GWB vs. FDR II

Slate's Chris Suellentrop joins the chorus of those claiming that Social Security is a "welfare" program. He does so explicitly:

Liberals, for their part, aren't bereft of philosophy. They support Social Security because it's redistributive. In other words, it's welfare for old people. The politically correct term for this is "social insurance."

To Suellentrop, Roosevelt's insistence that the system be designed as social insurance and not as redistributive welfare was a disingenuous, euphemistic form of political correctness. (What a prescient fellow FDR must have been to have embraced "PC" decades before its rise and fall as a buzzword.)

Suellentrop doesn't seem to understand what Social Security is or how it works. Consider what a "redistributive" program of "welfare for old people" might actually look like.

A "welfare" program would be need-based and means-tested. It would not be sending monthly payments to, for example, current Social-Security recipient Warren Buffett, but only to those who required such financial assistance.

A "redistributive" program would be based on some kind of progressive tax, taking money from the haves to assist the have-nots. This progressive tax shouldn't kick in until some fairly high income threshhold. This is almost exactly the opposite of how Social Security is funded. The payroll tax (the largest tax burden for 7 out of 10 Americans) is a regressive flat tax that has no minimum threshhold, but does have a maximum cap — currently $87,900. This is not a "redistributive" program.

Again, I'm willing to entertain the idea of converting Social Security into what Suellentrop already imagines it is. But if we want to turn it into a redistributive welfare program for old people then we've got to make some massive changes. We would need to start means-testing benefits. We would need to abolish the cap on payroll taxes, and to replace the current flat rate with an aggressively progressive one.

I'd prefer, however, to keep Social Security what it is — social insurance and not welfare. It is not a program of redistribution, but an intergenerational covenant (or a social contract, if you prefer) based on the idea that We the People do not wish to live in a society in which half or more of our elderly scrape by in poverty — as was the case before Social Security.*

This contract requires from each of us a duty and in return makes to each of us a promise. The duty is that while each of us is able to work, we will contribute a portion of our wages to ensure the financial security of those who are no longer able to work. The promise is that once each of us, nearly inevitably, reaches the point where we are no longer able to work, that we too will receive such support from future Americans.

I like this system. It is not the only imaginable system, nor does it have a unique claim to moral superiority over every other imaginable system. But it does work (see, for example, this CBPP study from 1999, which shows that nearly half of America's elderly would be in poverty without Social Security). And I would argue it is a more moral approach than, for example, setting the elderly adrift on ice floes or embracing some form of social Darwinism.

Some of the raucous, but interesting, debate in the comments to the previous post seems to have been sparked by my complaint that Jonathan Rauch seems to view "cooperation [as] lower on the hierarchy of morals than atomistic individualism."

My gripe with Rauch's moralizing was his apparent insistence that private, individual accounts were somehow inherently morally superior to the kind of duty/promise, rights/responsibilities system we now have. It's a puzzling assertion that he doesn't explain or defend.

And, of course, where I say "atomistic individualism" and "social Darwinism," others may say "self-sufficiency" and "freedom from any and all government coercion." Tomato, tomahto.

But as for the utopian-anarcho-libertarian notion that the current system is evil because it is based on taxes, well, show me a dollar. Whose picture is that? And whose inscription?

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* This rather obvious bit of history is difficult to grasp for some post-Gingrich ideologues. These folks are convinced that government programs are the primary cause of poverty and that, therefore, FDR introduced poverty with the New Deal. Thus their desire to take America back to the Edenic, Gilded Age, before poverty was created.