The Right Opinion

Progressives Support Welfare for the Rich

By Jacob Sullum · Dec. 5, 2012

Since Republicans are pushing entitlement reform and Democrats like taking money from rich people, you might think they could agree on means-testing Medicare and Social Security as part of a deficit reduction deal. Yet many Democrats are surprisingly hostile to the idea of tailoring these programs to help people who actually need them.

There are two main reasons for this resistance – one strategic, the other ideological. Neither is persuasive, even from a progressive point of view, at a time when trillion-dollar deficits are the norm and publicly held federal debt is projected to reach 150 percent of gross domestic product within two decades.

“I don't see want to see Medicare turn into a welfare program, which is what it would be if wealthier people didn't benefit from it or had a significantly reduced benefit,” Rep. Keith Ellison, D-Minn., told ABC's George Stephanopoulos on Sunday. “It needs to be something shared that Americans are all in, that we all participate in and we all contribute to.” Ellison is co-chairman of the Congressional Progressive Caucus, which opposes any cuts to Medicare or Social Security benefits.

The strategic rationale for this position is that reducing or eliminating retirement subsidies for people who can easily get by without them would spoil the illusion that all of us are “entitled” to those benefits because we have “earned” them through our “contributions.” In reality, Medicare and Social Security are funded through intergenerational transfers from relatively poor workers to relatively affluent retirees.

That does not sound terribly progressive, but left-leaning opponents of means-testing worry that narrower versions of these programs would be politically vulnerable. “If Medicare turns from an earned benefit into a welfare program,” warns Max Richtman, president of the National Committee to Preserve Social Security and Medicare, “you will see support dissipate.”

There is not much evidence to support that prediction. In a 2010 Heritage Foundation report, Katherine Bradley and Robert Rector counted “over 70 different means-tested anti-poverty programs” and noted that spending on such programs “has grown faster than every other component of government over the past two decades.”

Furthermore, Medicare and Social Security already are transfer programs; they are just poorly targeted. If the aim is to prevent the elderly from sinking into poverty or to ensure that they can obtain the medical care they need, it hardly makes sense to use payroll taxes extracted from middle- and working-class employees to cut monthly checks to Michael Bloomberg or subsidize prescription drugs for Ross Perot.

Both programs do include some modest means tests. The monthly premiums that help fund Medicare are higher for wealthier beneficiaries, for example, and the share of Social Security benefits subject to tax is larger for retirees with higher incomes – functionally equivalent to reduced benefits.

But with Medicare and Social Security facing unfunded long-term liabilities of $42.8 trillion and $20.5 trillion, respectively, they need to move much further in the direction feared by Ellison and Richtman. As Andrew Biggs of the American Enterprise Institute observed last year in National Affairs, “It is inevitable that Social Security, Medicare, and other government programs will become less generous toward the rich than they are today.”

If progressives are having trouble adjusting to this reality, it is not only because they (mistakenly) believe means-testing will jeopardize these programs. As William Voegeli observes in his 2005 book “Never Enough: America's Limitless Welfare State,” progressives' counterintuitive resistance to means-testing also stems from a communitarian vision that sees universal participation in tax-funded social services as inherently good.

Voegeli quotes Robert Kuttner, co-editor of The American Prospect, who in his 1987 book “The Life of the Party” argued that “there is immense civic value to treating middle-class and poor people alike.” According to Kuttner, “a common social security program, or medical care program, or public school program” fosters “social solidarity.”

You may or may not find this vision appealing. Either way, we can no longer afford it.



Wayne in Hinesville, GA said:

I don't understand how means testing would cause less people to contribute to the Medicare or Social Security programs. If you work it automatically comes out of your paycheck. How stupid of me, over half the people in this country never contribute to any social program, they just take from them. Keep spending money we don't have must be the solution to all our problems. 'FORWARD"

Wednesday, December 5, 2012 at 2:50 PM

Tod the tool guy in brooklyn ny said:

I've had a medicare portion, deducted from my paychecks, for about 35 years now. I also pay for my family's own health care insurance. I smell a smelly rat Democrat Socialist, around here, somewhere!

Wednesday, December 5, 2012 at 6:04 PM

Capt. Call in New Mexico said:

Social Security should be sunsetted or made totally voluntary. Those who wish to remain on Social Security, can keep depending on unfunded government boondoggles; the rest of the people can keep their money out of government hands and invest it themselves.

Wednesday, December 5, 2012 at 6:23 PM

Merry in Cave Creek, AZ said:

All of these arguments make sense however, in this case, it would be best to use individual anecdotes that affect most young successful people today. You know---"our future" and all that claptrap.

My 27 year old son has near $140.00 PER WORK DAY taken from his paycheck based on his estimated liability for taxes in 2012. This only accounts for his mortgage interest deduction and excludes the huge costs he incurs as a volunteer for our beloved Sheriff Joe. He really isn't able to deduct much more as he is unmarried (obviously to those of us with moral kids he has no dependents), has a fabulous job that is salaried, and owns his own 500K home with a 225K mortgage. He has no debt whatsoever. He owns a modest 5 year old car in great shape. He just got off the phone with me and said the new roof he needs isn't going to happen anytime soon because it appears he will still owe another 6K in taxes! I am so f'ing mad I could blow! This is Bullsh-t! He has worked since he was 8 years old, went to college, and kept his nose to the grindstone. He is a good, decent, law abiding, smart, and hard working man. How dare those bastards in D.C . (of both parties) discuss this in general terms without looking at the young people being thrashed by taxation! How dare them.

Wednesday, December 5, 2012 at 8:25 PM

Wayne in Hinesville, GA replied:

Merry, They need your son's taxes so they can keep spending like drunken sailors. Also, how can they keep the parasites voting for them if they don't have money to pay for the give-away programs. Unfortunely, your son falls into that category that pays an inordinate amount of tax simply becaue he is single. Congratulations for raising such a fine young man! It's too bad that many parents don't bother to teach their children to be responsible, hard working, and to take nothing from the government.

Wednesday, December 5, 2012 at 9:17 PM

Merry in Cave Creek, AZ replied:

And I am PISSED that he is getting his ass kicked for doing what I raised him to be!

Wednesday, December 5, 2012 at 11:21 PM

Robinius in Broomfield, Colorado said:

What is wrong with means testing Social Security and Medicare payouts? Will George Clooney, Samuel L. Jackson, Oprah, Whoopi Goldberg, Barbara Streisand, Bill Gates, Warren Buffet, Morgan Freeman, Michael Bloomberg, and millions of other well-off Democrats and Republicans and Libertarians actually demand a $2,500 government check? I would think they would be embarrassed. There must be some way of doing this and saving billions of dollars.

Wednesday, December 5, 2012 at 10:19 PM

pete in CA said:

Good arguments of keeping all things equal on the receiving end of Social Security and Medicare. Now let's address the paying in side of the equation.

Why is there a limit, currently $110,100, on income that FICA is paid on? That makes the lower and middle classes pay on 100% of their income, while those who make millions per movie, song, game, bonus, cap gains, etc. are barred by law from paying on 100% of their income? It is a given that they will live better and healthier in their seniority anyway, they should be allowed to pay FICA on 100% of their annual income just like the lesser peons.

Wednesday, December 5, 2012 at 10:22 PM