1.2.16

WILL THE WELFARE STATE HAVE TO COLLAPSE OF ITS OWN WEIGHT?

Here's Reason's Jacob Sullum, contemplating cans kicked down the road.
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.
Hostile to do so in straightforward ways, perhaps. But then the reforms take place more subtly.
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.
Because, the self-styled progressives fear, means-tested "Social" "Security" would be just another form of welfare.  Thus you hide the benefit cutting in the tax code.
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.
Thus does the grand fiction of "all in this together" go on.  Until the "trust fund" has to be replenished with more increases in the retirement age and the tax rates.   While private retirement accounts subject to market risk are somehow less safe.

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