What are Entitlement Programs?
Stewman's World -- April 7, 2011
As we arrive on the eve of the much talked about shutdown of the federal government, we have to wonder what is to become of this country? Not because a bunch of egomaniacal politicians, bought and sold by corporate interests, have decided to hold hostage the citizens of the country in a game of ideological chicken over budgetary table scraps, but because of the sheer stupidity that the common person displays when trying to discuss the details of the issues.
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First, what are entitlement programs? We hear so much about them, but the average guy on the street doesn’t know what they are. Entitlement programs are those institutions of government which provide personal benefits, either through financial or social means, to each and every taxpaying citizen of the country. Unfortunately, the context used to describe these programs has changed over the years and taken on a whole new meaning. The term has become a euphemism for giving benefits to the undeserved, completely altering the meaning altogether.
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These programs are not a giveaway of taxpayer money. They have a specific purpose and provide specific long term benefits. These are mandatory programs that taxpayers have contributed toward for generations. These are entitlements that you and I are currently paying into. When you get your paycheck stub there are line items which outline how much is taken out for each of these programs. This tells you the amount you contribute to this pool every two weeks. These are long term benefit programs, underwritten by the government, guaranteed to payout in the future when you need them. The only "entitlement" I see in these programs is that we are all entitled to receive benefits because we have paid into them our whole lives. I will repeat this, because it is the money shot.
We are entitled to these benefits because we have paid into them our whole lives!
If you "accept that" we are really entitled to these benefits -- then "Entitlement Programs" is an apt descriptor.
If the implication is -- we are NOT entitled to these benefits -- then "Entitlement Programs" is an insidious reminder of something that needs to be "brought under control".
Language matters. Context Matters. An economically-literate public matters too.
I think that if they were called "Retirement Insurance Programs" instead, much of the heated political rhetoric around them, would simply go away.
Pundits and Politicians generally like Insurance. That industry is full of a healthy donors, with buckets of Mad Money, just lying around.
This is funny. The "I" in the FICA Tax actually stands for Insurance!
Who knew?
Federal Insurance Contributions Act tax
From Wikipedia,
The Federal Insurance Contributions Act (FICA) tax is a United States payroll (or employment) tax[1] imposed by the federal government on both employees and employers to fund Social Security and Medicare[2] —federal programs that provide benefits for retirees, the disabled, and children of deceased workers. Social Security benefits include old-age, survivors, and disability insurance (OASDI); Medicare provides hospital insurance benefits. The amount that one pays in payroll taxes throughout one's working career is indirectly tied to the social security benefits annuity that one receives as a retiree.[citation needed] This has led some to claim that the payroll tax is not a tax because its collection is tied to a benefit.[3]
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The Center on Budget and Policy Priorities states that three-quarters of taxpayers pay more in payroll taxes than they do in income taxes.[5] The FICA tax is considered a regressive tax on income (with no standard deduction or personal exemption deduction) and is imposed (for the years 2009 and 2010) only on the first $106,800 of gross wages. The tax is not imposed on investment income (such as interest and dividends).
Here's a few more things, you might not yet know about FICA Insurance ...
Federal Insurance Contributions Act (FICA) -
Social Security and Medicare Taxes: Payroll Considerations
Social Security payroll taxes are collected under the authority of the Federal Insurance Contributions Act (FICA). As a result, the related payroll taxes are sometimes called "FICA taxes."
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Background
The state of the economy during the great depression led to passage of the Social Security Act in 1935. This law provided payments known as "unemployment compensation" to workers who lost their jobs. Other sections of the Act gave public aid to the aged, the needy, the handicapped, and to certain minors. These programs were financed by a 2 percent tax, one half of which was subtracted directly from an employee's payroll check and one half collected from employers on the employee's behalf. The tax was levied on the first $3,000 of the employee's salary or wage.
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The FICA tax rates, which are set by law, haven't changed since 1990.
The 2005 Social Security wage base limit is $90,000. For 2006, the Social Security wage base limit is $94,200. The wage base limit is the maximum wage that is subject to the tax for the year.
[As of 2011, that base limit is $106,800; I guess the Ceiling can be raised.]
For 2006, the tax rates, as well as the maximum wage and tax figures, are as follows:
Social Security (OASDI)
Description Wage Limit Tax Rate Maximum Tax [per year]
Employer $94,200 6.20% $ 5,840.40
Employee $94,200 6.20% $ 5,840.40
Total 12.40% $11,680.80
Medicare Health Insurance
Description Wage Limit Tax Rate Maximum Tax [per year]
Employer (Unlimited) 1.45% (Unlimited)
Employee (Unlimited) 1.45% (Unlimited)
Total 2.90%
Note: Employers who fail to withhold the employee Social Security or Medicare tax from employee payroll will be liable for the uncollected tax.
Most folks like the idea of Insurance, especially if they can afford it.
Try driving a car, in today's world, without Insurance -- see how far you get.
Insurance is just a Fact of Life, in today's society. You got to have it. So much so, most States have Laws, making sure you have it.
So how did the Legal requirement to have us buy Retirement Insurance (aka FICA tax), become so controversial of late?
Two words. Entitlement Programs.
(... when they get used with the unfounded insidious connotation.)
Social Security: how retirement insurance became controversial
janinsanfran happening-here.blogspot -- Feb 02, 2011
For people who understand that Social Security is an insurance program for older workers, paid for through their contributions during their working life and managed by the federal government, it's hard to understand why it continues to be so politically contested.
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Disillusionment with government has made political space for a sophomoric libertarianism that imagines that people could be better off taking care of themselves without government support. The Depression generation knew better;
And the bottom line for this diatribe ...
Reframing the Debate: Quit Calling Them "Entitlement Programs"
by Pogue, fdl.com -- Feb 11, 2011
Entitlement has taken on the perception of something people want, but don’t really deserve. It’s only use, outside of labeling certain programs, is phrasing along the lines of “oh and you think you’re entitled to that?”
Agreeing to call Social Security, Medicare, or Unemployment benefits “Entitlement Programs” is to agree that the recipients are not truly worthy of receiving them.
... as Stewman from Stewman's World so succinctly put it, in the intro:
The only "entitlement" I see in these programs is that we are all entitled to receive benefits because we have paid into them our whole lives.
Well put sir. And thank you. How we say things, does matter.
We do deserve those benefits, afterall, we have paid for them -- throughout our working lives. With years of blood, sweat, and tears. And meager wages, to boot.
No undeserved "Entitlement" vibe about it at all. Or at least, in a fair world, there wouldn't be.