Friday, May 18, 2012

Don't blame people for believing what the government has told them

William Voegli answers those critics of the Tea Party who point out that many of them are quite possessive of the government benefits that they themselves receive while protesting government spending on others. The confusion lies in how Medicare and Social Security have been sold to the American people as an insurance program that they pay into and from which they receive the benefits that they paid for.
It was, however, the liberal architects and defenders of the welfare state, not its conservative opponents, who created the myth that spawned the subsequent confusion. Central to liberalism at high tide was a rhetorical effort to establish the untruth that Americans receiving social-insurance benefits were getting back nothing beyond what they had already paid for. A 1936 pamphlet describing the new Social Security system, for example, assured wage earners that “you will be earning benefits that will come to you later on” and “will come to you as a right.”

Vincent M. Miles, one of the inaugural members of the Social Security board, explained the basis of this right in a 1936 speech: The program’s old-age benefits “are best understood if we compare them to insurance.” The monthly checks from the government are “like the installments on annuities from an insurance company.” And, “like an insurance-company policy, the worker’s old-age benefit from the government must be paid for in advance. Instead of weekly, monthly, quarterly, or yearly premiums, however, the government collects weekly or monthly payments which are called ‘taxes.’”

....President Johnson invoked this principle of individually earned benefits in 1965 when he signed Medicare into law. (The new legislation amended the Social Security Act.) Through Medicare, he said, “every citizen will be able, in his productive years when he is earning, to insure himself against the ravages of illness in his old age.” He was to do so the same way workers were already paying for their old-age, survivor, and disability benefits — by contributing “through the Social Security program a small amount each payday for hospital-insurance protection.”

An American who warns an elected official to keep the government’s hands off a social-insurance program doesn’t misunderstand our welfare state but has grasped its central argument exactly as it has been presented. Social insurance, we have been told (and told and told), is a mechanism through which we insure ourselves against financial vulnerabilities. The benefits are ours because we paid for them in advance. They vary because the amount we paid for them varies. Having “contributed” our taxes, we insist on receiving our benefits, since we were assured that the former are just like insurance premiums, and the latter just like insurance settlements.
The fact that these programs have not worked this way for a long, long time is not the fault of citizens who believed what their government told them.
In the eight decades since the dawn of the New Deal, liberal politicians and intellectuals have tirelessly urged their countrymen to disregard all the evidence and common sense telling them to worry about this fiscal disparity. The most notorious example was the prediction of the economist Paul Samuelson in 1967 that our social-insurance programs could go on and on, paying each beneficiary far more than he had ever contributed, because of our “growing population” with “more youths than old folks,” and because “the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see.”

Twenty-nine years later, altered economic and demographic prospects found even Paul Krugman conceding that Social Security was built to look like “an ordinary retirement plan,” where “what you get out depends on what you put in.” It has, in reality, “turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in.” The trends Samuelson thought eternal having proven transient, “the Ponzi game will soon be over.”
And the politicians continue to lie to us by pretending that we can have something for almost nothing. And then the advocates of all this social welfare and say that no one who receives any of these benefits is fit to criticize government spending.
The facts on the ground, as they have been arranged there and then interpreted by liberals, would place the welfare state in a politically unassailable position. First, make sure that every American stands to receive benefits from at least one and preferably several social-welfare programs. Second, stipulate that the only people with the moral standing to criticize the welfare state are those in line for no benefits whatsoever from it. These premises combine to reduce the ranks of opponents liberals deign to recognize to survivalists living off the grid.

This effort to rig the political contest over the welfare state wouldn’t be quite so objectionable if liberalism had a history of candor regarding the welfare state’s costs. The two most recent Democratic presidential nominees, however, upheld a long tradition of disingenuousness about the price tag of their party’s agenda. Both promised, repeatedly and categorically, that the federal government could meet all the obligations it had assumed over the 20th century, and then add many new ones to further the cause of social justice, while exempting more than 95 percent of the population from any kind of federal tax increase.
Perhaps if the politicians didn't lie to us, people wouldn't be parroting those lies.