Thursday, January 17, 2013

194. Let's take the stigma out of entitlements

From the presidential election to the fiscal cliff, the debate on entitlements is far from over. As a significant part of social structure, entitlements provide many different functions in our society--they play a critical role in providing resources to those who need, deserve or have a right to them. For some, it is a retirement program or form of health insurance. For others, it is a costly and unnecessary burden on our Federal Government. Either way, its impact is so significant that Robert Samuelson, columnist for the Washington Post, stated that, "supporting retirees is now the federal government's main activity."

This difference of perspective is often reflected in the diversity of programs and definitions, which range from a legal right to benefits to a perceived lack of personal responsibility.

I think Wikipedia's definition of entitlement is actually pretty good: "An entitlement is a guarantee of access to benefits based on established rights or by legislation. A ‘right' is itself an entitlement associated with a moral or social principle, such that an ‘entitlement' is a provision made in accordance with legal framework of a society. Typically, entitlements are laws based on concepts of principle ("rights") which are themselves based in concepts of social equality or enfranchisement."

Wikipedia also offers the other perspective of entitlements: "In a casual sense, the term "entitlement" refers to a notion or belief that one (or oneself) is deserving of some particular reward or benefit--if given without deeper legal or principled cause, the term is often given with pejorative connotation (e.g. a ‘sense of entitlement')."

Before we can have the debate, it makes sense that we need to discuss the context of entitlements--inclusive of the individual right, social value, and of course, the social cost. Politically, the term has been contested--embraced by liberals as a social necessity, while fiscal conservatives and libertarians have created a sense of anxiety, or even resentment toward those who receive entitlement benefits. The number of entitlements and rights to them differ, but most embrace a form of social insurance--or socialism.

Thus some entitlements are participatory programs, in which many will receive benefits; others are disability or welfare programs, offering help to those enduring unfortunate circumstances.

Arising as a social insurance, due to the high poverty rates among seniors, some might be surprised to know that Social Security is actually a regressive tax. As worker's two percent tax holiday expired when it was left out of the fiscal cliff agreement, it is important to note that the tax liability ends at a gross income of $113,700. Thus those making one million dollars a year pay the same amount of social security taxes as someone making $113,700.

Medicare is a similar social insurance, meant to provide health insurance to seniors who likely no longer have health insurance available through employment or find it too expensive to purchase individually. Conversely, Medicaid and Supplemental Nutrition Food Program (SNAP and formerly referred to as food stamps) are means-tested social programs that offer health insurance and assistance to purchase food to low income families and individuals.

In terms of the participatory entitlements, consider the analogy to other forms of insurance, such as car or homeowner insurance.

Homeowner and car insurance are similar to many of our entitlement programs in that many people make payments, contribute to an "insurance" pool of resources, in which some members will be legally entitled to payments based on a qualifying event or circumstance.

In others words, members pay premiums for the legal right to access benefits if or when they become eligible. In essence, as a matter of protection, everyone in the pool has contributed resources--so that nobody suffers greatly in the time of need. Does anyone feel guilty about receiving a check from a homeowner insurance company if his or her home has been damaged? After all, if it is a significant claim, it is not your money--it is the money of the people in your insurance pool. Essentially, it's a handout.

And like Medicare and Social Security, there are "winners and losers." Some members pay homeowner or car insurance all of their lives, but in the absence of a qualifying event, they never receive--or are never entitled to-benefits. Likewise, some people will die before they can receive Social Security payments; others will live to 100 and collect it for decades. Similarly, the pool of resources becomes compromised if more people are collecting benefits (in the wake of a major storm perhaps) than are paying into it.

As for the idea that entitlements create a dependent society, the Center on Budget and Policy and Priorities released a report debunking the notion, "Some conservative critics of federal social programs . . . are sounding an alarm that the United States is rapidly becoming an "entitlement society" in which social programs are undermining the work ethic and creating a large class of Americans who prefer to depend on government benefits rather than work. Such beliefs are starkly at odds with the basic facts regarding social programs, the analysis finds."

The Center's report found that only nine percent of entitlement benefits go to young and able non-working households. It reported, "Federal budget and Census data show that, in 2010, 91 percent of the benefit dollars from entitlement and other mandatory programs went to the elderly (people 65 and over), the seriously disabled, and members of working households. People who are neither elderly nor disabled --and do not live in a working household -- received only 9 percent of the benefits. Moreover, the vast bulk of that 9 percent goes for medical care, unemployment insurance benefits and Social Security survivor benefits."

Entitlements will continue to be a political hot topic, and like any other government program, there needs to be an in-depth analysis of revenue and expenditures--to both project and protect viability. We also need to consider such programs in the midst of the federal debt. But in the discussion of these analyses, we need to be fair and realize that many of these programs are a form of social insurance-participatory and available to most Americans. They provide important health and retirement benefits to our seniors and the severely disabled. They exist as a social contract for each of us--and each other.

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