed by the full faith and credit of the United States and if we failed to honor them, one of the immediate impacts would be that we would lose our international credit rating. The impact of that would be severe and spread far beyond Social Security. So the Social Security trust fund is as secure and safe as anything in our country. (I’ll also point out that critics of that approach fail to answer the question of where the government should have put a fund of that size. It’s not the sort of thing you can go deposit in a bank without distorting the financial system and economy beyond recognition.)

Now Medicare is another story entirely. It’s basically a health insurance program specifically for the group of citizens in our country requiring the most health care (and usually the most expensive health care) overall. Its costs are spinning out of control. However, its costs are spinning out of control because the health care system in our country is broken, profiteering is rampant, and the entire system is breaking down. Yes, there are some ways that Medicare has been even more strongly impacted by ridiculous laws. (The law prohibiting it from negotiating drug costs like every other insurance program in our country does is one such example.) But by and large, there’s nothing we can do to “fix” Medicare without reforming the overarching health system within which it operates. We pay more than double the cost per capita for health care than the next nation on the list (Japan last time I checked). And our health care results, by every measure, are worse than every first world country and even some second world countries. Heck, Cuba gets better results at a lower cost than we do.

Maybe I’m overly suspicious, but I think the attempt to lump those two programs together is a deliberate attempt to gain the political support necessary to siphon money from Social Security to private financial interests (banks and investments companies). In order to do that, Social Security benefits have to be reduced. You can raise the administrative costs substantially and maintain the same level of benefits. Social Security has traditionally been the political third rail, but by exploiting the crisis in health care in our country, I think those who have long salivated at the prospect of raiding it see their opportunity.

After all, nobody in our country can honestly believe after the last two years that Republicans have any interest whatsoever in actually fixing the US health care system or doing anything whatsoever to address its problems. So they can’t really be interested in doing anything to “fix” Medicare. No, the end game here looks to me like an effort to “privatize” (which really means further enrich banking interests and Wall Street) Social Security while allowing Medicare (and most of our private health care system as well) to basically collapse.

If anything like serious journalism were still practiced anywhere on a significant scale in our country, our politicians shouldn’t be able to get away with it. Of course, even if there was still something like a serious press in our country, a large portion of our population seems to willfully prefer propaganda to truth. At least they go out of their way to find sources who distort reality or fabricate delusion. (And yes, if you choose to watch Fox, you are certainly part of that group. Personally, I almost never watch any of the 24 hour “news” channels, though on the extremely rare occasions that I do, CNN seems like the least offensive among them. I certainly don’t listen to most of the tripe that airs on talk radio.)

Of course, the real sources of the present budget deficit are the Bush tax cuts and our two foreign wars. Both were and continue to be completely unfunded. If we let the Bush tax cuts expire and instituted a “war tax” of some sort (lots of ways we have done that in the past for other wars), we wouldn’t have much of a deficit problem at all. Letting the Bush tax cuts expire wouldn’t even impact most of us very much. After all, we were doing just fine with the rates as they were under Clinton. The vast majority of those cuts went to the most wealthy. And contrary to another common delusion in our country, the overwhelming majority of us will never be in the wealthiest one percent. If you seriously believe otherwise, I have this bridge I’m trying to sell …


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