Photo Credit:Social Security card illustration
donkeyhotey via wikim cc2
Democrats, such as Warren, cynically speak with forked tongues on what Social Security is in the name of making it what they want it to be.Over at Gateway Pundit, Margaret Flavin suggests that Elizabeth Warren “continues to display her ignorance,” revealing that she “does not understand how Social Security works.”
She references this post by Warren on X:
When Elon Musk, the richest man on earth, is set to pay the same amount in taxes as your neighborhood dentist, we’ve got a problem.
I’m fighting to get the wealthy to pay their fair share into Social Security so we can increase benefits.Flavin suggests that Warren “seems unaware that Social Security earnings and payouts are both capped.” I’m not so sure about that. In fact, the sheer vagueness of the statement strikes me as rather clever.
Warren fails to mention, of course, that the neighborhood dentist, who may earn, say, $200K annually, would also have his Social Security taxes increased by eliminating the payroll tax cap. And there seems to be a purposefully absent specificity about just whose benefits would be increased. There wouldn’t be much upside, after all, to mentioning that some higher income earners, like the neighborhood dentist, would be excluded from any Social Security benefit increases alongside Elon Musk.
It’s far likelier, in my opinion, that socialists like Warren simply have a knack for crafting bite-sized statements that lack any precise details. In this example, Warren makes a suggestion that the wealthy should be forced to “pay their fair share,” whatever that means. After all, the top 25% of income earners in the U.S. pay 90% of federal income taxes. While that arrangement certainly does appear to be “unfair,” it doesn’t seem that socialists like Liz Warren are framing the victims of that unlevel playing field appropriately.
The truth is that Democrats have been dreaming of eliminating the caps for contributions into the Social Security system while maintaining caps for high-earning beneficiaries like the neighborhood dentist and Elon Musk for a long time. They have dreamed about doing that because it will finally and fully transform Social Security into what they’ve always wanted it to be: a government welfare program.
And while setting up a government welfare program was almost certainly what FDR had in mind when he pitched his “old age insurance” to Americans back in 1935, he certainly didn’t pitch it as a welfare program.
Let’s step back, for a moment, to May of 1935.
America was in the thick of a Depression which was made Greater by the intervention of FDR and his brains trust of Soviet-admiring central planners. At a time when life expectancy was about 62, they brilliantly devised a government-administrated pension program which would pay a benefit of retirement income at age 65.
This was a morally dubious proposition, for various reasons beyond the fact that most Americans at the time weren’t projected to live long enough to collect any benefit at all.
It was widely understood, in 1935 anyway, that the federal government had no right to coerce Americans into any pension arrangement, or into any annuity (i.e., insurance) contract.
And make no mistake, Social Security very much functions as compelled contributions into a deferred fixed income annuity with no return-of-premium upon death. The beneficiary of the potential income benefit has no option to avoid making the required contributions, and has no control over the assets that he is contributing — only the promise of a future income if the rigid conditions of the “contract” allow it.
In May of 1935, the Railroad Retirement Act of 1934 was shot down by the Supreme Court in Railroad Retirement Board v. Alton Railroad Co., with Justice Owen J. Roberts brilliantly describing the slippery slope of how Congress was attempting to assume for itself powers which it has not be given by the Constitution:
The petitioners [for a compulsory pension, interchangeably referred to as an “annuity” in the opinion’s language, for railroad workers], in effect, say: the carriers with certain objects and purposes have adopted voluntary systems; this proves that pensions are germane to the railroad business; Congress may legislate on any subject germane to interstate transportation; therefore Congress may for any reason or with any motive impose any type of pension plan. The contention comes very near to this, – that whatever some carriers choose to do voluntarily in the management of their business, at once invests Congress to compel all carriers to do. The fallacy is obvious. The meaning of the commerce and due process clauses of the Constitution is not so easily enlarged by the voluntary acts of individuals or corporations.
The message was simple, brilliant, and ultimately, prescient, given that the Social Security Act was passed a few months after Roberts gave this warning – some private companies adopting voluntary systems for the benefit of their employees does not automatically imbue Congress with the power to compel all companies to adopt such systems. In other words, the “voluntary acts of individuals or corporations” do not enlarge the federal government’s ability to exercise its authority over Americans’ lives.
And yet, months after this decision, the Social Security Act was passed. Not only did it compel all private companies in the United States to participate in a federally-administrated pension program, but it compelled all Americans at the individual-level to pay “old-age insurance premiums” into Social Security.
But a funny thing happened between 1935 and 1937. “Pension contributions” and “old-age insurance premiums” had become “taxes” by 1937. The federally compelled “old-age insurance premiums” to Social Security by individuals were declared a “special income tax” (see: United States v. Hudson, 1936), and the compelled “contributions” to the Social Security “pension” by employers was deemed an “excise tax.” (see: Helvering v. Davis, 1937).
If you were paying attention to the Obamacare debate in 2012, this language shift should sound entirely familiar to you. The “individual mandate” to purchase health insurance, a long-touted feature of Obamacare, should have always been understood as an infringement on individual rights under the Constitution. But this federal mandate to purchase health insurance was later declared a “tax” by Supreme Court Chief Justice John Roberts in order to maintain a fiction that the law was somehow constitutional.
FDR, personally, went from talking about “premiums” and “contributions” into Americans’ “old age insurance” in 1935, to later talking about the “taxes” that would guarantee the future of his government program.
Sometimes, his language would get muddled within the same thoughts. In 1941, for example, he addressed criticism suggesting that it didn’t make economic sense to levy additional taxes during a depression, as he did. FDR responded:
I guess you’re right on the economics. Those taxes are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics. [emphasis added]
To most Americans, those sentences are still entirely incoherent. One makes voluntary contributions to a pension, for example, in exchange for an eventual return-on-investment in the form of an income benefit in retirement.
“Taxes” are something else. They do not exist to provide any tangible return-on-investment for an individual, but are a coerced payment that exists to generate revenue for the government.
In the end, Social Security is already arguably a welfare program. It is progressive by design, and lower income Americans will generally receive far more than they ever contribute to the program, while higher income earners will generally receive far less than they contributed. So why is Liz Warren hiding the fact that she wants Elon Musk and dentists and engineers and doctors to pay more while collecting disproportionately less from the system they are contributing to?
It’s because there remains a lingering belief among Americans that one’s right to property means something, and there is some value relative to one’s personal earning potential and contributions that should be associated with an individual’s Social Security benefits. If we allow Democrats to completely disassociate those contributions and benefits, the Left will have further chipped away at that foundational belief in Americans’ rights to private property, separate of the government and the collective, which will leave the door is open for a level of tyranny yet unseen in this country.
Image: DonkeyHotey, via Flickr // CC BY 2.0 Deed
