Economics, Entitlements, Pethokoukis

Will the tea party force the GOP to give up the fight to reform Medicare and Social Security?

Image Credit: shutterstock

Image Credit: shutterstock

The Wall Street Journal’s Holman Jenkins argues the Affordable Care Act will change how Republicans and conservatives argue about entitlements and welfare. They will draw a line, Holman  writes, between “earned” entitlements such as Medicare and Social Security vs. “unearned” welfare such as Obamacare subsidies, Medicaid, and food stamps. Coincidentally, of course, this position would reflect the immediate interests of the GOP voting base. Jenkins:

Scorekeepers judge the tea party caucus and Republicans to be net losers from the ordeal.  … Not appreciated is the powerful new meme Mr. Obama has handed them, which will transform entitlement politics in our country. The new “conservative” position will be to defend Social Security and Medicare, those middle-class rewards for a life of hard work and tax-paying, against Mr. Obama’s vast expansion of the means-tested welfare state for working-age Americans. … Look for means testing possibly even to evolve into a new pejorative in Republican mouths, suggesting undeserved benefits for groups that mostly vote Democrat.

“Defund ObamaCare” will turn out to be a slogan of genius that resurfaces again and again as the Affordable Care Act, because of its flawed design, needs more and more public funding to keep it afloat. Republicans secretly love the idea that Democrats will be stuck with the Obama welfare state, setting up fights in our overstretched republic between Mr. Obama’s “unearned” handouts and the “earned” handouts of the traditional entitlements. Team Romney was already trying out the new meme in the last election, casting ObamaCare as a threat to Medicare.

Jenkins may well correct about this political and policy realignment, at least over the short term. There certainly seems to be less passion among older tea party GOPers to means test Social Security and Medicare benefits than to repeal Obamacare and trim Medicaid and other welfare benefits for the poor. For instance: During the recent budget fight, Business Insider sent reporter Brett Logiurato to the district of Rep. Ted Yoho, a Florida tea party Republican, to see how voters there thought about America’s debt problem. This exchange is telling:

So what can we cut?Social Security? Medicare?Those are the big, long-term problems on our docket.

“No one’s going to cut Social Security or Medicare. That’s another scare tactic,” Biddle said.

So what can we cut now? 

“You can start with foreign aid. Cut that out. You can cut, you know, federal arts.”

Of course, you cannot solve America’s long-term debt problem without entitlement reform. Medicare and Social Security spending as a share of GDP, according to the CBO’s cautious baseline forecast, is expected to rise from 7.9% this year to 11.1% in 2038. And well-designed means testing is part of the solution. As AEI’s Andrew Biggs wrote in a 2011 National Affairs piece: “It is inevitable that Social Security, Medicare, and other government programs will become less generous toward the rich than they are today. The only alternative is ever-increasing taxes and their toll on personal welfare, individual freedom, and economic growth.” The math is the math.

And a reminder about “earned” entitlements: Here is a chart showing total Medicare and Social Security taxes paid and benefits received:

Credit: Urban Institute

Credit: Urban Institute

38 thoughts on “Will the tea party force the GOP to give up the fight to reform Medicare and Social Security?

  1. ““It is inevitable that Social Security, Medicare, and other government programs will become less generous toward the rich than they are today” and “There certainly seems to be less passion among older tea party GOPers to means test Social Security and Medicare benefits than to repeal Obamacare and trim Medicaid and other welfare benefits for the poor.”

    Of course this would be the case. Once you begin means testing, benefits are no longer “earned entitlements”, they become welfare payments. Isn’t that patently obvious?

    • And you’d be wrong again, MikeK. Lifetime Medicare payouts are higher than taxes paid in for everyone except the very top earners. The bottom line in subsidies should be that they go to folks who need them. Ditto for Social Security. A society matron who never worked a day in her life is entitled to half her husband’s benefit. Make any sense to you? The class that cries “class warfare” at the first mention of taxes seems determined to punish the poor.

      • Turd,

        “And you’d be wrong again, MikeK. Lifetime Medicare payouts are higher than taxes paid in for everyone except the very top earners.”

        On this we agree. And I don’t know a single Tea Partier who disagrees. Entitlements and government in general need to be whacked.

        • I know a tea partier who disagrees, he lives in Ted Yoho’s district and is referenced in this article. Many members of the republican base, being older than the electorate at large, are strongly opposed to cuts in Medicare and SS. Hence the republican ads in the last election hitting Obama for the “cuts” to Medicare to fund the ACA.

          • After a lifetime of coerced payments I’d be against cuts to my benefits as well. Wouldn’t you? But for the good of the country I’d live under a situation where SS benefits were limited to the amount of SS taxes collected, distributed by a formula that factors in contribution amounts. (I believe benefits are slightly skewed to benefit lower income earners now, but I don’t know the exact formula). I don’t have a problem so much with that formula as I do with the fact my progeny are going to pay higher rates with higher caps in FICA taxes as well as higher income taxes to make the SS trust fund whole. This whole house of cards will crush future generations. Look no further than Japan and the western European social welfare states for proof.

          • @Mike

            I would hope you agree to take out benefits that are commensurate with what you put in. With SSA you probably are getting 1/3 too much in payments due to political promises due to pandering to old people. With medicare it is 2/3rds too much for the average person.

            If I demanded you pay a penny a month for a service and promised $1000 a month in return when you retire, I would hope you see that you really didn’t pay in all your life and you really are getting a welfare benefit.

            As for your taking much more than you put in. You will reap rewards, but it is really coming from the money I am putting in now. When I retire, I will be lucky to get 70% of what was promised to me.

          • @marque2

            “I would hope you agree to take out benefits that are commensurate with what you put in”

            I would. Logistically, you have problems though. Unless you privatize the system, how do you know how much to draw out of the system? Would I receive accumulated interest on my payments? What if I outlive my contributions? Someone earning at the current SS wage cap of $113K contributes almost $14K annually. 40 years of contributions (age 27-67) = $550K. Those contributions earning just 6% would net a retirement account of well over $2M. My point was to demonstrate that people who paid into SS their entire lives (with no opt out) should reasonably expect some benefit when they reach retirement age. I agree with you that benefit should be in line with what they paid into the system. That was how SS was originally set up and sold to the American people. Of course, the New Dealers never anticipated the demographic problems the plan might face. In light of those problems (baby boomers) all the original promises and calculations ring hollow.

            “As for your taking much more than you put in. You will reap rewards, but it is really coming from the money I am putting in now. When I retire, I will be lucky to get 70% of what was promised to me.”

            I’m in the same boat as you (maybe slightly better, I’m early 50′s), however I’m more worried about my kids and grandkids. As bad a deal as SS is for me it will be horrible for them, let alone what it will do to the economy as a whole.

        • Just sayin the society matron’s SS benefits aren’t “earned” in any sense. So some measure of means testing eliminates welfare rather than promotes it.

          • “So some measure of means testing eliminates welfare rather than promotes it”

            Means testing is the definition of welfare. From each according to his means….

          • Fine. If you’re stuck on semantics let’s rename it. Henceforth, taking rich people off the federal teat is banana peeling.

          • “Fine. If you’re stuck on semantics let’s rename it. Henceforth, taking rich people off the federal teat is banana peeling.”

            So, expecting to collect SS benefits after a lifetime of contributions is now considered living off the “federal teat”? And this is a “semantic” argument?

            I’m not sure I’m following your logic. I do like to ask people who support means testing these forced contribution social welfare programs, why someone who lives a frugal lifestyle and anticipates a return on their coerced contributions should receive less than the profligate spender who disdains any saving for retirement?

          • Let’s suppose John W Smythe IV spent his life clipping bond coupons. Ditto for Mrs. Smythe IV. Both are entitled to minimum SS benefits. Why? I’m not pretending that this savings is significant. Just making the point that this isn’t as one-sided as you think. On Medicare in particular, the poor die younger and rack up smaller lifetime bills.

      • With medicare the average is 3 to 1 benefits vs payments which easily explains why it is going under.

        As for SSA in 2034 when the “trust fund” runs out it will only be able to make 70% of promised payments. Of course since the trust fund is spent, and we would have to raise taxes on youth enourmously to cover paying back the trust, this 70% payback will probably happen much sooner.

        I don’t understand how much more the relatively poor youth are suppose to push up toward the elderly. When you are in your 20′s you are just starting out and have zero wealth. When you are in your sixties, if you played it right your house is paid off, you have money for retirement etc. In fact just retired folks are the richest demographic in the country, by far.

        So liberals concoct these strategies to transfer money from poor youth to the rich. (Solar energy is another transfer to the rich. Tax money from everybody goes to the rich to subsidize electric power – so the rich don’t have to pay the power – put the poor are left to pay for the 92% backup power reserve. )

        Why do Democrats hate the poor so much?

    • An unfunded obligation cannot be an “earned benefit.” Social Security is now past $20 trillion in unfunded obligations, and Medicare is more. And that is by very conservative estimates involving Rosy Scenario as far as the eye can see.

      Someone needs to be the first to tell the American people that despite the lie — lie — that politicians have told them all their lives, they didn’t pay as much into these programs as the expect to receive out of them. And then he needs to say that, in the words of a late Georgia senator, “There ain’t no Santy Claus.”

  2. If the GOP were to be totally honest about their views of what to do about entitlements – they’d be voted out of office in a heartbeat.

    What the Tea Party is doing is exposing the duplicity of the GOP in sending different messages to different audiences.

    The only way the GOP or Tea Party does what they would like to do is – if they successfully lie to voters and dupe them.

    even then, they’d be voted out at the next election.

    what the GOP and the Tea Party do not understand, do not accept, is that governance means representing the interests of voters – not dictating to voters your philosophies.

    they fundamentally reject the basic concept of governance and that’s a recipe for failure.

    • If the GOP were to be totally honest about their views of what to do about entitlements – they’d be voted out of office in a heartbeat.”

      Could be right. The unsustainability of entitlements is a reality the low information voters have no interest in facing.

      However, if the Democrats were totally honest about their views, Obama especially, the American public would boil them in oil.

  3. “You can start with foreign aid. Cut that out. You can cut,

    Oh, bullsh*t. The tea party contains some of the most well-informed members of the American public. This is a typical maligning of the group that represents the last vestiges of what made America great.

    • Alas, Paul is not one of those well informed members of the American public. In statistics, correlation is express as an R value, with a R=1.0 being lockstep and R=0.0 being apples and oranges. Dan Kahan’s blog post that tea party membership and understanding of science has a correlation of 0.05 is at best apples and apricots. Its only significance is that 0.05 also explains the relationship of better understanding of science and moving from the right to left on the political continuum. Or as Kahan explains, does scientific understanding explain right and left? No.

      Or as Kahan put it: “Next time I collect data, too, I won’t be surprised at all if the correlations between science comprehension and political ideology or identification with the Tea Party movement disappear or flip their signs. These effects are trivially small, & if I sample 2000+ people it’s pretty likely any discrepancy I see will be “statistically significant”–which has precious little to do with “practically significant.”
      Yes, the tea party is just like everyone else — which is to say, highly vulnerable to the reason-effacing consequences of our polluted science communication environment.

      In other words, Paul believes what Rush tells him to believe,

      • Goodness, that’s the sound of a semester and a half of third-rate political science and some half-digested freshman statistics. But, at least you have self-esteem. I suppose Paul has to slink away now,back into the shadows, far from the blinding light of passively received wisdom.

    • The 6 cents we pay to foriegn aid well 8-) is somehow a liberal excuse to have trillions in deficit.

      And then to top off what folks don’t realize about the minescule foreign aid is that much of foreign aid, is giving away surplus stuff the government purchases in the name of price supports. Too much wheat – and the government has to buy it, well they give it to a 3rd world nation and call it $1billion in foreign aid.

      So the real answer is stop agricultural price support programs.

  4. Yes, that’s right. All but the top earners receive more in SS & Medicare benefits than what they’ve paid in. So what is the proposed remedy? PENALIZE THOSE TOP EARNERS YET AGAIN BY IMPLEMENTING FURTHER MEANS-TESTING! (Somehow, though, the author doesn’t state it that way — they’re not the hardworking “top earners” when he talks about hitting them up again. Instead, he says that the programs need to become “less generous toward the rich than they are today.” Hah! The programs are least generous toward the rich, who pay an incredibly large percentage of the freight.)

    Does anyone still wonder why the ambition of individuals in this country has been dwindling? Why should I encourage my kids to become an accountant, an engineer, owner of their own blue collar business, etc. when they can do something that doesn’t require nearly as much work and probably comes with a better schedule (say, yoga instructor)? They won’t have to worry about the fact that it comes with a smaller paycheck, because they can rely on progressive taxation, child tax credits (not available to the upper middle class and wealthy), free healthcare and cellphones (courtesy of higher prices on those of us who pay our own way), and means-testing of so many other things (college tuition, Social Security). All this can give them a lifestyle that does not differ much from those who bust their butts every day to work hard for their families. Oh, I guess there still is one difference – those who work hard have greater self-respect. Well, maybe until this all goes so far that hard workers begin to realize that the rest of the country sees them as suckers and they start to feel that way themselves. What will happen then?

    (Note – yes, I realize that many lower-income people are very hard workers, and no, I am not in the upper tier myself, so no need to comment along those lines. I’m just disgusted.)

    • Personally I think. What goes in should go out.

      IF SSA is only getting 95% of the promised outfow – they should multiply every promised payment by 0.95 and only deliver that amount.

      • Another way to help SSA is to raise the minimum collection age by 2 years. You don’t have to reduce the benefit, but this would encourage the average person to work 2 more years, increasing the amount of money going into SSA.

  5. The pervasive belief that SS and Medicare are like insurance policies (“I paid into them all my life”) makes “reform” of these programs very difficult. FDR, when Congress passed SS, was careful to couch SS in terms of a payroll tax, not income redistribution or welfare–which is why the SS tax withstood any court challenges under the Commerce Clause, as happened with ACA’s individual mandate. Someone needs to explain clearly to the American people that SS and Medicare are not “earned” or “insurance” because Congress can change the benefit rules at any time–as it has indeed done from time to time over the years. SS and Medicare may be intergenerational “social contracts”, but they are not legal contracts that would stand up in court.
    As a beneficiary of both SS and Medicare myself, I’m the first to admit that both programs need significant “reform”. But even my well-educated and well-intentioned contemporaries express their adamant belief that they deserve those benefits because they paid into them all their working years.

    • They paid into them far less than the average one will take out of them. The difference is made up by taking money from young people today.

      Our youngest quintile is our poorest, while our oldest is our wealthiest — and then we add in the intergenerational rip-off programs.

  6. If the Washington DC bureaucrats continue their present trend of passing legislation which will dis-incentivize employment and saving ,and instead incentivize slothful behavior , and an entitlement mentality toward what in the past had to be earned( Housing, Food, and not to mention tax revenue funded Cell Phones ), then our long term future is bleak,regardless of changes to medicare and social security timing of distribution. If the only “choice” left to ponder is the weekends entertainment(I speak of those less than retirement age),because the Messianic Nanny’s provide all , we will stagnate , and then disintegrate like the old Soviet Union but with an Obesity epidemic entailed , despite the Bloombergs of the world. Humans without a need to strive, dither then die on the vine…. Tea Party non member ( but cheerleader)

    • Absolutely. Someone has to do the work. Just because you are sitting on your butt, doesn’t mean that the food is magically coming to you. Some younger person has to stay on the farm and plow the fields and harvest the grain. By overpaying SSA we not only encourage folks to be less productive, we also punish those who are productive and bringing us the food, by forcing them to pay other folks to sit around.

  7. I’m nearing 60 and am not factoring Social Security into my retirement plans. In fact I told people over 20 years ago that I’d willingly let the government keep everything I’d put in to that date if they would let me out of the scheme so I could invest those funds as I wished.

    I also discovered early on Chile’s route allowing people to opt out of their similar program and read only recently that it has been a huge success. Many people I’ve spoken to who one would think would have heard of this were totally in the dark, but then that’s what comes with being too long immersed Washington and too dedicated to holding on to 19th century ideas (Progressive indeed!).

    If the Tea Party decides to distinguish between two types of welfare rather than first pushing for reforms of the type “lowly” Chile has adopted, we really are doomed. However, I don’t trust the current establishment GOP to do anything about regardless of who gives them support.

  8. I’m a 64 yr old Tea Partier, and I would trade all of my forthcoming Social Security benefits in exchange for the opportunity to keep the social security withholding for the rest of my working years.
    Also, I never want to go on Medicare. I’m a physician who has spent his life fighting Medicare restrictions on what I can do for my patients, effectively barred from practicing appropriate medicine by Medicare, and despise the program. I’d prefer to pay out of pocket, or arrange my own (medical savings account) catastrophic coverage through a private insurer than to ever go on Medicare.
    I am all in favor of Medicare and Social Security reform, as per Paul Ryan, or an approach even more market oriented and individually tailoreed–for example, a system of medical savings accounts (first party payor system) for everyone, as well as a 401k type system for all of Social Security, that would give upcoming generations a shot at greater prosperity and control over their own resources and lives. I’ve advocated for these all of my life, was even censored by the Texas Medical Association 20 years ago for advocating what Dr
    Ben Carson suggested at the national prayer breakfast–for which he was audited by the IRS, whereas I was just censored by the TMA. Republicans who shrink from Medicare/Medicaid/SS reform will not be supported by me. And I’m one of those spoiled retiring baby boomers (embarrassed by my own generation, NOT the greatest generation by any stretch of the imagination–my generation saddled the next generations with unsustainable debt and spending, on autopilot–something I’ve objected to all of my life).

  9. I am a 57 year old “Tea Partier”.
    Social Security and Medicare at present are a cross between a Ponzi scheme and a welfare system, and both are a form of stealing. Means testing is merely another way to steal more from the productive, responsible contributors.
    These systems need to be changed completely to a personal savings system where they are entirely associated with each contibutor, the contributor gets back only what they put in plus/minus any investment return/loss, and if the contributor dies the remaining funds go to the contributor’s estate. That would be an honest and fair system.

  10. The best that Pethokoukis could come up with as a spokesman for *all* tea party cohorts is one Congressional representative. Did the reporter ask Pethokoukis any other questions concerning what could be cut in the federal budget? Did Pethokoukis neglect to put those answers in his post? Was Pethokoukis just trying to meet a deadline and this was all he could come up with?

  11. The “elephant in the room “is the immense defence budget

    History shows that great empires allways collapse when the endless demands of the military bankrupt the state
    The Romans.The Spanish.the British all went down the same road
    The miiitary allways find a justification for their vast spending..and in the end destroy the empire they claim to defend
    Can we learn these lessons or does the USA go down to certain ruin too

    At this very moment ten US naval task forces with many huge vessels partrol the oceans.and at vast expense…and ..to what purpose?
    Cut back…spend the money at home on infrastructure
    and solve several probems at the same time

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