There's a difference between benefits and entitlements

While I enjoyed reading Ed Conant’s op-ed piece “Democrats should start entitlement reform with Social Security Fix” (Nov. 17), I find his use of the term “entitlement” (although technically correct) rather than “benefit” for Social Security problematic. Visit www.ssa.gov and you will find a “Benefits” tab but not an “Entitlements” tab.

A major problem with the blanket use of the term entitlement is that it conveys the impression of some similarity between government programs like Medicaid or food stamps – which do not receive financial support from its recipients – and programs like Medicare and Social Security, which do receive the support of its recipients’ taxes paid during their pre-eligibility years.

 

ONE OF TWO Social Security Trust Funds, the Old Age and Survivors Insurance, is funded by payroll tax revenues and interest earned by special nonmarketable federal securities purchased with the trust fund’s surplus. Unlike more conventional “retirement” plans with flexible investment strategies, OASI’s annual rate of return on its “investments” is rather fixed. This limits the fund’s ability to maintain solvency, as the number of eligible recipients increases or when the national economy weakens.

Numerous strategies have been proposed to address the potential OASI shortfall. Mr. Conant mentions other remedies like raising payroll taxes (penalizing working people) or chained CPI (penalizing fixed and limited income seniors). Mr. Conant does not address other proposed solutions like increasing the age for full eligibility, means testing and eliminating the payroll tax cap.

 

HOWEVER, GIVEN the decreasing ratio of contributors to beneficiaries since the SSA’s inception, these measures will probably fall short of completely fixing future OASI revenue gaps. In my opinion, with proper and responsible oversight, a plan that allows the SSA to invest some of its revenues more flexibly like traditional “retirement” plans do (yes, there is risk involved) could have the greatest potential to ameliorate the present situation with the least penalty to its contributors or recipients.

I agree with Mr. Conant’s concern about the significant (and partly unexplained) increase in those receiving the tax-supported Social Security Disability Insurance (SSDI) benefits. Preventing (or at least decreasing) fraud and revisiting current eligibility criteria would be a nice start, but will require putting many more boots on the ground and, for a refreshing change, some (or better) evidence-based guidelines for enrolment.

 

FINALLY, MR. CONANT does not identify one of the major “elephants” in the entitlement room. This elephant is the sizeable number of social welfare programs supported by American taxpayers, along with their growing number of recipients, and a long-time favorite child of the Democratic Party.

With increasing federal deficits, these programs are among the least sustainable of the “entitlements” unless they too receive major and long needed overhaul. Perhaps, this is a better starting point for the Democrats’ entitlement fix.

 

(The writer lives in Augusta.)

Democrats should start entitlement reform with Social Security fix

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