The Daily Caller

The Daily Caller

Social Security reform and the entitlement mentality

Jim Huffman
Visiting Fellow, Hoover Institution

A week ago I suggested (“Why ‘entitlement’ programs aren’t really entitlements”) that we might have a better chance of dealing with the massive future liabilities of Social Security, Medicare and Medicaid if we stopped encouraging the mistaken view that the programs are sacrosanct entitlements. My argument elicited numerous objections that Social Security is different from the other two programs — that it really is an entitlement.

I think the point the objectors make is that Social Security ought to be an entitlement. I fully agree with that sentiment. But it is only a sentiment. As a legal matter, Social Security beneficiaries are not entitled to any benefits beyond those prescribed in current law. If Congress reduces benefits, raises the eligibility age, or eliminates the program altogether, beneficiaries will have no remedy in court.

Of course, there is zero chance that Social Security will be eliminated. But that’s because of politics, not legal entitlement. A proposal to eliminate Social Security would almost certainly not get a single vote in Congress. The problem is that the reforms necessary to the long-term viability of the program also have a near-zero chance of passing. That’s partly a consequence of people thinking and talking about Social Security as an entitlement program.

How many times have you heard congressional candidates, Republicans and Democrats alike, argue that something must be done about the massive future liabilities of Social Security while insisting that their constituents are entitled to every penny (plus cost-of-living increases) they receive or will receive in the future despite the fact that most experts agree Social Security will not be viable in the future unless those benefits are somehow scaled back?

Some of the needed changes are obvious. They are changes that would not compromise the welfare of people in need. In fact, they are changes that would make it possible for Social Security to help those in need for decades to come. Yet our understanding of Social Security benefits as entitlements is a politically insurmountable obstacle to reform.

Upping the eligibility age by a year or two threatens no one’s future welfare. Nor does means-testing benefits. There is no public policy reason that each of my dependent children should be receiving over $600 per month in benefits (Why is my 13-year-old daughter eligible for Social Security?), or that people with annual retirement incomes in the hundreds of thousands of dollars should receive any benefits at all.

But wait, says our entitlement mentality. We have been making FICA contributions every month of our working lives. We have paid into the system, so we are entitled to collect benefits from the system when we retire.

That would be true if Social Security worked like a private retirement account system where future benefits depend on investment returns over the course of one’s employment, or like some public employee retirement systems where future benefits have been ill-advisedly guaranteed. But our Social Security contributions have not been invested for our personal future benefit. They have been used to pay benefits to current retirees or to cover other unrelated government expenditures.

Sure, people feel entitled to receive benefits from a government program to which they have been required to contribute for decades, just as they feel entitled to drive on the roads and play in the parks their taxes have helped fund. But as a strictly legal matter, their entitlement to the former is no different from their entitlement to the latter. It’s all politics.

Once we accept that my children are not really “entitled” to the Social Security benefits they are now receiving, that the well-to-do are not “entitled” to retirement income they do not need, and that today’s 50-year-olds are not “entitled” to begin collecting benefits at age 65 rather than 67 or 68, we will open the door to talking seriously about the reforms necessary to ensure that those in need 20 and 30 years from now will be able to receive the benefits their government has promised.

On the other hand, we could turn Social Security into a true entitlement program in which individuals have personal accounts to which they contribute and from which they benefit at retirement. But that would smack too much of privatization, so let’s start out by describing our existing system for what it is — a government-funded retirement program that must be reformed if it is to survive.

Jim Huffman is the dean emeritus of Lewis & Clark Law School, the co-founder of Northwest Free Press and a member of the Hoover Institution’s De Nault Task Force on Property Rights, Freedom and Prosperity.