# Is the USA a "welfare state" like the right claims? **URL:** \ **Category:** Great Debates\ **Created:** [April 24, 2012, 12:07am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764 "2012-04-24T00:07:39Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Age\_Quod\_Agis](https://avatars.discourse-cdn.com/v4/letter/a/d07c76/32.png) [@Age\_Quod\_Agis](https://boards.straightdope.com/u/Age_Quod_Agis)\ **Post date:** [April 25, 2012, 9:21am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/21 "2012-04-25T09:21:21Z")
> [@Voyager](#): > > The quote specifically says “current spending”. If it had said spending over the next 25 years I wouldn’t have been outraged. It does say spending “over the next 25 years.” In the very next sentence. Which you quoted. > [@Washington Examiner](#): > > Spending on Social Security, Medicare, Medicaid and Obamacare alone currently account for 46 percent – or nearly half of – federal spending, excluding interest payments. Over the next 25 years, that percentage will explode to 66 percent, or close to two-thirds, according to the Congressional Budget Office. > [@Voyager](#): > > Medicare Advantage is the Bush giveaway to private insurers, right? Moving that money around is a good thing. Better to go to the uninsured than to insurers. Which sort of raises the question of why the White House is trying to extend that “Bush giveaway” until after the November election. But that’s a debate for another thread. 🙂 ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [April 26, 2012, 1:24am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/22 "2012-04-26T01:24:34Z")
> [@Quartz](#): > > That’s the press. A paper of which I know absolutely nothing. Let’s see a cite of some modern conservatives. Move the goalposts much? ---
**Author:** ![Quartz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quartz/32/267_2.png) [@Quartz](https://boards.straightdope.com/u/Quartz)\ **Post date:** [April 26, 2012, 6:53am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/23 "2012-04-26T06:53:17Z")
> [@Trinopus](#): > > Move the goalposts much? No. That article provided no cite. Unlike **Algorithm** ’s post. ---
**Author:** ![Clothahump](https://avatars.discourse-cdn.com/v4/letter/c/51bf81/32.png) [@Clothahump](https://boards.straightdope.com/u/Clothahump)\ **Post date:** [April 26, 2012, 3:40pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/24 "2012-04-26T15:40:47Z")
> [@Linden\_Arden](#): > > Or are we a Social Security/Medicare state? > > I maintain the latter. From my perspective about 85% of all social spending are for elderly entitlements. > > It seems the right wants to combine SS with “welfare” in order to demonize taxes. SS and Medicare _are_ welfare programs. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [April 26, 2012, 9:08pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/25 "2012-04-26T21:08:22Z")
> [@Quartz](#): > > No. That article provided no cite. Unlike **Algorithm** ’s post. Well, since **Algorithm** won the point, there isn’t much point in arguing… But I disagree with you anyway. A right-wing newspaper is part of “The Right.” You never said, “Cite…excluding newspapers.” So, neener. Or something. ---
**Author:** ![What\_the](https://avatars.discourse-cdn.com/v4/letter/w/f4b2a3/32.png) [@What\_the](https://boards.straightdope.com/u/What_the)\ **Post date:** [April 27, 2012, 11:47am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/26 "2012-04-27T11:47:41Z")
Does the right claim the US is a welfare state or that it is trending that way? Well of course they don’t use fancy words like “trending” much but you know what I mean. ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [April 27, 2012, 12:34pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/27 "2012-04-27T12:34:02Z")
> [@Clothahump](#): > > SS and Medicare _are_ welfare programs. Supposedly, a person must earn those entitlements via work and withholding taxes as opposed to the primary pure welfare programs - TANF, SNAP, and HUD programs. The latter three total about $120 billion in benefits and execution costs. Medicaid is sometimes lumped in as a “welfare” program but only 12% of its benefits go to non-elderly adults. ---
**Author:** ![MsRobyn](https://avatars.discourse-cdn.com/v4/letter/m/90ced4/32.png) [@MsRobyn](https://boards.straightdope.com/u/MsRobyn)\ **Post date:** [April 29, 2012, 5:37pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/28 "2012-04-29T17:37:23Z")
> [@DeepLiquid](#): > > You pay into social security and medicare before you draw on them. SSDI and medicaid are the ones you can draw on without paying into them. ISTM that SS and Medicare are aleatory contracts. You will likely get much more out of them than you pay into them, at least at current levels. > [@CJJ](#): > > It’s more than that. IMO the right sees SS as a big pool of “dead” money that could be put to better use in the stock market or other private investment. They want to demonize it only to the extent that the pile ends up being liberated for private use. As the 2008 market crash should have taught us, relying heavily on privately-managed retirement accounts like 401(K)s is bad juju. Some professions, like teaching, are now extremely top-heavy with older workers who are afraid to retire because they believe that their pensions are no longer worth what they were. (To be fair, though, the union was doing a great job of encouraging this.) So, whether the money is there or not, the _perception_ that it’s gone is enough to encourage some people to keep working, which, in turn, hurts younger workers who can’t advance into higher positions because those jobs are filled by people who are afraid to retire. Lather, rinse, repeat. So, IMNSHO, this push for privatization is a bad move. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 29, 2012, 6:00pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/29 "2012-04-29T18:00:48Z")
> [@MsRobyn](#): > > As the 2008 market crash should have taught us, relying heavily on privately-managed retirement accounts like 401(K)s is bad juju. Only if you ignored the advice given by pretty much ever professionals money manager practically forever and kept your retirement money in stocks into your 50s, 60s or beyond. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [April 29, 2012, 6:18pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/30 "2012-04-29T18:18:53Z")
> [@John\_Mace](#): > > Only if you ignored the advice given by pretty much ever professionals money manager practically forever and kept your retirement money in stocks into your 50s, 60s or beyond. So all the people who lost their retirements in 2008 deserve to starve. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 29, 2012, 6:33pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/31 "2012-04-29T18:33:42Z")
> [@The\_Tao\_s\_Revenge](#): > > So all the people who lost their retirements in 2008 deserve to starve. When I say or imply that they should, that would be a pertinent question. But I didn’t, so it isn’t. ---
**Author:** ![MsRobyn](https://avatars.discourse-cdn.com/v4/letter/m/90ced4/32.png) [@MsRobyn](https://boards.straightdope.com/u/MsRobyn)\ **Post date:** [April 29, 2012, 8:23pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/32 "2012-04-29T20:23:05Z")
> [@John\_Mace](#): > > Only if you ignored the advice given by pretty much ever professionals money manager practically forever and kept your retirement money in stocks into your 50s, 60s or beyond. Well, sure, if people have the chance to diversify, which not everyone does, and if people have access to professional money managers, which not everyone does. Unfortunately, many people rely on their employers’ 401(k) accounts, and the choices are often “take it or leave it”, with funds heavily invested in company stock and few other options. If you refuse to participate in the employer’s plan, you will likely lose out on the matching contribution, and when the standard advice is to make sure you get every penny of the matching contribution that you’re entitled to, there aren’t many people who are going to go out on their own. And professional money managers? What a joke. Most people get their financial advice from people they know or people who get rich writing generic advice books, who may be total idiots. When I was in financial services in 2008, I had a client tell me that she wanted to move all of her 401(k) into a stock fund because her brother-in-law told her that the stock market could only go up, just like the value of her house. The market crashed about two months later, taking her 401(k) with it, and forcing her to postpone any plans to retire until the fund came back. Since I didn’t have much to do with her 401(k), all I could do was stand back and watch. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 29, 2012, 9:44pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/33 "2012-04-29T21:44:18Z")
> [@John\_Mace](#): > > Only if you ignored the advice given by pretty much ever professionals money manager practically forever and kept your retirement money in stocks into your 50s, 60s or beyond. What, no one panicked and sold low? Here is a [link](http://elaine-mink.suite101.com/average-401k-account-balances-by-age-group-a332909) to a table showing average 401K balances at the end of 2009, by age group: able 2: Average 401(k) and 403(b) Account Balance by Age Bracket, Year-End 2009 \* Under age 25: $3,908 \* Age 25–34: $17,453 \* Age 35–44: $43,765 \* Age 45–54: $85,799 \* Age 55–64: $124,472 \* Age 65 and up: $148,959 Pretty feeble, right? If everyone were rational about money, their portfolios would be balanced and their balanced would be a lot higher than this. Surprise, not everyone is rational. We are going to see serious problems in the next few years. People with enough money for good financial planners, or with enough economic smarts to understand the need for diversification will be okay, but we need policies for everyone. It isn’t just the US. Sweden has a national 401-K like program, where everyone outs money into one of a controlled set of investments. Thaler and Sunstein looked at this in **Nudge** and show that people make the wrong choices - usually buying into the fund with the best record up to that date, in other words buying high. And it did not give as good returns as others. Joe Nocera had a column about this yesterday. He thinks the 401K experiment has failed. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 29, 2012, 10:15pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/34 "2012-04-29T22:15:42Z")
> [@MsRobyn](#): > > Well, sure, if people have the chance to diversify, which not everyone does, and if people have access to professional money managers, which not everyone does. Unfortunately, many people rely on their employers’ 401(k) accounts, and the choices are often “take it or leave it”, with funds heavily invested in company stock and few other options. If you refuse to participate in the employer’s plan, you will likely lose out on the matching contribution, and when the standard advice is to make sure you get every penny of the matching contribution that you’re entitled to, there aren’t many people who are going to go out on their own. > > And professional money managers? What a joke. Most people get their financial advice from people they know or people who get rich writing generic advice books, who may be total idiots. When I was in financial services in 2008, I had a client tell me that she wanted to move all of her 401(k) into a stock fund because her brother-in-law told her that the stock market could only go up, just like the value of her house. The market crashed about two months later, taking her 401(k) with it, and forcing her to postpone any plans to retire until the fund came back. Since I didn’t have much to do with her 401(k), all I could do was stand back and watch. Well, now you’re making a completely different argument. Your original claim was that the market crash of 2008 proved privately managed investment accounts were no good. Now you’re saying people are too stupid to read about how to invest for retirement. I say “read” because no one needs to access professional money managers-- there are dozens of books that you can read. And of course some of your objections are purely artificial (that is, created by Congress), and could be changed by legislation allowing people to invest more of their own money. Especially since you were specifically responding to someone’s post about Social Security monies being outside the reach of individuals to choose to invest as they see best So, no, the market crash of 2008 didn’t tell us anything that we didn’t know before. And if you look at the plan Bush tried to set up, and which got absolutely nowhere even with his own party, it had exactly the kinds of limits built into it that address your objections. Whatever flaws it might have had, investments were limited to 5 broadly diversified index funds and a life cycle fund. The latter would be a very conservative fund invested in bonds and cash which the person is required to start transitioning to at age 47. Thus taking the “stupid” out of the equation. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [April 29, 2012, 11:21pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/35 "2012-04-29T23:21:00Z")
I don’t understand what benefit privatization is supposed to accomplish. When the government takes in more from FICA taxes than it pays out in benefits, it uses those funds elsewhere. When it takes in less, those funds have to come from elsewhere. This seems totally optimal to me. It’s the exact equivalent of a market solution—those funds also won’t sit around, but will be invested somewhere—but with a totally different risk profile. I don’t understand why we would set up a complicated legal framework to accomplish this in some other manner which really would be wasteful. The market can provide security, fire protection, loss protection, and so on, but I still think the government should run the police and fire departments. When we’re discussing intentionally chosen features of social organization the government is the first best place to accomplish it because it is the seat of such intentions. If we decide, as a society, not to do these things, then leave it to individuals to save for themselves or else tough shit, that’s one thing. (It’s also not a society I care to be a part of.) But it’s my understanding that this is just trying to take money out of the hands of individuals to generate profits for people who won’t be responsible if things go south. And the only way _that_ could be avoided is if the government guaranteed certain things… but we’re already doing that, so what the fuck? I just don’t understand what benefit privatization is supposed to accomplish. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 29, 2012, 11:33pm UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/36 "2012-04-29T23:33:57Z")
You are assuming that full privatization or full nationalization are the only choices. It’s probably true that if SS were completely privatized, we’d end up having to bail out all the people who made stupid decisions with their retirement funds. But, the argument is made, if the government allows the system to be partially privatized, and puts significant restrictions on what investments qualify (similar to what I outlined above), that you get as good or better return for people and you fee up capital to invest in the economy in more creative and useful ways. Anyone who has an IRA or a 401(k) has bought into that idea already. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [April 30, 2012, 12:18am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/37 "2012-04-30T00:18:49Z")
> [@John\_Mace](#): > > But, the argument is made, if the government allows the system to be partially privatized, and puts significant restrictions on what investments qualify (similar to what I outlined above), that you get as good or better return for people and you fee up capital to invest in the economy in more creative and useful ways. The system is already “partially privatized” in the sense that everyone is free to save additional money for their retirement. And what capital is being freed up, exactly? > [@](#): > > Anyone who has an IRA or a 401(k) has bought into that idea already. Right. So what’s the problem being addressed? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 30, 2012, 12:44am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/38 "2012-04-30T00:44:27Z")
> [@erislover](#): > > The system is already “partially privatized” in the sense that everyone is free to save additional money for their retirement. And what capital is being freed up, exactly? > Right. So what’s the problem being addressed? All the SS money tied up in ridiculously conservative investments. But the point is to transition it from a pay-as-you-go system to a way for people to invest in their own retirement. In that case, all of the SS taxes would be redirected into economic investments. You can’t do that overnight without major disruption, so this would have to be a very gradual thing. And, of course, we could have set it up that way in the first place. Make it a mandatory, regulated retirement program instead of, well, welfare for old people. And, if partial privatization is a good thing, why not more? Most Americans are fully capable of funding their own retirement. One might as well ask: why have the government take over the whole system just because some minority of citizens can’t manage it themselves? ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [April 30, 2012, 1:49am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/39 "2012-04-30T01:49:26Z")
> [@John\_Mace](#): > > And, if partial privatization is a good thing, why not more? Most Americans are fully capable of funding their own retirement. One might as well ask: why have the government take over the whole system just because some minority of citizens can’t manage it themselves? I don’t know about you, but I don’t think I want to rely on SS for my retirement, for the same reason that I hope I never have to go on welfare. > [@](#): > > ridiculously conservative investments See, this is just the kind of thing I don’t understand. The point is to _ensure_ that a minimal standard of living is possible. If this is truly what bothers you, then whatever alternative you propose—you, someone else, a panel of someone elses—necessarily means you think you’d rather some people fail. If you don’t, if you have already resolved that you resolutely will not let people fall off the bottom, then you’re just promoting yet another form of lemon socialism—taking from people who could have done better (but the market moved) and giving to those who already are, and hey, it was their risk to take\*!\* Why? What possible benefit will we see from this? I am sure you personally don’t want people to fall off the bottom, but when people make riskier investments then they will, necessarily. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 30, 2012, 2:03am UTC](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764/40 "2012-04-30T02:03:58Z")
> [@erislover](#): > > I don’t know about you, but I don’t think I want to rely on SS for my retirement, for the same reason that I hope I never have to go on welfare. I’m covered. 😉 > [@](#): > > See, this is just the kind of thing I don’t understand. The point is to _ensure_ that a minimal standard of living is possible. If this is truly what bothers you, then whatever alternative you propose—you, someone else, a panel of someone elses—necessarily means you think you’d rather some people fail. Why? Why is taking that exact amount of risk the optimal situation? How do you know it’s either too much or too little? This is like the whole birth control thing. Some small percent of women can’t afford birth control, so we decide to provide it “free” to everyone. I have no problem with the government taking care of the poor. What I have a problem with is forcing everyone into a system designed to take care of the poor. [Previous page](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764.md?page=1) [Next page](https://boards.straightdope.com/t/is-the-usa-a-welfare-state-like-the-right-claims/619764.md?page=3)