Sunday, April 11, 2010

The entitlement trap

Entitlements are a very divisive issue amongst the parties.To compound the problem,they are defined in different ways.The public gets stuck in the middle as usual with lots of spin and misinformation provided to keep our eye off the ball.

The usual thinking is that democrats like lots of entitlements under the guise of helping people and that republicans are opposed to them due to the cost.That's on the surface,but it's really more complicated than that.

Democrats like entitlements because they mean power.Pure and simple.Creating the dependency nation is their long term plan for power and perpetual re-election.They try to sell it as compassion,as caring for the needy and less fortunate.To not support it is deemed to be political suicide because you become an easy target as wanting granny to die,to be racist and to generally be opposed to the little guy catching a break.

Republicans oppose entitlements as being fiscally irresponsible.We're broke and can't afford it.They view it as wealth redistribution.Stealing from the rich and giving to the poor.Why should anyone else be entitled to the fruits of my labor?They believe that every single citizen should pay taxes.Everyone should have a stake in our society.Even the poor should pay something,albeit much less than those with the means to pay more.

What qualifies as an entitlement?Most people would say social security, medicare/medicaid and welfare.It's not that simple.Social security on it's face is not an entitlement.You have been contributing your entire working life thru payroll deductions to your theoretical personal account.When you retire,you then pull those funds back out of the system.Sounds good so far.You paid in and now you merely get your money back.True unless you live too long.Once you go beyond the tipping point and outlive your contributions,you still continue to receive benefit checks.This is the point where you crossover and become a burden to society and thus are receiving an entitlement.

Medicare and medicaid are set-up in a similar fashion.If you were to somehow be the model of health and die at a nice early age,you may not ever have any claims against medicare or medicaid thus not becoming a recipient of an entitlement.For the vast majority of Americans,this is not the case.Old age dictates that our bodies need a whole lot of maintenance and our claims on the system easily surpass what our payroll contributions were during our working life.

Unemployment is similar to social security.Both the employee and the employer contribute to the trust fund which is then withdrawn when we become unemployed.However,Congress keeps extending additional benefits for the long term unemployed at which point you become a burden on society because you are taking out more than you and your employer ever put in.

So it's not a clear cut case on entitlements.It's dependent on individual situations and usually determined by longevity.The bottom line is if you are receiving something you didn't pay for at the expense of others,it's an entitlement.

The problem comes in the form of the argument presented by the two main parties.Republicans argue that never ending free lunches dis incentivize the public.If you always know that you can get something for nothing,you lose interest in doing anything about your situation.Particularly as you are 'penalized' for trying to do so.

For example,as you make more money,you pay a higher progressive income tax.You may lose those free lunch entitlements such as the earned income tax credit or other similar credits that you received when you made less money.You can actually end up with less money in your pocket after taxes minus those entitlement credits.This kills the will of someone wanting to move up the ladder.Why should they do it if they get penalized to do so?Why work harder for less?

Republicans argue that is inherently unfair to redistribute wealth and equally unwise to encourage long term dependency by the structure of entitlements.People who have had a bad break,lost their job,developed an expensive medical condition,etc.,all can get into the situation where it is too difficult to pull themselves out of it and easier to stay where they are.Responsibility and self-reliance are simply taken out of the equation.

This is the difficult selling point.How do you convince the public that they are better off with a system that only provides temporary help to those that really need it and force you back off it as soon as possible so you again become productive,self-sustaining,and not a burden on others?The problem is that most would agree with this only when they aren't in that situation.When they are,their perspective changes and they think it's not so bad taking some from those more fortunate.Until they fall into the trap and realize it's far more difficult to cross over the hump to get back out.

Democrats realize this perfect storm many years ago and have been playing it to their advantage for just as long.Obama is simply taking it to the next level.He can see the finish line in sight.He has several plans playing out right now.Health care was only one part.Amnesty for illegals is upcoming.The VAT tax is another designed to stress the economy even more to generate more dependency.He'll also go after card check to increase union membership.

Democrats are simply using the entitlement mentality to their advantage.They are better students of the human psyche than republicans.They know republicans haven't developed a sufficient argument to offset their claims of compassion.They have the system rigged so that once you descend into a dependency state,it's very difficult to get back out.It can be riskier or just less rewarding to get over that hump.

This is the challenge facing the country.Continue on this path and America will be destroyed without question.We can't afford it and history is littered with failed examples of socialism.The creation of a dependency nation has been a long,slow crusade by design.To sap the can-do spirit of American that created this nation doesn't happen overnight.The time was when we would not lay down in the face of adversity and accept the easy way out.It in fact was frowned upon.

It has taken this long to get us staged if you will into a mode of acceptance.That it is socially acceptable to be in a position of relying on government for our daily needs.I have stated previously that the republicans will need a salesman to reverse this trend.They can no longer simply claim conservative values and self responsibility and expect that to resonate with the masses that have fallen into the trap.What do they care about deficits and debt when they are in the dependency state?That's somebody else's problem.

Whoever it is that has the ability to connect with these people and show them a way out must be a good salesman.They must also have great political savvy to be able to manipulate Congress into reforming entitlements.The system must be altered to provide incremental steps of progression so as not to penalize those that want out.And to not provide the comfort of endless free lunches to those that don't want out.Some will take advantage on their own to get out.Some must be forced out.Then you only have a safety net left for those that simply can't get out.More to come...

No comments: