Social Security, MediCare, and Minimum Wage

Okay, so as it turned out, I was completely unable to watch the SOTU address.  And I’m glad.  The last thing I need is to get aggravated by the Commie in Chief’s latest plans to destroy our country.  So . . . yay me!

So then I was reading through my usual list and ran across a great post by the ever-fabulous Adrienne over at Adrienne’s Corner.  She writes about MediCare and about minimum wage through a very personal and understandable lens; it’s true that we have little choice but to draw on Social Security and MediCare, that the system is such that we do, indeed, depend on government.  As such, I think, we try too hard to rationalize these programs and ignore their flaws.  We lash out at the gross mismanagement of our tax dollars . . . often without considering the fundamental flaws in socialist programs and the entitlement state.  We forget that we, yes, even die-hard conservatives, are indeed–as lefties gleefully note–partaking in the entitlement state, fully-invested (so to speak) in the entitlement mentality.

Leftists just love to point out that conservatives draw Social Security and MediCare, and more recently, that we take out student loans.  This latter point, too, is flawed, when I took mine out, they were with private lenders, not the government; I would never ever have taken a loan from the government to go college, even if that meant not going at all.  But my student loans, like everyone else’s, were sold around and then eventually ended up in the government’s lap–indeed, no student loans can be issued today except through the federal government.  Another “benefit” of the 0CareTax.  But I digress, this post isn’t about student loans and the federal take-over of the student loan industry.

There’s a problem with that leftist glee in our supposed “hypocrisy”; Social Security and MediCare have become the sole means of income/coverage for seniors; there is no other option in the majority of cases.  It’s not like we can survive without these government programs, not anymore.  And they love that!  Why wouldn’t they?  The government has the teat from which even the most die-hard conservative adult suckles.  They conveniently forget that it’s the only teat in town.   Big government wins.

Until it doesn’t.

Of course in my response to Adrienne, I went on and on, but I thought it might be worth posting here as a blog post-like thing.  So here it is:

When we speak of unfunded entitlements, we don’t mean what the taxpayer is forced to pay; we mean whether or not the money is there, in a budget. As we don’t have and haven’t had a budget during Obama’s entire presidency, this gets tricky. But as an example, when the Bush prescription drug plan for seniors was passed, it was “unfunded.” In other words, there were no cuts in spending or taxes added to pay for it in that (or any subsequent) budget. The money that we all pay into MediCare and Social Security was not raised (indeed it was cut during the Bush years and only just raised to where it was by Obama), seniors were not tapped retroactively to cover the bill. It was literally an added cost to the tax payer, tacked on to all the other things we pay for . . . and those we don’t.

So that particular entitlement was the equivalent of adding some new cost to your household budget without cutting back on something else or getting a pay raise to pay for it. It can do nothing but accumulate debt and increase inflation/devalue the dollar. This is problematic because it means that the more we do this, the more we offer without the exact amount spent paid in, the higher our deficit (we spend more than we take in) and the more debt we accumulate (the deficit adds to the debt every single day).

Now, about MediCare and Social Security. These are entitlements, but yes, they are partially (almost minutely at this point) paid for by tax payers. When Social Security, for example, was first enacted, the life expectancy was significantly lower, the idea was that the government would be taking in more than it paid out because people would die before they qualified. Nice, huh? Social Security funds, further, were never supposed to be part of the federal budget, they were supposed to be separately managed (remember that “lock box” stuff?). That didn’t happen, and yes the money was thrown away, wasted, porked out to greedy politicians.

By the way, these funds were never invested (and shouldn’t be, not by the federal government). If YOU, on the other hand, had invested that money independently, knowing the risks and assuming you didn’t lose it all in ’08, you may indeed be a millionaire, but there is no guarantee with the stock market.

But, and here’s the rub, once life expectancy grew and the people drawing Social Security grew, nothing was done to address the discrepancy between what was paid in and what was paid out–most people on SS and on MediCare receive at least 50% more in benefits and payouts than they paid in during their working life. This is a problem. It’s not like a Christmas account where you take out exactly what you put in, possibly with nominal interest paid. It’s like having a Christmas account into which you deposit $500 over the course of the year and then take out $750 at the end of the year. Where does that extra $250 come from? And how can we say we’re entitled to 50% more than what we paid in?

These two programs amount to 2/3 (and growing) of federal spending, yet the taxes paid via our paychecks (the means we pay into MediCare and Social Security) barely make a dent in that amount. If we actually paid for our benefits, that would be one thing. But we do not. Not even close. Not even in the ballpark, the universe. This is why they are (correctly) called pyramid schemes. And why they, like all pyramid schemes, will definitely collapse if they continue as they are.

Now, all that said, there is a very serious problem with all of this because when both programs were enacted, they were supplemental to employer-provided pensions. Very very few employers today provide pensions, outside federal, state, and local governments (and most of those are grossly inflated and unsustainable due to union interference). As you note, you have no choice but to be on Social Security and MediCare. Few do. Something that was supposed to be a safety net (for widows, as Social Security first was introduced and passed) has morphed into a retirement plan for all seniors. That was never the intent, but it’s happened. So people have no choice but to take them because they have nothing else. And then . . . well, we are all socialists now as Newsweek once proclaimed and as the opponents of these entitlements stated in their opposition to their enactment.

What do we do now? I haven’t got the answers, but I do know that as long as even conservatives are fighting to maintain the status quo, these programs, along with our entire economy, will collapse. And it’s not a matter of “if” but when.

Now on to minimum wage. You may indeed deserve more than the current minimum wage, and personally, I think you are worth your weight in gold. But here’s the problem with federal minimum wage mandates: nothing changes. The cost of living and the price of everything simply adjusts to the new minimum, so your $10/hour gets you no more than your current $7.25/hour (not you, personally, a general “you” here).

Employers who are already cutting hours/jobs due to the 0CareTax abomination that changes full-time from 40 to 30 hours per week will simply cut more jobs to accommodate the minimum wage increase. And/or they will pass those costs on to the consumer (thus the flattening out that always occurs after a minimum wage hike–you make more but you spend more to maintain the same standard of living). We can make minimum $500 dollars an hour, but it won’t change anyone’s standard of living. All that will happen is that bread will be $45 a loaf (or whatever).

These are serious and complex issues, but the bottom line on it all is that doing more of the same will lead to more of the same until we eventually collapse.

I’ve written about these entitlements before, including providing specific data and graphs (Okay, So We Don’t Touch MediCare, MedicAid, or Social Security and Screw the Scalpel, Chainsaw Massacre of Federal Budget Needed), and the road to serfdom onto which we’ve been herded.

Until these programs are significantly overhauled, or better yet abolished, there is no shame in participating (there currently is no choice).  Let me repeat that: there. is. no. shame. in being on MediCare or Social Security.  None.  And there is no hypocrisy. The trap has been beautifully built: reject socialism?  Well, you’re a big, fat hypocrite because you rely on (totally unsustainable) socialist policies to eat and see a doctor.  Cowed, shamed, and nonplussed, conservatives fight back by stating that we paid for it.  But we didn’t, not even close.  And that’s the trap.  Fight back, and you bite the hand that feeds you . . . . But that hand is the federal government, out of control and spending more than it takes in.  The very thing you disdain.  Do not be cowed.  The system is rigged, we have to rely on it for now; however, that does not mean it’s a good system.

Conservatives have to stop thinking–convincing ourselves–that we are entitled to anything that is not specifically stated in the Constitution or to more than we actually pay into something.  Regardless of our current circumstances, circumstances that were forced upon us probably to cause this exact response, this Constitutional crisis.  Until we stop thinking that way, stop cowering in fear and shame, we really can’t make a compelling case–or any case–for the free market, for capitalism, or for liberty.