There are defined citizens “rights” in the Constitution, not the least of which are those contained in the Bill of Rights, like free speech and the right to bear arms. The following are not included: the right to privacy, the right to “healthy” food, the right to credit, the right to affordable housing, the right to a job, the right to hurricane insurance, the right to healthcare, and the right to retirement income. Yet each of these rights has been demanded by some politically influential group and has been granted to some citizens through legislation or judicial edict.
But conferring these new rights or entitlements to all citizens has a cost which must somehow be paid. It’s not a problem when quid pro quo payment (equal value) is made by the recipient; it is, however, when the benefit far exceeds what is paid. Then the financial burden must ultimately be transferred to all citizens. For example, the right to affordable housing granted home ownership to those making below market payments (subprime mortgages) for the benefit. Virtually every U.S. homeowner is now paying for the consequences of that legislatively manufactured right — $7 trillion of equity value gone.
As damaging as the right to affordable housing has been, it pales in comparison to the coming financial catastrophe of two other rights — healthcare and retirement income, otherwise known as Medicare and Social Security. If left untouched, these legislative entitlements will disable the U.S. economy, meaning their costs will crowd out every other item in the federal government budget, requiring huge borrowing to meet obligations. For example, in 20 years Medicare (including Medicaid) costs are predicted to double (to more about 8 percent) as a share of the economy and boost federal debt to twice the value of GDP.
Recipients of Medicare and Social Security claim they have paid for these entitlements (through payroll deductions) over their working lives and dismiss any attempts to reduce benefits. But the claim is false. According to one estimate, a two-earner couple with average wage income who retired in 2010 will receive $900,000 in Social Security benefits for less than $600,000 in payroll taxes. That’s a 50 percent return on money spent and it gets higher the longer the couple delays retirement. For Medicare it’s even better with three dollars in benefits for every dollar paid — a 200 percent return.
These excessive benefits to one demographic, the retired, have to be paid for by non recipients potentially leaving nothing for when they qualify. The Medicare Trust Fund is rapidly being exhausted, even with squishy calculations of replenishment coming from provisions of the 2009 healthcare reform bill. Social Security doesn’t even have a real trust fund. Any surplus money (payroll tax receipts minus payouts) is spent by the U.S. Treasury which gives Social Security an IOU. Essentially, it’s a pay-as-you-go system dependent on U.S. solvency.
At the very least, benefits must be equated to what is paid in by recipients. There are fair approaches to doing this. Politicians saying they will preserve the status quo are lying. They are vote pandering, promising unsustainable benefits to which you are not entitled.
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Write to Gerryk3001@yahoo.com.