Don't let politicians turn Social Security into welfare

Man has invented no better way of sinking a government program than turning it into welfare. Hang the welfare sign around its neck, and a program soon finds itself sleeping with the fishes. The Marianas Trench is not too deep a resting place.

President Bush proposes just that for Social Security. He would slash benefits for upper- and middle-income people, but preserve them for the poorest 30 percent. Call it Social Security, if you wish, but welfare is its name.

I am assuming that this is a real proposal. I have my doubts. The whole thing sounds like another act of psychological warfare, meant to shock the public into accepting private accounts. Or, as some have suggested, it's a tactic to divert attention from more-pressing problems — for example, the explosive growth of Medicare spending. Social Security, by contrast, is an easy fix (and it may not need fixing if the economy continues to grow at the current pace).

Under the president's new proposal, workers earning over $36,500 in today's dollars see massive cuts in Social Security benefits. What would follow is easy to predict: Most workers stop regarding Social Security as an essential source of their retirement income. They start resenting their Social Security payroll taxes more than they already do. Some accuse the low-income beneficiaries of not having worked as hard as they did, or failing to save for retirement. In the end, broad support for the Social Security system crumbles, and Congress finds excuses for throwing it overboard.

Anyone interested in what happens to programs for the poor need only compare the fates of Medicaid and Medicare in recent budget deals. Medicaid, the government health plan for low-income Americans, gets cut by $10 billion over five years. Medicare, which serves all elderly Americans — billionaires included — gets a new prescription-drug benefit. That little add-on is projected to cost taxpayers $724 billion over the first 10 years. (Medicare's administrators recently placed weight-loss treatments on their list of services.)

Note how politicians justify taking a cleaver to Medicaid. "We're not cutting Medicaid," they say. "We're only reducing the growth in spending." This, of course, ignores the swelling army of low-income Americans with no health insurance. When people who qualify for a program can't get the same benefits they could before, that's a cut.

An article in Health Affairs magazine predicts that one in four workers will be uninsured by 2013. Let's face it: The future of Medicaid is grim.

No one tries such sophistry on the nation's well-organized retirees. It's the rare politician who tells older voters: "You may think we want to reduce your promised benefits. Actually, we're only out to contain the growth in spending."

No, you don't want to depend on a government program designed to help only the poor. And that is why in 1935 the creators of Social Security made it a universal program. All workers, from the CEO on down, put money into it. All workers who reach retirement age take money out.

Social Security does have some progressive elements. It replaces a bigger percentage of pre-retirement earnings for low-income people than for the well-to-do.

For the record, today's Social Security is not welfare. It is the least welfare-like of any government program. The workers pay for it entirely themselves, out of their payroll taxes. Unlike farm supports and Medicare, not a penny comes from the Treasury.

If political leaders want to turn Social Security into welfare, they should do so honestly. First, they should abolish the Social Security payroll tax. Let the government fund it out of general revenues. Payroll taxes take money that workers sweat for. General revenues come from a wider variety of sources — the more-progressive income tax; levies on corporate profits; taxes on investment income.

Do this, and you don't have anything resembling Social Security as we know it. You have a welfare program for indigent old people.

This idea — not original to me — is simply a straighter path to the destination proposed by the president. In either case, you end up with a welfare program helping only poor people. That's the worst kind of welfare to depend on.

Providence Journal columnist Froma Harrop's column appears regularly on editorial pages of The Times. Her e-mail address is fharrop@projo.com