Social Security: 'sacred cow' of entitlement programs.

• Author: Hogeboom, Willard

In August, 1994, the Federal Bipartisan Commission on Entitlements and Tax Reform issued a preliminary report warning that government spending for entitlements--including Social Security, Medicare, Medicaid, and Unemployment Insurance--is growing at such a rapid rate that, unless Congress acts soon, it could bankrupt the country. The public has been hearing that message for some time now, but not paying heed to it.

While the possible bankruptcy of Federal entitlement programs is a very real prospect, there is another issue that needs to be addressed first. Politicians must start dealing honestly with the public about these programs, especially Social Security, in terms of what they are and what they are not.

Just before the 1994 elections, Federal Budget Director Alice Rivlin submitted a memo to Pres. Clinton outlining a number of options of budget cuts to hold the deficit in check while allowing the Administration to finance certain programs on its agenda. That memo was leaked to Republican leaders, who then accused the Clinton Administration of secretly planning to cut Social Security and Medicare. The President quickly gave public assurances that they would not be cut.

Once again, as so often in the past, Democrats and Republicans were united in a bipartisan public posture declaring Social Security and Medicare sacrosanct. It is this sort of charade that stands in the way of any serious attempt to address the problems of Social Security and Medicare.

The Social Security Act of 1935 included a broad spectrum of initiatives: old age assistance, Federal-state public assistance, unemployment compensation, public health services, and vocational rehabilitation. Most industrial countries of the world already had such legislation. The Franklin Roosevelt Administration knew that old-age assistance especially would face stiff opposition, so it was of critical importance that it not be seen as a welfare-type program. FDR explained that those who participated could be "likened to the policyholders of a private insurance company."

A special payroll tax was created to support Social Security so that people would be aware of it every time they received their wages. The Federal Insurance Contributions Act (FICA) tax was labeled a contribution, like an insurance premium, and people knew they had to work a certain period of time to become eligible. Thus, every effort was made to make Americans believe that what was being deducted was "their money," which...