In an op-ed published by Fox News, associate professor of accounting Rodney P. Mock considers the insolvency of Social Security and Medicare, and asks why benefits are not means-tested:
“Why is it that being a senior citizen in and of itself automatically entitles one to free medical insurance, prescription drugs and retirement benefits? Rather, if a senior cannot demonstrate financial hardship based on income level and net-worth then perhaps he or she should not qualify for Social Security and Medicare. These entitlement programs need to end for those with their own (and often very significant) financial resources. And, this is especially necessary if we want to preserve them for those impoverished seniors without external resources.
“Certainly, these entitlement programs will never, ever inure to the benefit of this country’s youth, who will contribute far more during their lifetimes into them than their forefathers. Furthermore, for all of the media banter that the younger generations believe in “entitlements,” they in fact exhaust very little of the federal budget of what they are entitled – perhaps unemployment benefits at best. Yet, they receive broken promises from the federal government and entitlement glares from the seniors.”
I suspect seniors would respond to Mock’s point by angrily pointing out they had paid into Social Security and Medicare for their whole lives, and should not be robbed of the benefits just because they happened to retire with a certain level of net worth. After all, they have been told for their entire lives that money paid into those benefit “lockboxes” was their property. In fact, there are still Democrats who insist the Social Security fund is full of money, and people foolish enough to believe them.
In reality, all those gigantic Social Security and Medicare payments disappeared into the sea of money surging through Washington. The benefits of current retirees are paid by money deducted from today’s young working people, as Mock notes, and since the system cannot possibly endure as currently construed, those young people are getting robbed.
Means-test for benefits, however, or continue raising the retirement age, and seniors will howl that they are getting robbed. This is an argument between generations over the ownership of entitlement money, and both sides are wrong.
Who owns Social Security and Medicare: the elderly who paid into the funds throughout their long working lives, or the young people who are actually funding the benefits collected by retirees? The answer is: neither. The government “owns” that money, and will decide what to do with it. Every nickel pulled from your paycheck through deductions becomes the property of the State. You lose any real claim to ownership. Political warfare is your only means to influence how those funds are spent.
It is wise to remember that no political “contract” made today can bind the parliaments of the future. The promises made to the early participants in Social Security have already been modified over the years, and they will be modified again, perhaps dramatically. If a private bank violates a contractual agreement made long ago, you can sue them for redress. There will be no court where you can file an appeal, when the Congress of tomorrow decides what to do with the Social Security and Medicare “contributions” you make today.
Today’s young workers don’t have a “contract” with the government for their retirement benefits, and neither did their grandparents. The balance of politics presently favors the grandparents, and so their needs are met. At some point, the insolvency of our entitlement programs will change that calculation, and the balance of power will shift. It won’t be pretty.
Keep this in mind when the government makes its long-rumored move to seize 401(k) accounts and similar assets. There will be elegant talk of guaranteed benefits and enhanced “financial security” through government ownership. It will be another case of selling the public on the illusion that they somehow “own” what the State has taken… but no meaningful form of ownership requires political victory to assert.