Monday, October 31st, 2011
A few days ago we commented on presidential candidate Mitt Romney’s positions on so-called “entitlement” programs. “Entitlement” programs are taxpayer-funded benefits, such as Social Security and Medicare. The results of the 2012 election could have a huge impact on the lives of retirees and anyone approaching retirement age. This includes almost all mesothelioma patients, since the deadly lung disease is usually diagnosed in people over the age of 50.
Former business executive Herman Cain is at the top of many polls right now and could have a shot at the nomination. So let’s take a look at his position on Medicare and Social Security.
Mr. Cain’s campaign website suggests he thinks the programs must be radically changed. “Too many people have exchanged their freedom for a false sense of security that these programs are supposed to provide,” the text says. “Unfortunately, this has not only been to the sociological detriment of America, but also to its economic detriment. Simply, ever-expanding social programs are compromising the current and future financial stability of this great country.”
Social Security and Medicare are going to go broke, he says. If those programs fail to pay benefits to the people whose taxes supported them all these years, he says, it isn’t fair.
In fact, Social Security is not really in that bad a shape, although the Medicare hospital benefits program (Part A) could be in trouble in a few years. PolitiFacts analyzed the Cain campaign’s assessment of Social Security and Medicare solvency and found it to be half true.
The Cain website continues,
“The federal government has imposed expensive and often counter-productive social and welfare programs on the states and the people. It is time to admit the mistakes, and get the federal government out of the way. This will allow states, cities, churches, charities and businesses to offer a helping hand instead of a handout where they live. People closest to the problems are the best ones to solve the problems effectively.”
This appears to be saying that benefit programs such as Social Security and Medicare should be scrapped at the federal level so that these benefits could be handled only at state level. Also, people will be expected to rely more on charity — churches, charities — and not on taxpayer supported programs.
He appears to be quite serious about this. His tax reform proposals would eliminate the payroll taxes that fund Social Security and Medicare. Without those, Social Security really would go broke in a few years, and Medicare more quickly.
But in a recent column in the New York Post, billionaire Steve Forbes — a past presidential candidate — praised Cain for his tax reform plan: “The Cain plan would rid us of not only the federal income tax, but also the Social Security and Medicare payroll taxes.”
Instead of paying into the current Social Security fund, Cain has suggested allowing younger workers to put their money into private investment accounts. He speaks highly of the privatized system initiated in Chile several years ago.* However, if current workers stop paying payroll taxes to support Social Security, there really won’t be enough money to pay benefits to people already retired, a problem Cain has not addressed.
“Fiscal conservatives have been pushing the “Chilean model” for quite some time; here is a 1997 article from the Cato Institute saying that Social Security would “go bust in 2010″ unless the U.S. wised up and did things like they do them in Chile. (You might have noticed that Social Security did not, in fact, “go bust” last year, which should tell you that doomsday predictions are not always Gospel.) Conservatives continue to praise the “Chilean model,” but the truth is the program has been plagued by high costs and low returns. Our Social Security program is a bargain in comparison.