Because of failure to heed the limitations of the U.S. Constitution, which has produced runaway federal spending, our nation sits on the precipice of disaster. Former Senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton, co-chairmen of President Obama's debt and deficit commission, in a Washington Post article "Obama's Debt Commission Warns of Fiscal 'Cancer'" (July 12, 2010) said that "(A)t present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans — the whole rest of the discretionary budget is being financed by China and other countries."
The commission added the current budget trend is a disaster "that will destroy the country from within" unless checked by tough action in Washington. The tough action required is spending cuts in programs, including the so-called nondiscretionary, eating most of the federal revenues.
According to the Census, around 80 percent of Americans 65 and older own their own homes compared to 43 percent under 35. Twenty-three million households, or 37 percent of all homeowners, own their homes free and clear, and most of these are seniors aged 65 and older. According to the Federal Reserve Board's 2007 "Survey of Consumer Finances," the median net worth of people 65 and over is $232,000, those under 35 years have a net worth of $12,000 and for those 35-44, it's $87,000.
For good reason, older people have accumulated more wealth than younger people; the primary reason is that they've had more time to do it. There is no logical case that can be made for using the tax system to force Americans with less wealth to subsidize those with more wealth. But it's not clear who is subsidizing whom.
Consider an elderly widow, say 70 years old, with a modest retirement income of $18,000 living in a $300,000 house that's fully paid for. She might receive local property tax forgiveness, medical and prescription drug subsidies and other federal, state and local subsidies based upon her age and income.
When subsidies are provided for this lady, whom are we truly benefiting? It's not the lady but her heirs. Conceivably, the lady could make a deal with a financial institution to pay her property taxes, allow her to live in the house for the rest of her life and give her a lump sum cash settlement so that she can live without the handouts. Upon her death, the house becomes the property of the financial institution, not her heirs. Giving the widow handouts allows her to bequeath to her heirs her assets, a $300,000 house. If her children want to inherit the house, they, rather than taxpayers, ought to take care of their mother.
We can start getting the federal spending under control by ending subsidies to people with high net worth that can be ready turned into cash such as a home or business. While seniors might say that they support reduced government spending, they, like other handout recipients, believe they have a right, through government, to live at the expense of others. What's more, they have considerable clout — they vote in large numbers. Only 50 percent of young people vote, but up to 70 percent of seniors vote.
Political guts have always been in short supply and politicians fear senior retaliation at the polls. Moreover, it's a practical matter for seniors and politicians. The true economic calamity won't hit the country until 2030 or 2040. By that time, both today's politicians and seniors will be dead so why should they make sacrifices now to prevent an economic calamity decades off into the future? Seniors might protest my cynicism but they can easily prove me wrong by waging an effective campaign to end handouts based on superannuation.
Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2010 CREATORS.COM
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6 Comments | Post Comment
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Mr. Williams,
I am one of the senior citizens and veteran that you target in your article:Eliminate handouts to U.S. seniors. First, I paid my social security & medicare payments in order to collect my monthly check & the federal government robbed that fund to use elsewhere and never paid the money back. Second, I at one time was in that group of 35 and under and had a net worth of less than $12,00.00, and I worked my butt off to get to the point that I am today, and now you expect me to get a reverse mortgage on my home and live on that money--I don't think so.
You want to elimanate the veterans benefits program? If it had not been for thses brave men and women fighting to preserve the freedoms that you enjoy today, you would not be able to write the columns that you do.
All that needs to be done is to cut out the pork barrel spending, cut out the billions of foreign aid to other nations, you would not have to worry about cutting entitlements to seniors and veterans.
This is my view on your article.
Wesley Oberhoff
Comment: #1
Posted by: Wesley Oberhoff
Thu Aug 12, 2010 8:16 AM
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A well written and cogent perspective. Too bad it so woefully incomplete. In the end, we are all in this together. We will sink of swim together. While singling out Social Security (and note that I am only speaking of Social Security, not at all Medicare, which is a completely different subject) it seems odd that you have forgotten to mention local government pensions, state government pensions, federal government pensions and educational system pensions.
All of your logic applies to each and every one of these subject areas just as succinctly, and perhaps more so. The overhead of unfunded pension obligations is either going to come from somewhere or not be disbursed. I have not seen figures, but my sense it that if we added up all of the Social Security contributions since inception, subtracted pension only disbursals (not including the political entitlements that have been added on) and showed a reasonable return (pretending that the proceeds has invested in something rational like T-Bills or marketable Treasury Bonds, as opposed to unmarketable government securities), that the health of the Social Security system is going to embarrass most government pensions systems. Like I said, in the end (particularly politically), we are all going to sink or swim together. How do you plan to retire, Mr Williams, when your pays twenty-cents on the dollar. Shame on you (considering you stated credentials) for such an incomplete (and seemingly self-serving) missive.
Comment: #2
Posted by: Gary Smith
Thu Aug 12, 2010 5:16 PM
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Dear Mr Williams,
Having been born in 1939, I was taught the values that have been splurged by your generation, like waste not want not or a penny earned is a penny saved. When you invest, you have a right to expect a return on it. Because I was prudent and frugile and expected a decent return on money the Government took out of my paycheck since I was at least 16 years old. Your article stated you are a professor of economics. Congradulations I'm sure youe had to work day and night to acheive such an honor. If the government hadn't made SS and later Medicare mandatory deductions and made us promises we might hav sought other types of investments. We now know they hav squandered the money they were intrusted with on thousands of other projects. I lived before air conditioning, microwaves, malls and computers to name a few, nothing has come easy. I lived with lice, rats and filth and lacked educational oppurtunities except for basic high school. We would be called white trash but we knew economic oppurtunities existed out ther somewhere so we pressed on. We didn't give in then and sure won't now. My God is bigger than any circumstance that may come my way. So you may help with your world of influence by getting resposible representation of a Gov for the people, of the people, and by the people.
lived with lice
Comment: #3
Posted by: THOMAS E PARHAM SR
Thu Aug 12, 2010 8:16 PM
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Regarding your column, "Seniors should give up some benefits...", perhaps you wold like the opinion of an expert. I say that as a 66 year old retiree on S.S with a 96 year old mother in a nursing home under Medicaid and owning her house and a 26 year old daughter living at our home on unemployment. I think that fits all the categories you described.
Unlike your other posters, I'm ready to sign up to your request. However, before giving up any S.S. benefits, I want to receive over the next 19 years all the money I put into the S.S. system plus interest at the rate of inflation, including that on the money remaining in the fund as I withdraw it. That only seems fair. Note that I'm not asking for any of the money that my employer put into the system as a result of my employment. Unlike most/all other retirees, I do NOT consider that to be my money. My calculations indicate that it will take about 19 years. After my money is returned, I will ask for, each year, only my percentage (as one of many on S.S. at that time) of the money paid onto the system by employers the previous year. My calculations indicate that will approximate the current minimum payment (about what my mother is receiving). As for my mother's home, it will be sold at the time of her death to pay back all the Medicaid funds being paid to the nursing home just as you asked. As for my daughter, she is trying to launch her own business in the absence of jobs in the health field for which she received her training. Somehow I suspect that even if the S.S. system takes me up on my offer, she will never receive the kind of benefits that I or her grandmother have. E-mail me if you want more detail on how such a S.S. payout system would work.
Comment: #4
Posted by: Roy Salisbury, Jr.
Sat Aug 14, 2010 10:18 AM
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Dr. Williams. This article must be a hoax on your part, and in a week you're going to tell us what the lesson is you were trying to teach. Surely after listening to you on Rush Limbaugh and reading your columns, you can't really mean what you wrote.
Comment: #5
Posted by: S Hale
Sun Aug 15, 2010 12:21 PM
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I don't have a problem with phasing out Social Security eventually. The idea that senior citizens worked hard for their Social Security benefits is a sham. They did not work hard for them. A lot of them probably voted for FDR who got us into this mess. For your old fart respondents to advocate a Ponzi scheme where they basically live off of a younger generation of people just for their financial benefit is malignant narcissism.
Comment: #6
Posted by: davideowen
Wed Aug 25, 2010 8:16 AM
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