Here. Excerpt:
Here is how I define a welfare program. First, it taxes one group to support another group, meaning it's pay-as-you-go and not a contributory scheme where people's own savings pay their later benefits. And second, Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics. Social Security qualifies on both counts.
Part of the problem with the SS system is that no one quite agrees on just what it is or is supposed to be. Some call it a Ponzi scheme. (Steve Forbes, Judge Andrew Napolitano) But obviously it isn't. Ponzi schemes are fraudulent in intent by definition. SS is not. What Napolitano et al. presumably mean is that it like a Ponzi scheme in being unsustainable. But that is not quite right either for it is sustainable if one is willing to do one or more of the following: raise taxes, limit/postpone benefits, reduce spending in other areas, increase the money supply thereby inflating the currency.
To call the SS system a form of welfare as Robert Samuelson does is closer to the mark but still wide of it. How can it be called welfare when the recipients of it (most of them anyway) have paid in a lifetime's worth of contributions? The average hard-working Joe who has contributed all his life via payroll taxes will bristle, and with justification, if he is branded a welfare recipient when he retires. He will insist that he has worked hard and long, and now wants what is due him: the money that was coercively taken from him plus a reasonable return.
So SS is not a welfare scheme either, Samuelson's slanted definition notwithstanding, though it is like one in some respects.
My understanding is that when it was originally set up, in the '30s, SS was envisaged as destitution insurance. The idea was that a decent society does not allow its members to fall into the gutter and eat cat food if through no fault of their own they end up destitute at the end of their lives. But of course if it is destitution insurance, then, like all insurance, the 'premiums' will be small relative to the payout, and only those who end up destitute would get a payout. But the system is nothing like this now. It has transmogrified into a retirement program, but one without individual accounts and the sort of fiscal discipline that they would bring.
So it's not a Ponzi scheme, not a welfare scheme, and not a form of insurance, if these terms are used strictly. (And if you are not using them strictly, then you shouldn't pretend to be contributing to a serious discussion.) Conceptually, SS is a mess, a mess that aids and abets all the unhelpful rhetoric that we hear on all sides.
If memory serves, Speaker Boehner (before he was speaker) called for means-testing. The moral absurdity of that should be evident, especially when espoused by a supposed conservative. You work hard all your life, you play by the rules, defer gratification, exercise the old virtues, and end up well off. And now the government penalizes you for having been self-reliant and productive. Disgusting. You expect that from a liberal. But from a conservative?
As one further indication of the conceptual mess that is the SS system, consider that the FICA tax is called a tax. It is no doubt a coercive taking, but what other kind of tax brings with it an expectation of getting one's money back down the line? Property owners pay real estate taxes to the county. But no one who pays these taxes expects to be able to pay a visit to the Assessor's office sometime in the future to recoup what he has paid. That's not the way a tax works. So why is the FICA tax called a tax? This is just another indication of the conceptual obfuscation built into the SS system.
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