Samuelson on the 'Origins of Entitlements'

Rick Moran
A really good article from Robert Samuelson in RealClearPolitics traces the history of Social Security and shows why even FDR wouldn't recognize the program today.

Roosevelt originally saw a "contributory" pension system where workers would pay into the fund and their contributions would grow over time, acting as a government run pension system.

That's changed, of course, as Samuelson points out:

Millions of Americans believe (falsely) that their payroll taxes have been segregated to pay for their benefits and that, therefore, they "earned" these benefits. To reduce them would be to take something that is rightfully theirs. Indeed, Roosevelt -- believing he had created a contributory program -- said exactly that:

"We put those payroll contributions there so as to give the contributors a legal, moral and political right to collect their pensions. ... No damn politician can ever scrap my Social Security program."

What we have is a vast welfare program grafted onto the rhetoric and psychology of a contributory pension. The result is entitlement. Unsurprisingly, AARP's advertising slogan is "You've earned a say" on Social Security. The trouble is that contributions weren't saved. They went to past beneficiaries. The $2.6 trillion in the Social Security trust fund at year-end 2010 sounds like a lot but equals slightly more than three years of benefits.

With favorable demographics, contradictions were bearable. Early Social Security beneficiaries received huge windfalls. A one-earner couple with average wages retiring at 65 in 1960 received lifetime benefits equal to nearly 14 times their payroll taxes, even if those taxes had been saved and invested (which they weren't), calculate Eugene Steuerle and Stephanie Rennane of the Urban Institute.

But now, demographics are unfriendly. In 1960, there were five workers per recipient; today, there are three, and by 2025 the ratio will approach two. Roosevelt's fear has materialized. Paying all benefits requires higher taxes, cuts in other programs or large deficits. Indeed, the burden has increased, because it now includes Medicare, which is also viewed as an entitlement.

It has been convenient for the left to continue the false narrative that since people paid into the system for years, those payments have actually been kept in trust by the government to be doled out once the payee retires. The truth is, every dime we pay into Social Security today is spent almost immediately to pay for benefits for current retirees.

Read Samuelson's entire article for a good background on how Social Security morphed into just another entitlement program.



A really good article from Robert Samuelson in RealClearPolitics traces the history of Social Security and shows why even FDR wouldn't recognize the program today.

Roosevelt originally saw a "contributory" pension system where workers would pay into the fund and their contributions would grow over time, acting as a government run pension system.

That's changed, of course, as Samuelson points out:

Millions of Americans believe (falsely) that their payroll taxes have been segregated to pay for their benefits and that, therefore, they "earned" these benefits. To reduce them would be to take something that is rightfully theirs. Indeed, Roosevelt -- believing he had created a contributory program -- said exactly that:

"We put those payroll contributions there so as to give the contributors a legal, moral and political right to collect their pensions. ... No damn politician can ever scrap my Social Security program."

What we have is a vast welfare program grafted onto the rhetoric and psychology of a contributory pension. The result is entitlement. Unsurprisingly, AARP's advertising slogan is "You've earned a say" on Social Security. The trouble is that contributions weren't saved. They went to past beneficiaries. The $2.6 trillion in the Social Security trust fund at year-end 2010 sounds like a lot but equals slightly more than three years of benefits.

With favorable demographics, contradictions were bearable. Early Social Security beneficiaries received huge windfalls. A one-earner couple with average wages retiring at 65 in 1960 received lifetime benefits equal to nearly 14 times their payroll taxes, even if those taxes had been saved and invested (which they weren't), calculate Eugene Steuerle and Stephanie Rennane of the Urban Institute.

But now, demographics are unfriendly. In 1960, there were five workers per recipient; today, there are three, and by 2025 the ratio will approach two. Roosevelt's fear has materialized. Paying all benefits requires higher taxes, cuts in other programs or large deficits. Indeed, the burden has increased, because it now includes Medicare, which is also viewed as an entitlement.

It has been convenient for the left to continue the false narrative that since people paid into the system for years, those payments have actually been kept in trust by the government to be doled out once the payee retires. The truth is, every dime we pay into Social Security today is spent almost immediately to pay for benefits for current retirees.

Read Samuelson's entire article for a good background on how Social Security morphed into just another entitlement program.