Earlier this year, my former wingnut carpoolian buddy boasted in a comment section of my blog how he had annuitized his 401K through an insurance company: he expressed a seeming anger that if he had the opportunity to invest himself, he could have done much better over what he received from Social Security, to which he had contributed heavily over the years. Although I am highly dubious of the value of such annuities, he may be correct about “doing better” himself than through “forced” contributions to social security; however, the point is that in either case Social Security is an insurance annuity option for retirement income.
All this (and a little more) is part and partial to a statement by Rick Santorum which PolitiFact (PF) rated Mostly True, that “a little less than 50 percent of the people in this country depend on some form of federal payment, some form of government benefit to help provide for them." An excerpt from PolitiFact’s finding:
The Census Bureau found that a little over 147 million Americans received payments from at least one of these programs at a time when the U.S. population was just over 303 million. This meant that 48.5 percent of Americans received federal cash or cash-like benefits -- and it means that Santorum’s number is well-supported. In fact, counting such items as amounts refunded from the Earned Income Tax Credit or agricultural subsidies -- neither of which are included in these figures -- would push that number higher.
I believe Santorum’s statement is partially accurate but leaves out important details (Half True by PolitiFact): many of the entitlements are actually a form of insurance that have already been contributed toward through payroll taxes. Then there’s the point made by the Washington Post that “the usefulness of these numbers is weakened because they count everyone in a household as benefiting from a particular federal payment even if that payment is made in the name of only one person.”
Then, there’s the statement following which, taken in context, was a patently absurd one: that “After Obamacare….it will be 100%.”
Then there’s a problem I have with the states that Santorum won in the primaries: the “bite the hand that feeds them” states, in particular, Mississippi and Alabama, where we already know there are a higher percentage of food stamp recipients relative to other states, and where they receive more assistance than what they pay in taxes. As noted by Lee Pappas, the Rude Pundit:
Some conservatives see the social safety net as a calculated plot by liberals to make people dependent on the federal government, a way of controlling them. Of course, since the states where people receive more in government assistance than they pay in taxes vote Republican, that's pretty much demonstrably false.
Let’s get back to the first point, Social Security as insurance. Over 37 million people age 65 or higher receive Social Security. Almost 8 million people under 65 receive social security because of a disability. I would imagine the vast majority of the total 45 million contributed to the Social Security system. Even my conservative counterpart admits it’s a form of insurance. If that’s what it is, how can Santorum say those who receive it depend on it, when they planned to get it because they contributed to it in the first place?
I’ve heard the horror stories about disability and SSDI, a good friend who had been unemployed a long time whose nurse sister told her, “you know all you have to do is get three doctors to agree that you can’t work…” I know of those who get it for maladies such as bi-polar disorder, something I’m sure a few people would feel could be easily feigned. But let’s say half of these people collect it because they are truly disabled: if they had been working prior to their disability, isn’t the purpose of this (or any) insurance to be for such “catastrophic” care?
We all contribute to Medicare as well. And like Social Security, Medicare is spending down its trust fund from those “funds” accumulated as treasury bonds when it was taking in more than it spent. It is estimated that for 2012, the shortfall will be about $283 billion (link above). The best guess is that the Trust Fund will run out around 2018. In other words, many of those who are “dependent” are in a sense drawing out the money they already put it. Dependency also implies that you have zero resources to depend on: but this is not a zero resource if this is a fund that consists of money already contributed.
The word dependent also conjures up the notion that people have nowhere else to turn or are otherwise desperate and would have great hardship without it. In the case of some of these benefits such as free lunches and Medicaid, while not having it may create a hardship for the recipient, it isn’t like they’re going to starve or be homeless. To me that’s not “dependency” in its fullest sense. (Like Sean Hannity said, you can survive a long time on beans and rice. Just kidding.)
The earned income credit, it should be noted, is only for those who have earned income. You’re not eligible for it unless you’re working (and as I recall, have dependents). Basically it is the end result of the lack of decent wages, as described by economist Paul Krugman in a recent interview in the March 2012 issue of Playboy Magazine:
I think the choice we made, really without understanding that we were making the choice, was to make Walmart jobs low paying. They didn’t have to be. In a different legal environment, a megacorporation with more than a million employees might well have been a company with a union that resulted in decent wages. We think of Walmart jobs as being low wage with 50 percent turnover every year because that’s the way we’ve allowed it to develop. But it didn’t have to be that way. If the rise of big-box stores had not taken place under the Reaganite rules of the game, with employers free to do whatever they wanted to block union organizing, we might have had a different result. Part of the hysterical opposition to the auto industry bailout was the notion that we were bailing out well-paid workers with union jobs.
(Playboy Question: How does this affect the American tradition of a strong working class?)
What we know is that the New Deal era produced a big leveling: it basically turned us into a middle class country, and it stuck. The question is not why it happened but why it stuck. It was unions. The thing about unions is that they don’t just negotiate higher wages for their members. They also have an effect on people not unionized. It’s probably true that the union movement was a big factor in our having a middle-class country. The destruction of unions outside the public sector is an important factor in our no longer being a middle class country. People say “Oh, we can’t maintain unions in a modern globalized economy.” But then you see advanced countries where it works—Canada has had some decline in unionization but nothing like ours. It was a political decision. The best generation of economic growth we’ve ever had was the 25 years or so after 1947, which was a period of high unionization and high marginal tax rates. This is just an excuse for what amounts to pushing down the standards of American workers.
The earned-income tax credit has been what’s made up for some of those standards that have been pushed down. Those well-paid union people aren’t eligible for the earned income tax credit. The government in effect subsidizes inadequate wages. Six years ago it was estimated that the average 200-person Walmart costs the taxpayers over $400,000 per year in such benefits (besides the earned income tax credit). Even PolitiFact (Ohio) has looked into this.
Beginning last year, ten thousand people turned 65 every day, and will turn 65 every day for the next 18 years. That means since that time until present, 4.6 million boomers were eligible for Medicare, or almost 70 million people over 19 years. Most of them will simultaneously be collecting Social Security. We should also all remember that every year (most of us) get a statement from Social Security which shows what we contributed (read: saved) over the years and an estimate of what we will collect when we are eligible. Why Rick Santorum wants to judge me for being “dependent” for using that money so I don’t have to work in my old age is beyond me.
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