A classic expression of centrist Washington "pain causus" thinking from Robert Samuelson, who uses his description of social insurance as "welfare" to justify yet another argument for vast cuts in Medicare and Social Security:
We are a nation of closet welfare junkies, which helps explain why we can't have an honest debate about Social Security. Social Security and Medicare are our biggest welfare programs, but because Americans regard "welfare" as shameful, we've found other labels for them. We call them "social insurance" or "entitlements." Anything but welfare. Democrats and Republicans alike embrace the deception. No one wants to upset older voters. Well, if you can't call something by its real name, you can't discuss it honestly.
Welfare is a governmental transfer from one group to another for the benefit of those receiving. The transfer involves cash or services (health care, education). We have welfare for the poor, the old, the disabled, farmers and corporations. Social Security is mainly welfare. Workers' payroll taxes pay the benefits of today's retirees. The taxes aren't "saved" for the workers' own retirement. There have been huge disparities between taxes paid and benefits received.
Here's Mark Thoma (via Brad DeLong) making the point I'd been meaning to make about this:
Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not welfare.
Just because an economic activity transfers income from one person or group to another does not make it welfare. Fire insurance transfers income. Some people pay premiums for their whole lives and collect nothing. Others, the unlucky few who suffer a fire, collect far more than they contribute. Does that make it welfare? Of course not.
Social Security is no different, it is an insurance program against economic risk as I explain in this Op-Ed piece. Some people will live long lives and collect more than they contribute in premiums, some will die young and collect less. Some children will lose their parents and collect more than their parents paid into the system, others will not. But this does not make it welfare.
Is gambling welfare? Gambling transfers income from one person to another. Does that make it welfare? Loaning money transfers income when the loan is paid back with interest. Are people who receive interest income on welfare?
There is an important distinction between needing insurance ex-ante and needing it ex-post. Insurance does redistribute income ex-post, but that doesn't imply that it was a bad deal ex-ante (i.e., when people start their work lives).
Thus, by this definition, farm subsidies are welfare. Steel tariffs are welfare. R&D tax credits are probably even welfare, and so is AFDC. All of these are pure ex-post redistributions. That is fundamentally different from the purchase of insurance.
It's true that we'll have to trim Social Security and make major changes in Medicare to bring them into balance, but Samuelson has almost a fetish for benefit cuts -- hence, the overwrought, inaccurate language.
(Related reading: Part I in the series "What is Robert Samuelson talking about?" See also this post.)
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