If I Paid for it, then it's not an Entitlement

President Obama's deficit reduction commission, headed by an independently wealthy businessman (Erskine Bowles) and a former senator with a guaranteed pension (Alan Simpson), has made public its recommendations for reducing the federal deficit. One web-site characterizes the recommendations as addressing issues that represent the "third rail" of American politics. (See: Talking Points Memo.)

There is no more highly charged third rail than Social Security.

A few years ago, when I was casting about for another book topic, I began to consider writing about Social Security. It seemed like something that might be worth the time and effort. Consider these few facts:

Fact One: Social Security was signed into law at the end of 1935, to take effect in 1937. The nation was in the throes of the Great Depression, and unemployment continued to be high, but at about the time that Social Security taxation became the law of the land, unemployment began to decline and employment to increase. After the new tax law took effect (because Social Security is, first and foremost, a tax), unemployment increased again. Why? Because it now cost employers more to have employees, since they were required to contribute a percentage of their employees' wages as the employer contribution of Social Security.

Fact Two: When the actuarial tables were run to determine what the appropriate contribution percentage should be, the calculations showed that the program would become bankrupt beyond 1965. FDR questioned the validity of the model used to compute the figures, and when he determined that the math was valid and correct, ordered that the actuarial tables provided to Congress only go through 1962.

Fact Three: The Supreme Court nearly overturned the Social Security Act as an unconstitutional form of taxation, prompting FDR to attempt to "pack the court" with more justices (whom he appointed, of course), but in May, 1937, the Court determined that Social Security did not constitute an unconstitutional tax.

(See: Social Security Online History)

Which lays the foundation for where we are today, as we begin the year 2011, and talk swirls in political circles about changing the retirement age and adjusting benefit amounts.

I have been paying Social Security since I was 16 years old. I can still remember the thrill of my first paycheck - $20, for 10 hours of work at a university library. It had already been determined that I would not owe income tax, so imagine my surprise, after I earned that first $400, to find that Social Security would now be taken from those wages!

That was 40 years ago, and as I get closer to the age of 65, Social Security is as much a third rail issue for me as it has been for the population, generally. When I was 40, I would have loved if the United States Government had told me to end my contributions to Social Security and put the same amount in an investment account of my choosing. Even with the recent reversals in the stock and bond markets, I at least would have had direct control over my money. It would have been especially helpful to have had that ruling 15+ years ago, because I was self-employed at the time - and 15.2% of my net income was sacrificed on the tax altar. - It's money not freely given, and under the terms of the government's social contract with me, I should get it back when I reach the current eligible age to draw it and at the benefit level that has been in place for most of my working life (and we won't even go into the craziness of the fact that a tax will be taxed again as "income").

Politicians are masters at using language that reduces the net emotional impact of an issue. The term 'entitlement' is fraught with connotations of spoiled, demanding children who have tantrums if they don't get exactly what they want when they want it. As we become increasingly inured to the term 'entitlement' as it applies to both Social Security and Medicare (because those tax payments are intertwined), it may become easier and easier to convince voters and their representatives that we citizens have asked too much of our government, and now we will have to give it up.

I would remind our government that they started asking me for that tax 40 years ago, and have been asking for it every working year since. If I paid for it, it's not an entitlement - it's my money. And I want it all back.