SU: The 'Entitlements'

 A reminder of the approach I'm using

The idea is to approach the entitlements subject--which is primarily social security, medicare and medicaid--conceptually, i.e., placing these in a conceptual framework.  The framework deployed in the Social-X series is the social contract, as developed in the philosophy of John Locke.

The Social Contract Paradigm

Government makes a contract with its citizenry, severally, i.e., with each citizen. The citizen agrees to live by the rules established in the contract (these could be spelled out) in return for protection and a modicum of well-being governmental services can provide.

This relationship generates certain social principles, two of which, though negative, are germaine to discussion of entitlements:  1.  The Principle of Endangerment and 2. The Principle of Incapacitation.  In terms of these principles, governmental action on behalf of the citizen is to prevent a citizen's bodily endangerment and the effects of disability, both of mind and body.

I think you can see that the entitlements are in the purview of these two principles.

We must also keep in mind that there are two basic accounting principles that are used in describing governmental financial activities, viz., accounts payable and accounts receivable.  With respect to financial transactions of the government, then, social security, medicare and medicaid are clearly expenditures, i.e., on the accounts payable ledger.

Pertinent Features of governmental accounts payable    

Accounts payable transactions tell us nothing about where the funds to pay to beneficiaries come from.  For political reasons, I believe, social security was presented to Congress in 1935 as an employer-employee pay-as-you-go (PAYG) system.  Government would simply dole out money from its Social Security Trust Fund, established as part of the program (though some economists regard it as a fiction).  So, even today, a beneficiary, a citizen 62 or older, will claim he is simply getting back funds he already contributed!  Well, we are only too aware, that many workers live longer and receive benefits far in excess to the total amount they and their employers made into the system.

Nevertheless, by the social contract, the citizen is entitled to the protection from life endangement that each month's social security check provides.  In sending the check, the government is living up to its obligations under the social contract.  "Social security" in its fundamental sense means the government's providing the financial means for the beneficiary over 62 to live under the poverty line.   

Not to mention the benefits medicare and medicaid provide to the elderly.  The question involving the negative principles of endangerment and disability is, what catastrophic occurrence would happen to the beneficiary of the entitlement should the government not come to his aid?  In some cases, the potential beneficiary would die (e.g., due to starvation), would lose use of a limb or sensory organ; would become insane.  It is important to realize that prior to the enactment of the entitlement programs such possibilities were very real and immenent.  It is most times possible to submit the citizen seeking government's help in dire circumstances to request a means-test so that the implicit claim of the citizen that indeed he is in need in a critical situation for which his own assets are insufficient toward remedy is justified; but not always is the test convenient.

These entitlements are offered to those in need--in the waning years of life, viz., 62 years and older; and the permanently and temporarily disabled no matter the age.  They are part of a program of relief for the citizen who has not the wherewithal to meet even the basic costs for a remedy, including  for life material sustenance.

Retirement Benefits issued by the government with no means-testing relevant             

But there has evolved a secondary meaning of the term "Social Security," involving amounts of money both the employee and his employer have contributed to the employee's retirement.  It is this sense of the term that Congressman Ryan advocates a beneficiary's savings account maintained in the Social Security system--from which to draw during retirement years, e.g., a Medicare sum.

Indeed, financial institutions in the United States and many European governments have already set up retirement programs, such as the 401K plans.  A retirement program that sets aside a certain percentage of an employee's wages (with whatever contributions an employer has been allowed to make) must be distinguished from Social Security in its fundamental sense as discussed above, which is actually an insurance program against a "rainy day."  It is the derivative sense of "Social Security" that  Republicans argue for a beneficiary's separate account(s), drawn upon in retirement years.  No problem there.  Such plans are effectively in play in Chile and some other South American countries now.  Assets in such personal retirement accounts can be used to invest in the stock and bond markets, just like the 401K funds.  But if the stock market should go "belly up" as happened in 2008 in the US, though these accounts would be greatly diminished in value, the beneficiary would still find available the Social Security safety net, as needed.  In sum, under Social security, as a fiduciary system, the government may simply account for monies entrusted to it upon which the beneficiary may draw during the retirement years.

Pertinent Features of governmental accounts receivable

Wherever the government finds the money to meet its social obligations to its citizenry is another matter entirely from what its financial obligations to the citizens are.  It may create fictional accounts of why the money is needed in order to prod compliance to its taxation edicts.  Who cares?  The point is the government must find the money to meet its obligations, including those social.

I recall being in Russia during the time of the drafting of its new Constitution in the late 1980's.  There was a "green party" in existence that insisted on five-year plans that limited the development of the country's natural resources.  However, the government was bankrupt; it could not live up to the five-year plan restrictions placed upon it.

Not so different from the situation in the US today.  The Republicans are right, I believe, in averring that the oil resources of the country must be developed as part of a program to decrease the federal debt with all deliberate speed.  The government must not forfeit its obligations to its citizens.

The Meta-Elements of the 'Entitlements'      

1.  The Promise.  The government will 'be there' acting on behalf of the citizen when times are rough and threatening. 

2.  The Acceptance.  The citizen applies for help from his government--in most cases to the federal government.

3.  Areas of societal advancement.  Whereas previously, the citizen was left to cry for help from anyone who would listen, today he knows there are social services available for him.  Society has advanced beyond the times when a citizen had to beg in the streets for social justice in his case.

4.  Provisions for breakdown of the 'Entitlement' systems.   Were the benefits through Social Security, Medicare, and Medicaid to become insufficient to meet citizen basic needs, the citizenry would undoubtedly demand better treatment--using the ballot box for their votes and communicating with governmental agencies; and even demonstrating, i.e., taking to the streets.

5.  Pursuance of the Utopian vision.  By attending to the citizen's needs, I believe, the government lives up to its commitment to societal well-being under its administration.  Not simply words, but budgetary commitment acknowledges its obligations under the social contract.