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Why Democrats Must Get Smart On ‘Entitlements’

Memo Pad

Why Democrats Must Get Smart On ‘Entitlements’

Social Security, Taxpayers, Taxes, Safetynet, Retirement

In a season of depressing budget news, the worst may have been that a majority of U.S. House Democrats signed a letter urging President Barack Obama to oppose any benefit cuts to Social Security, Medicare, Medicaid and other entitlements. That’s the last thing we need.

To hold the line on harmful cuts to discretionary spending, Obama and the Democrats must educate the public about the necessity of entitlement reform. Otherwise, the poor and needy — largely spared by the automatic reductions under sequestration — will get hit much harder down the road.

Liberals are right to reject Republican proposals that would slash social-welfare programs even as they refuse to consider closing tax loopholes for the wealthy. And I agree that the sequestration will cut into the bone of important government functions and investments in the future.

That makes two more reasons to start talking seriously about how we will pay for the insanely expensive retirement of the baby boomers.

How expensive? Anyone reaching retirement age in the next 20 years (including me) will take more than three times as much out of Medicare as he or she contributed in taxes. By 2030, the U.S. will have twice as many retirees as in 1995, and Social Security and Medicare alone will consume half of the federal budget, with the other half going almost entirely to defense and interest on the national debt. It’s unsustainable.

If Democrats don’t want to talk about these programs, they can say goodbye to every other pet program. We can preserve Medicare in amber only at the expense of investments in pre-kindergarten programs or cancer research.

To reform entitlements, we should assess what these programs were meant to do in the first place.

For starters, Presidents Franklin D. Roosevelt and Lyndon B. Johnson didn’t call them entitlements. Jimmy Carter’s administration borrowed the term from Anarchy, State and Utopia, a 1974 book by Robert Nozick, a political philosopher. “Entitlement” sounds selfish and at odds with the dignity and peace of mind that Social Security and Medicare are meant to provide.

It distorts the animating idea behind these programs, which is social insurance.

FDR didn’t have strong feelings about benefit levels, retirement ages or eligibility standards. He focused on what he called guaranteed return. By that he meant that having paid into the system through a kind of insurance premium (though in fact it was merely a payroll tax), Americans should rest easy that some money would be there for them if they lived long enough to need it. The whole point was “insurance against need.”

“Guaranteed return” and “insurance against need” should continue to be the two guiding principles of social-insurance reform.

“Guaranteed return” means no privatization or voucher system for these programs. FDR would have strongly opposed President George W. Bush’s plan to allow Social Security contributions to be invested in the stock market. He thought subjecting retirement income to what he called “the winds of fortune” was a breach of the social contract. Imagine what would happen to someone who retired in 1929 or 2008? No guaranteed return.

Jonathan Alter

Jonathan Alter is a bestselling author and journalist who served as senior editor for Newsweek from 1983 to 2011. He is currently a lead columnist for Bloomberg View as well as a contributing correspondent to NBC News. Alter's 2010 book, The Promise: President Obama, Year One, reached #3 on the New York Times Best Seller list.

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  1. nobsartist March 1, 2013

    Want to make a stand on entitlements?

    Get some balls and demand the tax (or contribution or whatever you want to call it) MANDATORY ON ALL INCOME. NO CEILING, NO EXCEPTIONS.


    1. Lovefacts March 2, 2013

      I agree with you. There should be NO ceiling re income for Social Security or Medicare withholding. Also, it shouldn’t matter if the money is earned or, as the tax code calls it, unearned. Include all income from every source. Why should the rich be exempted when the rest of us pay and pay and pay.

    2. Independent1 March 2, 2013

      And the need for benefits should be means tested. Seems absurd to me that someone who over their working life accumulates considerable wealth (lets use Romney as an example), should on retirement get a benefit check of say 5,000 dollars a month, just to deposit into his bank account that already has maybe 250,000,000 dollars in it. That would be like adding a $1 a month to my account. What’s the point? He would already have more money than he should realistically be able to spend.

    3. Dominick Vila March 3, 2013

      I agree. A SS contribution cap on $106K earnings allows multi millionaires to satisfy their obligation by sunset on January 1st, while the average American worker contributes 52 weeks a year. Eliminate that cap and our SS concerns would be gone overnight. Unfortunately, our political system is designed to protect the interests of the wealthy at the expense of the middle class and the poor. Don’t expect the SS, loopholes or subsidies to sectors of our economy that don’t need them to go away any time soon. Corporate welfare, involving the redistribution of wealth from those who work for a living, to those who already own 2/3 of the financial wealth in this country is alive and well, and will remain so until we all wake up and say “I had enough, and I am not taking it anymore”.

      1. Independent1 March 3, 2013

        It’s unfortunate that you’re so right and sad that so many Americans still don’t see the writing on the wall. As Theodora30 pointed out earlier, it seems that Dems have not been very good at getting the message across about how the GOP is manipulating the truth to create a sense of fear that has been allowing them to hold the country hostage.

        Through lies and distortions, the GOP has created in many American’s minds the idea that not only is America broke (which it clearly is not) but also that the only solution to fixing its problems is through drastic spending cuts – which is absurd given that Obama has cut spending drastically over the past 4 years to the lowest levels in years which is slowing but not keeping the deficit from rising. It should be clear to pretty much anyone with one once of common sense that the only solution is to get back to creating more companies and jobs, and to revamping antiquated tax and social benefit legislation in a way that will spur the economy by raising consumer confidence and spending; while at the same time making the legislation fairer to all Americans.

  2. I Zheet M'Drawz March 1, 2013

    Want to make a stand on entitlements? Ever wonder why they’re called ‘entitlements’?

    They’re called entitlements because we paid for them!

    So shut up anout entitlements, these so-called entitlements are nothng more than insurance we pay for in case our political leaders crash the economy, which they did.

    So shut up!

    1. nobsartist March 2, 2013

      Yes but they dont like them because they cannot screw us into paying exorbinant management salaries which result in more bribes being paid out.

      Like the bribe paid to Obama to force all Americans to support the formerly illegal “for profit” health insurance cabal created by republiCONs and enabled by Democrats.

      1. Independent1 March 2, 2013

        Your expressing an opinion again on a very limited understanding of the law; and you’re doing it far too soon. You have no idea of the long range impact that Obamacare will have. It has already drastically slowed the rise in insurance costs over the past two years to the lowest levels in 15 years; and only the portion of the law that would tend to increase premiums has taken affect – the portion that requires insurers to provide more benefits and restricts their ability to deny coverages. The portion of the law which should reduce premiums by making millions more customers available to the industry and for healthcare providers to drastically cut their charges because there will not be so many people getting healthcare that can’t be paid for doesn’t take affect until next year. You may be a proponent of universal government covered healthcare, and that may well be a good solution, but during a time of deep recession when the government is already running trillion dollar deficits, I fail to see how that would have been a good solution to implement at this time. Obamacare at least offers a means for controlling healthcare costs and could well be a stepping stone to universal healthcare at a time when we can better afford that.

        1. I Zheet M'Drawz March 2, 2013

          Some folks, like me, don’t care about the negative numbers on the governments’ spreadsheet. Right now I care about the problems the bankstas & the Republicants saddled the comon working family with by destroying the American job market.

          People either get health care or they get sick, maybe die, maybe contract something really infectious & spread it wildy because they couldn’t get an anti-biotic.

          I want people to have food stamps & mothers to have WIC. You expect the kids to do what, DIE? To balance your spreadsheet? I don’t think so.

          We’ll provide for our nations people & we’ll get out of this mess. And then you can expect a raft of Laws pertaining to banksters, insurance companies in the form of very tight regulation as to what they can charge PLUS remove the Republicant sponsered Laws that give American companies a tax incentive to fire Americans & send the jobs to some Shi’ite hole in the Mid-East.

          And if you really want to cut the deficit after we take care of our own familes & friends then just withdraw from themiddle east wars, get out. Let them fall to crap if the people don’t have the stones to keep their freedom. Why should my kid die for their freedom when they aren’t fighting for it & instead are all supporting the crazy factions, like Taliban.

          Say…let’s get rid of the tax exempt status of churches too.

          1. Independent1 March 3, 2013

            I’m a little confused – your comment addressed a lot of issues far beyond what I was commenting on – I was only trying to let nobsartist know that there’s no one in America today who really knows the long range impacts that Obamacare will have and that his comment about “illegal ‘for profit’ insurance cabal” is total nonsense coming from him at this time.

            Having said that, are you aware that starting next year (2014) that if your state implements the Obamacare legislation, that the government will actually provide subsidies to the people that you say cannot afford the healthcare for their kids; subsidies that hopefully will make it possible for them to afford the health insurance they need to care for their families?

            And with respect to the deficit, withdrawing from the Afghan war that we’re currently fighting wouldn’t make a dent in bringing down our deficits. Obama has already wound down the war to where the costs of waging it are far lower than when Bush was in office. The only way to bring down the deficits is for the GOP to agree to passing Obama’s jobs legislation so America can get back to creating more companies and jobs so the country can get back to where there are many more companies and people paying taxes on the wages and profits they make.

    2. TheSkalawag929 March 2, 2013

      I understand your displeasure but the word entitlements has become tainted by the republicans and a rallying cry for those who deny their benefit to those who need them most.

      I agree with your definition. Maybe it’s time to find a more palatable synonym. One we don’t have to fight over as we fight for the insurance policies we have paid for.

    3. m8lsem March 2, 2013

      The Repugnicans have made ‘entitlement’ into a dirty word, meaning undeserved gift.

  3. stcroixcarp March 2, 2013

    Start referring to Social Security and Medicare as pre-paid benefits, or paid for benefits, and start talking about oil subsidies, tax breaks for private jets, agricultural subsidies to non farmers as unfunded corporate welfare.

    1. Lovefacts March 2, 2013

      I’ve been singing this song for a long time. I hope Democrats wake up before it’s too late. The right-wing has controlled how we discuss taxes, entitlements, social issues, and who has value for too long.

      In truth, the tax code, along with subsidies, has turned the rich, super rich, corporations, and mega non farmers into takers, not makers. It’s the rest of us–from the working poor through high middle class–that keep this country running.

      It’s time we took it back, starting with the ballot boxes in the 2013 off-year elections–like here in Virginia.

    2. Theodora30 March 3, 2013

      They are social insurance programs so stop calling them entitlements or social welfare. As for how much we will take out of Medicare, that is also a red herring. The problem is the cost of our health care system, not of Medicare. If we had the costs of a country like Canada or Germany we would not be facing such a big problem. As for Social Security, it would take very little to fix the temporary shortfall due to the number of baby boomers retiring in the next few years. Just raising the cap on income being taxed or taxing it a lower rate but for much higher incomes would do the trick.

      Democrats have been terrible at messaging while Republicans are experts at market testing new phrases to cover what they are really doing. Frank Luntz came up with such doozies as “death taxes” and “privatization” while Dems just rolled over and played dead. How hard could it be for them to call the Republicans on this. For example we should all start talking about “profitization” which is exactly what turning Social Security or our schools is all about.

      1. Dominick Vila March 3, 2013

        I understand where you are coming from, and the negative interpretation the term entitlement represents for some, but rather than focus on semantics shouldn’t we try to educate a segment of our society that, at times, seem to live in the middle ages and afflicted by either the Inquisition or the crusades.
        Social Security and MEDICARE are, indeed, insurance programs run by the government. We pay into them throughout our professional lives, and in the case of MEDICARE we continue paying fees after we retire. It is anything but a handout or welfare, in fact, it is expensive but a lot cheaper than having to get health and retirement insurance from a for profit insurance company. Most importantly, ALL Americans are eligible for it regardless of ethnicity, income, gender, or political affiliation. The only requirement is age.

        1. Theodora30 March 4, 2013

          Words can be used to obfuscate or to clarify. Using words that clarify the nature of a program or proposal is one of the easiest steps to take to educate a public that does not pay close attention to politics. “Profitizing” Social Security is a simple, accurate way to tell people what the Republican plans to “privatize” it are designed to do.

          I guarantee you that the average person thinks “welfare” when they hear the word “entitlement”. Simply changing to the term “social insurance” and pressuring the media to do it in order to better inform citizens is an easy way to educate the public.

  4. m8lsem March 2, 2013

    First, we need to separate the accounting for Social Security out of the budget and into a separate report. That would immediately end discussions of Social Security as a today disaster. The fund is very solvent for at least ten to fifteen years, if not longer. Let’s just go back to the 1933 – 1958, at least, method of stating it. Merging the bookkeeping was done to make the deficit look better than it was.
    Chained CPI, as I understand it, is based on the concept that we will make more pancakes rather than buy steak, i.e. the elderly will economize when the cost of living rises. My response to that is, one can only take that step once. If I economize in 2014, there’s nothing left as margin with which to economize in 2015. You can chain me one year, but not every year. If Chained CPI means something other or different, enlighten us.
    To raise the amount of income which is subject to payroll taxes is a simple thing to do, and then index that for inflation.
    And while talking economics, let’s have a little stimulus for rationality; if inflation reduces the value of the minimum wage, let’s take the percentage by which it is reduced, and add that same percentage to the top income tax bracket.

  5. BDC_57 March 2, 2013

    Why doesn’t the goverment pay back to social security what they borrow for
    bush’s wars.

    1. Independent1 March 3, 2013

      The social security fund has not been borrowed from – that’s an old wives tale. The fund currently has 2.7 trillion dollars in it which will continue growing for the next 8 years (till 2021) and peak at 3.0 trillion dollars. If no changes are made in current SS benefits or its revenue sources, starting in 2021, the government will have to find a way to start supplementing the account to keep it from being exhausted by 2033.

  6. Dominick Vila March 2, 2013

    What we must get smart on is not only entitlements, but the fact that the GOP has been setting us up time and again. Most of our monthly crisis have been engineering by House Republicans intent on getting their way. When the administration agrees to their demands, they turn around and blame Democrats for doing what they pushed for. The President must be absolutely clear and unwavering on entitlements. No cuts to Social Security, and which MEDICARE cuts take place will be those we propose. If the GOP does not like that, let them bear the ire of senior citizens.

  7. MARK March 2, 2013

    While I agree that the term entitlements should be thrown out,I have to question the mindset of the author.He gives the impression that he expects the economy and the employment rate to remain stagnant.More working people make more contributions to the program.He does offer at least one good idea and that is that every working person regardless of income contributes.I will go one step further and propose that anyone reaching retirement with a million dollars or more must forego collecting benefits.Now I know that many would cry,kick and scream at that idea but consider that insurance is a gamble anyway.What guarantee does anyone have that they will live long enough to collect? If you do live that long,and you have done well enough to get there with a million or more,then you don’t really need the benefits.If I want to claim benefits from any other type of insurance I must prove a need.If you die ahead of time then the funds you have paid should be used towards final arrangements.In an effort to be fair all who contribute should be required to do so at the same rate.Disability would be funded similarly with those collecting benefits switching over to SS when coming of age.Now before I am to be condemned please remember that this is just an idea. I am no economist.

  8. Germansmith March 2, 2013

    Medicare and Social Security are like insurance programs in which you pay premiums for a protection or projected benefit…but not really
    The benefits and the cost for such a benefit in any insurance plans are determined by actuaries (bean counters that analizes the cost for insurance benefits)
    Medicare costs are dictated by the AMA, Hospital Assoc. Big Pharma and other medical providers, who are doing quite well $$$$$ even in our economic collapse.
    Social Security payments are mostly determined by politicians not taking in consideration increase life span…they just want to make sure they get the senior’s votes.

    If we are going to be calling these programs insurance, what do we call Medicaid and other welfare programs? Compelled Charity? Wealth Redistribution? Civil Peace blackmail payments? votes for democratic politicians?

    The point is, whatever you want to call them, we still have to reform them, because we can not afford them if left as they are.

    I am not putting all the blame on the politicians…most of the blame is on us because we are selfish creatures……If we receive a benefit, then it is an Important Social Program.
    If the other receives the benefits, then we call it a giveaway, corporate welfare, corruption, etc.

  9. lana ward March 2, 2013

    Nixon–I am not a crook,, Omuslim–I am not a dictator

  10. ralphkr March 2, 2013

    First: I am in my 70s and I do not have SS or Medicare because of too many years wasted in exempt occupations such as LEO, military, etc. but I definitely feel that turning the programs into means tested programs most definitely converts them from the current insurance program to a welfare. I realize that most folks think that the rich should not get entitlements but that poses a problem: What is rich? To my great-grandkids it is someone with a $1,000, my grandkids it is someone with $100,000, 50 years ago I would have considered it as someone with a million but I have become wiser and now consider someone rich if they have 5 million because a million really doesn’t go very far now. Some suggested not only means testing but having to prove a need and my answer to that is that I pay for insurance (health, home, auto) and would certainly be upset if their means testing criteria was applied and my vehicle or home was damaged or I got sick but the insurance company would not have to pay because I had money in the bank and that is what means testing does.

    There is absolutely no reason to change SS or Medicare other than to raise the cap on pay and to allow Medicare to ask for bids for drugs just as hospitals do now & crack down on the super profits made by insurance companies. Some time ago I did an interactive survey on balancing the Federal budget (pretty obvious that it was written by conservatives since the suggestions about cutting military and closing oil accelerated deduction were presented with negative language while raising SS & Medicare age to 70 with positive slants) and I discovered that I could not only close the short term gap but end up with a multi-billion $ surplus at the end of 20 years without touching either SS or Medicare other than to streamline Medicare. My surplus would have been even more if raising the SS salary cap, cutting out the fake carried interest exemption, and a few other anti-conservative items had been allowed.

  11. WebAntOnYouTube March 3, 2013

    The politicians probably found a way to steal it or miscalculations were made based on changing economic circumstances. The bottom line is that changes need to be made to social insurance programs or they will fail to provide for us when we need them. I think this is what the author was trying to convey,not callous disregard for the welfare of the elderly.

  12. charleo1 March 3, 2013

    Sometimes I wonder just how skewed toward the top, our system of taxes, and distributed benefits
    to the wealthy can become, before the Right can no longer characterize those programs that most
    benefit the vast majority of us, the people, as something that must be eliminated? Or, that it is
    just too expensive, and it is only by our flawed conception of the role of government, by extolling the merits of healthcare for the poor, or working poor, and elderly, or a modest, publicly funded retirement at the end of our working lives, can somehow be construed as refusing to face the. “facts.”
    This talk, and that’s all it is, is insanity, sold as sound, fiscal policy. We might as well,
    contend, if we adopt this, that sure, in a perfect world, the sick could see a doctor. And people
    would be able to have a few years of respite after a lifetime of work. But unfortunately, that would
    mean raising taxes on those who are seeing 80 cents of every dollar gained go straight into their pocket and so, taxing them, would be wrong. Better that we have our sick die for lack of care.
    And our elderly, live out their last remaining days, without a dime in their pockets, living on the
    generosity of charity. So, in the end, they not only lose their independence, but their dignity as
    well. And this is a far more moral, and fair, and correct way to conduct ourselves as a society?
    More correct than asking those who are profiting the most, by the sacrifices made by those who have the least, to at least cover the minimum expenses of an impoverished working class, they in large part, created? Well, isn’t that what they are asking you to believe?

  13. droptheBS March 6, 2013

    And we just start referring to taxes as investment, and the national debt as deferred wealth. Changing the paint on the walls doesn’t make the room larger.

    1. droptheBS March 6, 2013

      Or, we just rename guns to ‘clouds’. Sounds puffy AND threatening.

      1. droptheBS March 7, 2013

        Guest – You log off then back on as a psuedo-guest just to copy and paste a deleted comment that you didn’t even write. Why do you suppose there’s a DELETE option, moron? Venezuela just posted a position for dick-tater on Monster. Can’t stand independent action without YOUR approval, eh asshat? How do put it…GFY

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