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The Greatest Entitlement

Tags Taxes and SpendingU.S. EconomyU.S. History


The 20th century was the progressive century, marked by the rise of war and socialism as entrenched features of American life. But perhaps the most lasting effects will be felt in the entitlement mindset woven into the American psyche, via decades of successful incrementalism. 

Social Security and Medicare in particular represent brilliant political achievements for American progressives. Both programs created a vast middle-class constituency, both programs are now thoroughly embraced by progressivism's nominal opponents (conservatives), and both programs have become sacrosanct "rights" in the eyes of the public.

For example, here is Mr. Obama speaking to an AARP audience in 2012:

I want to emphasize, Medicare and Social Security are not handouts. You’ve paid into these programs your whole lives. You’ve earned them.

And (now) House Speaker Paul Ryan during a radio appearance with Laura Ingraham in early 2013:

“No one is suggesting that what we call our earned entitlements — entitlements you pay for, like payroll taxes for Medicare and Social Security — are putting you in a 'taker' category,” said Ryan. “No one would suggest that whatsoever.”

Of course "Greatest Generation" Americans, born around the Depression years, routinely collected or collect far more in benefits than they paid in taxes. Even Baby Boomers retiring by 2010 are likely to receive one-third more in benefits payments than they paid in taxes. So for these retirees, at least, Mr. Obama's words — "you paid for it" — ring hollow. Those tax dollars are long gone: whether they were allocated to the supposed Social Security trust fund or just poured into general revenues is irrelevant. It's quite a stretch to argue that fedgov is justified in robbing younger workers today to pay entitlements for older retirees who were robbed in the past. If a thief no longer holds one's stolen property, what precisely is the legal theory that permits him to make you whole by finding a new victim while you ask no questions?

That said, even ardent libertarians like Dr. Walter Block make the case for accepting government entitlement payments. And as he makes clear, not accepting such payments will result in the money reverting to the Treasury, where it surely will be used for illibertarian purposes.  

We've heard very little from any presidential candidate (save apparently Ben Carson) about the coming actuarial disaster underlying the Social Security and Medicare programs. Both systems are broke, and collectively are more than $30 trillion in the red. In fact, Boston University economist Laurence Kotlikoff — hardly an antigovernment libertarian — calculates the shortfall between future federal tax revenue and future federal entitlement obligations as more than $200 trillion. The sheer demographics of smaller families, an aging population, and longer life expectancy combine to create a very unpleasant reality: where more than 40 employed workers once supported every Social Security recipient, fewer than 3 do today. And retirees reaching age 65 today often look forward to 20 or more years of benefits.

The real story, though, is not about the numbers. It's about progressive incrementalism, and how the Left grindingly turns outrageous ideas into commonplace reality. If there's one strategic lesson libertarians can learn from entitlements, it's that incrementalism is a one-way street. Just ask the mealy-mouthed Mr. Ryan.    



Contact Jeff Deist

Jeff Deist is president of the Mises Institute. He previously worked as chief of staff to Congressman Ron Paul, and as an attorney for private equity clients. Contact: email; Twitter.

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