Social Security: Has Become a Welfare Program

Personal Freedom and Power 105:  Freedom and Governance

“A wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” 

Thomas Jefferson – Inaugural Address – 1801

The paramount duty of a governance system dedicated to human freedom is to protect each individual and their possessions from the force and fraud of others. 

 Social Security: Has Become a Welfare Program

Comparing today’ Social Security to President Roosevelt’s intent, Robert Samuelson of the Washington Post concludes it is welfare: 

It has become what was then called “the dole” and is now known as “welfare.” This forgotten history clarifies why America’s budget problems are so intractable.

Samuelson claims Roosevelt intended to have something similar to a defined contribution plan.  Where the worker pays into Social Security and receives a monthly check upon retirement at age 65 based upon the amount paid, and the growth of the investment.  This was President Roosevelt’s intent when he said:

We put those payroll contributions there so as to give the contributors a legal, moral and political right to collect their pensions. ... No damn politician can ever scrap my Social Security program.”

Wrongfully, politicians – Republicans and Democrats – have raided, manipulated and used the contributions for their immediate political purposes.  President Johnson included the Social Security tax revenue to hide the cost of the Vietnam War.  Nixon approved a 20% benefit increase and made sure every beneficiary knew of the increases just prior to the 1972 election.  Social Security was bankrupt within a decade. The most recent abuse was the two percent payroll tax holiday secured by the Democrats and a few Republics which increased the unfunded liability of Social Security. 

Knowing promised Social Security benefits are an enormous driver of America’s debt, the media and the politicians are seeking solutions by increasing the retirement age, increasing tax rates, reducing benefits to the wealthy and more.  Samuelson bemoans that Americans’ assume they are entitled to benefits.

What we have is a vast welfare program grafted onto the rhetoric and psychology of a contributory pension. The result is entitlement. Unsurprisingly, AARP’s advertising slogan is “You’ve earned a say” on Social Security.  …    

Poor Samuelson, the liberal entitlement provocateurs denounce him as a stupid dunce.  Many yell and scream that Social Security is fully funded and doesn’t add to the debt. Many more have warm feelings because Social Security helped their aunt or grandmother.  The fact is Social Security pays out more than it receives and makes up the difference by taking money from the general treasury.  Thus, the American worker pays his or her Social Security tax (which is matched by the employer) and now every taxpayer pays again – the money paid out of the treasury.

Of course the libertarians (I am included) ask what about the contract.  Government has promised benefits to working Americans, and now Samuelson and the politicians want to up the age to 70 to receive benefits, and some want to give less benefits to more affluent seniors. The DC elite will respond that the Supreme Court ruled there is no contract right to Social Security.  This is correct.  Seniors receive Social Security only because Congress authorizes the payments. 

Stop and think – the President and Congress can do anything they want with Social Security.   So far, they have absolutely avoided suggesting a solution because seniors are scared that any proposed changes will decrease their benefit check.  So, the national debt explodes and politicians continue to dither.  Give Samuelson some credit, he confronted the issue.

Which brings us back to the problem, government will raid, manipulate and misuse the money dedicated to Social Security.  It is naïve to think that if Congress and the President raise the age, increase the tax rate, remove the earnings cap and whatever new scheme is proffered that the manipulations would stop, and politicians would be excellent stewards of workers’ income.

There is only one solution:  pay the benefits that have been promised and seek an honorable means to entice Americans nearing retirement to delay their Social Security benefits.  Most importantly, allow young American workers to invest their payroll taxes into a personal account – owned by the worker.  Only personally owned savings accounts will stop the immoral raids and manipulations by politicians.

Young Americans must have the opportunity to invest their income – to be free from government manipulation. Thomas Jefferson understood the duty of good government:

“… and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”