Social Security is Inheritance Security

I'm feeling all "United-States-of-Obama" at the moment, all sweetly in agreement with others who have moved beyond the old disputes. I just read Michael Kinsley who, in the previous age of darkness, we would have called a "liberal." But whether he has changed or I have changed, or maybe we've all changed (or been changed), he makes a lot of sense in his recent TIME essay, "Entitlement Myths" (Feb. 9, 2009).

His point is essentially that whereas Social Security was established to protect the aged against poverty and suffering in their years of disability or retirement, it has become a way of saving money to pass along to your children.

Meanwhile, though, families--middle-class families, not just rich ones--are passing hundreds of thousands of dollars on to the next generation in their wills. Fair enough, if they worked for the money and saved it. In fact, wonderful. But much of this generosity, it turns out, is made possible by Social Security and Medicare. How much? Hard to say. What is easier to say with certainty is that most people today and in the future will get more back from these entitlement programs in retirement than they put in during their working lives.

Medicare and Social Security are supposed to be insurance against the perils of old age: poverty and illness. They are not supposed to be gifts or subsidies to the children of retirees. Yet that is what, in large part, they have become. The reason for insurance is that you can't predict the future. If an elderly woman has diabetes and her husband needs heart surgery, then dies anyway, leaving her impoverished, Medicare and Social Security should be there for her. And if it all costs far more than she ever put into the system, that's O.K. too.

But if our elderly woman dies with $691,000 in the bank, it's evident that she didn't need the government money to pay for her health care or to avoid plunging into poverty. She wasn't lying or cheating--she might have been legitimately worried--but her worries turned out to be unnecessary. And society, having kept its promise to her, should get at least part of that money back. Oh, yes, designing a system to achieve this would be a nightmare--maybe impossible. The incentive for old folks to squander their savings would be enormous. Maybe it can't work.

Social Security is childrens' inheritance security at the expense of national economic security.

When George W. Bush won the 2004 election he began spending his political capital attempting to reform Social Security. He utterly failed and sent his capital down a political rat hole. Kinsley challenges President Obama to keep this question in mind as we enter what the President has called a "new age" of "hard choices."