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The new entitlement


I have been thinking about the jihad George Bush has declared on Social Security—not the merits of his case, which are of course non-existent, or even so much the drawbacks of his privatization plan, which are manifold. I have been pondering the "why." Paul Krugman has pointed out that conservatives hate Social Security not because it is broken, but because it is so successful. As the last New Deal program standing, it supports a vision of the role of government that they see as otherwise discredited. I think this explanation is correct, but only leads to at least one more in a potential infinite regression of “why” questions.


This next “why” question is interesting because Social Security is, in real terms, a pretty sweet deal for Richie Rich—one of the most regressive taxes there is, because (a) it is a tax on wages, not returns from capital (which means that Warren Buffett and Bill Gates could cut their SS payments to zero by eliminating their salaries without noticeably affecting their income, let alone their wealth) and (b) the wage limit on contributions means even if Gates pays himself $100M in salary, he pays the same $5580 a year as does a mid-level computer programmer in Silicon Valley.

It is also hard to see how the conservative antipathy could be based on the normal macroeconomic canard about the effects of taxes on desire to work. Though the average number of hours worked per week per employee has stayed relatively flat over the last few decades, the number of hours worked per family per week has increased by 11% since 1975. Americans now have longer work hours overall than citizens of any other developed country. It is hard to imagine that the same folks who preach to us about family values want parents to spend even less time at home.

And I am not persuaded by the conservative claims of concern about our nation’s savings rate. While the Social Security “trust fund” does not count as individual savings, I think a pretty good case can be made for the proposition that the $1.5 trillion dollars by which Social Security taxes have exceed payments over the last 20 years—a sum that has been invested in interest-bearing US Government obligations—count as savings on a societal level. And if you concede that point, privatization will not budge the national savings rate.

So it is difficult to avoid the conclusion that the basis for the conservative antipathy is neither concrete nor based on genuine self-interest—Social Security is simply another philosophical windmill to them. Like a Japanese anti-Semite, they hate something they have little or no direct experience with, just because. And like Don Quixote, they see such overwhelming evil in that windmill that they will do great damage to see it destroyed.

Thus: why? What is the source of this animosity? It seems to me that a case can be made that the hostility of conservatives in general, and George Bush in particular, is an inevitable consequence of that great American myth, the Horatio Alger story.

From very early on, an essential aspect of American mythology has been the idea of the self-made man. Landed gentry were never an official part of the landscape here. Immigrants could arrive in the “land of opportunity” with nothing and achieve wealth through individual effort. And so in a place that fancied itself a meritocracy, and where the coin of the realm was and largely remains the literal coin, it was perhaps natural for those who moved up to be seen as deserving of the fruits of their labor.

But when Henry Ford and John Rockefeller and Prescott Bush died, their money did not. Their children inherited it. Our collective mythology does not cover this outcome: if a rags-to-riches journey confers merit, inherited wealth does not. And in a society built on hard work, a natural reaction to getting without effort is guilt.

In older, class-based societies, my sense is that inherited wealth tends not to engender guilt. There is a sense of noblesse oblige, but little concern as to whether an inheritance is deserved.

The American system for many years reflected a different view. A progressive income tax code, with top rates ranging during the time from Roosevelt to Johnson from 63 to 94 per cent during WWII, could be seen as evidence of a view that wealth was as much a function of the good fortune of circumstance as of atomistic individual acts. Top estate tax rates, which ranged from 50 to 77% during the same period arguably bespoke a desire to make some attempt to reduce (though certainly not eliminate) the advantages of birth.

Society to a large degree stigmatizes what it officially dislikes through taxation – witness tobacco, alcohol, and, until relatively recently, wealth in general, and inherited wealth in particular.

That view of wealth has changed dramatically over the last 20 years or so. Top income tax rates have been cut somewhat, but taxes on wealth have been cut even more. And although estate taxes have only come down to 50%, estate planning loopholes now allow most of the wealthy to largely avoid them. In sum, it is now incredibly easy for big money to substantially avoid being nicked as it passes from one generation to the next.

It stands to reason that attitudes might take longer to change than tax laws. So perhaps there are a number of trust fund Baby Boomers who, at a subconscious level, are not completely at ease with having been born on third base, despite public claims about the home runs they subsequently hit.

Which brings us, of course, to George W. Bush. I’m no shrink, though I have previously exercised my Constitutional right to psychoanalyze our Commander in Chief. But there is abundant evidence in Dubya’s biography to support the notion that as a young man he was profoundly uncomfortable with certain aspects of his legacy. His early coping strategy seemed to be to avoidance of the scion role, but his toolset was limited. Even the most spoiled brat must choose between following the rules or breaking them – and break them he did. But the most powerful President in recent memory can do what the rebel without a cause could only dream of: he can change the rules.

And so, finally, we come to a possible answer to the “why” question. One of Dubya’s newer rhetorical sleights is the use of the phrase “ownership society” to describe the dismantling of the social safety net and the individualization of risk. But when George Bush talks about the ownership society, what he really means is that he wants to create an atmosphere in which there is no guilt associated with ownership – a place where those who inherit wealth will feel unapologetically entitled to it.

This, then, is the New Entitlement. Where once progressive social programs that redistributed resources from rich to poor were (perhaps unfortunately) called “entitlements,” for unhappy “haves” like our President, the term now means “what’s mine is mine, and you ain’t getting any of it.” And so he schemes to end the limits on transgenerational transmission of wealth by framing the inheritance tax as the “death tax.” He demanded sharp reductions in taxation on income from wealth (dividends and capital gains), while tax rates on labor are largely unchanged. And he jousts with the Social Security windmill because a system that rounds off the sharp edges of poverty and misfortune is a reminder to everyone of the role of chance in the distribution of the wealth. And if net worth depends even in part on chance, his claim of entitlement is suspect.

John Steinberg bloviates regularly at


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