From: mje@pookie.pass.wayne.edu (Michael J. Edelman)
Subject: Re: Middle-class entitlements (was Re: Taxin
Reply-To: mje@pookie.pass.wayne.edu
Organization: Wayne State University
Distribution: usa
Date: Tue, 26 Jan 1993 13:37:30 GMT

In article 6683@uunet!tellab5!odgate, mike@uunet!tellab5!odgate (Mike J. Kelly) writes:
>bboerner@novell.com (Brendan B. Boerner) writes:
    [...]
 >
>My point is that you have to look at the middle-class as a whole, not
>an individual taxpayer at a particular point in time.  As a whole,
>the middle-class is benefiting from government spending.  Only those
>dreaming of some libertarian utopia think that MOST people would benefit
>if government spending were replaced by private spending.  Private
>spending doesn't build roads, or mass transit, or other public
>infrastructure available to everyone.  Private spending doesn't provide
>universal health insurance, like Medicare, as we all know all too well.
>
On the contrary; the middle class is getting back a small fraction of what they pay
in. Government overhead eats up a large fraction of even those funds that 
get redistributed.

What does the middle class get from the federal government? Not a lot. The
direct day-to-day services, like schools, police, fire, sewers and so forth are
paid for by your local taxes. The Federal Government provides defense, food and 
drug standards, pollution standards, etc. Other than defense, you're getting 
mainly regulations and some enforcement. Defense is the only large budget item
that you benifit directly from. You do pay a lot for things that works against
your interests, like agricultural subsidies. Here you pay twice: First, to 
pay for programs, and second, in higher prices. ANyone who thinks the Dep't of
Agriculture is doing wonderful work should read James Bovard's book, The Farm
Fiasco. The Dep't of Agriculture pays the equivalent of something like $100,000
to every farmer in the US if it were partialed out. 
>
>The fact that many middle-class people in their thirties and forties do
>not believe that they will get anything from social security does not
>prove anything other than that many people believe they will not ever
>get anything from social security.  If they are planning on that basis,
>more power to them; I am, too.

A brilliant exposition, no? If you take a moment and look at the official 
projections of the SSA you'll see the fund is going bankrupt around 202-2030. If
you compute what you'll be getting, you'll see that if you have arranged for your
own pension you'll be getting almost nothing from Social Security. No doubt 
benifits will be further reduced in the future to stave off insolvency.

>
>However, all that is necessary to fix this
>problem is the political will to fix social security.  Consider: if
>social security were invested in equities, the way any sane retirement
>plan would be, it would easily outpace inflation and return enough to
>pay our collective retirement incomes.  Why isn't it?  Well, that would
>be (gasp) socialism!  

Try again.

The reason it isn't is that you can't raid a fully-funded retirement
program as easily as you can a Ponzi scheme. SS doesn't exist to help the
poor retiree; it exists to buy votes. It's a matter of using the money from
one generation to buy the votes of another. And like any Ponzi scheme, it
falls apart when the demographics change.

Social Security was instituted when the average life expectancy was darn close to 
65. Few people were expected to live long enough to collect. Now we have people
who don't plan their own pensions, thinking SS will take care of them. We also
have dozens of other programs tossed in with SS, as it's not only sacrosanct,
it's "off budget". Insolvencies in SS- and it *is* insolvent, despite the 
current positive cash flaw- don't show up in the debt.

  --mike edelman




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