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July 4, 2016

I saw an advertisement on a bus stand recently.  There was a picture of an elderly man and it read “I earned Social Security and Medicare, and when I couldn’t afford healthy food, SNAP HELPED.”

You might think I’m going to attack the SNAP program (which replaced what used to be called food stamps) but that’s not my priority.  The lies are about Social Security and Medicare.

Today’s elderly, including myself, are receiving vast subsidies under Medicare, regardless of need.  One economist’s study broke down winners and losers by age and gender.  Men my age, in their 70’s, will receive, on average, a subsidy of $285,000.  My son-in-law, in his 30’s, will receive $246,000 less than what he pays in taxes into the program.  So that means he will pay most of my subsidy and some other age groups will pay the balance. (Source: “Spending Beyond Our Means,” Jagadeesh Gokhale, Table 3, page 11.)

We hear politicians and so many senior citizens say “we paid for Medicare.”  This is factually incorrect; we are being heavily subsidized.  This cannot go on forever, which is the very nature of a Ponzi scheme.  Eventually Medicare will become a bad deal for people because of all the taxes they will pay and the inevitable healthcare rationing that will result from government trying to restrain the cost.  Actually, there already is rationing in Medicare, although it is not yet severe.

Social Security was a huge windfall for early recipients and then became a bad deal for seniors because Social Security taxes were raised again and again over the years.  That will happen with Medicare but it is a program 30 years younger than Social Security so it is still a windfall for seniors.  The windfall is so large that it overpowers the mediocre return today’s retiring seniors get on their Social Security taxes; around 2% after inflation.

I do not understand why people my age don’t get this.  We are bankrupting our children because of our denial.  I do not understand why most young people don’t get it.  Although the government tries to conceal what is happening by telling us we paid for it, the truth is available.

I do have criticisms of the SNAP program even though I am not opposed to it in the abstract.  (I wouldn’t oppose a program that was limited to the needy if the program actually helped them.)  Successive administrations, Republican and Democratic, have expanded SNAP so much that it is close to becoming another middle class entitlement.

Lawrence Reed and Marc Hyden wrote about a similar phenomenon that occurred during the Roman Empire; Emperors began giving away free food to citizens and successive Emperors expanded the program well beyond the needy (“The Slow- Motion Financial Suicide of the Roman Empire.”)  The food program became Rome’s second largest budget item, behind only the military.

I hope I haven’t clouded my main point with my comments about SNAP.  My main point is Medicare is a huge subsidy for people such as myself and government promotes the lie that we earned it.

Rick Miller

July, 2016

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