Expenditures under the Social Security
and Medicare programs account for
approximately one-third of total federal
government spending.1 It is obvious that
any major reduction in government
spending requires major reductions in
spending for these programs.
Unfortunately, Social Security and
Medicare are generally regarded as
sacred and thus virtually untouchable,
with the result that few if any
proposals have been made that would
greatly reduce the spending they
entail.2
At present, the age at which
full—“normal”—Social Security benefits
can be obtained, given the individual’s
lifetime earnings and contributions to
the system up to that time, is 66. This
represents an increase of 1 year from
the age in force from the system’s
inception until 2003, at which time it
was increased by 2 months, reaching 66
after a series of 5 more 2-month
increases in the years 2004-2008.
Commencing in 2021, the full-benefit
retirement age is scheduled to begin
increasing by a second series of 2-month
additions, until a full-benefit
retirement age of 67 is reached in 2027.
From the beginning of the system, and
scheduled to continue indefinitely, it
has been possible to choose to receive
Social Security benefits starting at age
62, though at a reduced rate. This rate
is currently 75 percent of the
full-benefit amount, down from 80
percent when the full-benefit retirement
age was 65, and is scheduled to fall to
70 percent when the full-benefit
retirement age rises to 67. By
continuing to work and postponing the
receipt of benefits until age 70, it has
been possible to obtain premium benefits
that are currently, i.e., for retirees
in 2011, 32 percent higher than the
“full” benefit amount. This premium is
scheduled to fall to 24 percent when the
full-benefit retirement age rises to 67.
The age for enrollment in Medicare is
still 65, and, under existing law, is
not scheduled to increase. Indeed,
enrollment at any later age is
frequently penalized.
The Social Security system, together
with Medicare, could be eliminated by
means of the following steps, each one
of which would result in substantial
cost savings. First, following a grace
period of perhaps two or three years, to
provide sufficient warning and time to
adjust, there should be a phased
increase to 70 in the age at which
individuals are eligible to receive full
Social Security benefits and Medicare.
At the same time, the early benefit
retirement age for Social Security
should be increased from 62 to 66.
The increases in age could take place in
6-month increments over a period of 8
years, with the exception of an initial
increment of 1½ years in the case of
Medicare. Thus, assuming that the reform
I’m proposing were implemented prior to
2021, with the Social Security
retirement age still at 66, in the first
year of its implementation the early
Social Security retirement age would be
raised to 62½, while the full-benefit
retirement age, along with the Medicare
retirement age, rose to 66½. In the
second year, the respective retirement
ages would be 63 and 67. And so it would
continue, year after year, for a total
increase of 4 years over an 8 year
period.
In this period, apart from adjustments
for increases in the consumer price
index, retirement benefits would remain
unchanged as the respective ages
increased at which they could begin to
be obtained. Thus, by the end of the
process, individuals receiving early
retirement benefits at age 66 would
receive no greater benefits than
individuals had previously obtained at
age 62. In the same way, individuals at
age 70would receive full benefits no
greater than individuals had received at
age 66, before the process of reform
began.
Thus, when completed, after 8 years, the
effect of just this phase of the reform
would be a substantial reduction both in
the number of people receiving Social
Security and Medicare benefits and in
the average per capita benefit received
by those who remained in the Social
Security program. Members of the age
group 65-69 would no longer receive
Medicare benefits. Members of the
age-group 62-65 would no longer receive
Social Security at all. Members of the
age-group 66-69 enrolled in the program
at that time, would receive benefits 25
percent less than their predecessors had
received, before the start of the
reform, because just as early retirement
benefits starting at age 62 had been 25
percent less than the full benefits
starting at age 66, so now early
retirement benefits starting at age 66
would be 25 percent less than full
benefits starting at age 70. Indeed, the
reduction in the benefits of the 66-69
age-group would be further increased to
the extent that they would no longer
contain any premiums for retirement
after 66. The elimination of premium
benefits would ultimately work to reduce
the aggregate benefits of all later
age-groups as well, insofar as they too
would eventually no longer reflect the
incorporation of premium benefits to
anyone.
As of December 2009, of the
approximately 33.5 million people
receiving Social Security retirement
benefits, approximately 4.4 million, or
roughly 13 percent, were in the
age-group 62-65. This group received
retirement benefits of $54.7 billion,
which represents about 11.7 percent of
the aggregate Social Security retirement
benefits of $468.2 paid in 2009.3 It is
not unreasonable to assume that the
closing of Social Security to new
enrollees in the 62-65 age-group would
achieve comparable percentage reductions
in the number of people receiving Social
Security retirement benefits and in the
overall cost of the program. To this
must be added the effect of the 25
percent reduction in the benefits of the
66-69 age-group plus the effect of the
elimination of premiums for late
retirement.
Based on the Social Security benefits
paid to the members of the 62-65 and
66-69 age-groups in 2009 relative to
total Social Security retirement
benefits in that year, the resulting
overall reduction in the cost of such
benefits can be estimated at
approximately 18 percent. The benefits
paid to the members of the 66-69
age-group were $116.9 billion,
representing 25 percent of the total. A
25 percent reduction in these benefits
represents a reduction of 6.25 percent
in overall benefits. Thus, the total
reduction in benefits is the sum of 11.7
percent, the share of Social Security
retirement income previously received by
the members of the 62-65 age-group, plus
6.25 percent, i.e., approximately 18
percent in all. This percentage is the
measure of the reduction in the yearly
cost of Social Security that can be
expected at the end of 8 years.
Based on data supplied by the Medicare
Payment Advisory Commission (Medpac),
the cost savings in Medicare that would
result from a rise in the eligible age
from 65 to 70 can be estimated at
perhaps as much as 15 percent of
Medicare’s spending.4
Second Step in the Elimination
of Social Security
The second step in the elimination of
Social Security would be the elimination
of the category of early retirement.
This could be accomplished by the early
retirement age continuing to increase by
a further set of 8 increments of
6-months each, which would bring it to
the point of coinciding with the by-then
established full-benefit retirement age
of 70. Based on the data from 2009, this
would result in cutting the cost of
Social Security by a further 18.75
percent, raising the total cost saving,
at the end of 16 years, to almost 37
percent per year.
Compensation for the Loss of
Social Security and Medicare Benefits
As compensation for their loss of Social
Security and Medicare benefits,
individuals in the 66-69 age-group who
remained at work, which many of them
would now no doubt have to do, would be
made exempt from federal income taxes on
an amount of income equal at least to
the maximum income then subject to the
payment of Social Security taxes. (This
amount is currently $106,800.) These
individuals would also be exempted from
the payment of Social Security taxes,
including employer contributions on the
part of those who were self-employed.
The exemptions would be adjusted for
increases in the consumer price index
and be automatically extended to older
ages as the Social Security/Medicare
retirement age advanced beyond 70.
Indeed, right from the very beginning of
the reform, the exemptions would apply
to all individuals 66 or older eligible
for Social Security retirement benefits
who abstained from taking them in any
given year. For example, even in the
very first year of the reform, someone
75 or 80, who did not accept those
benefits in that year, would have these
tax exemptions in that year.
It should be realized that these federal
income tax exemptions would apply to
incomes that for the most part would not
otherwise have existed, with the result
that the government would not incur any
significant loss of revenue by offering
them. Indeed, the result of millions of
people in their sixties remaining in
employment and off Social Security and
Medicare would not only be a major
reduction in government spending for
Social Security and Medicare, but also a
substantial rise in government tax
revenues as well.
The rise in tax revenues would come
about because people in the 62–69 age
bracket, now gainfully employed instead
of on Social Security and Medicare,
would pay more in the form of sales,
excise, and property taxes, as the
result of their having and spending
higher incomes than they would have
received from Social Security. And they
would pay more in the form of state and
local income taxes as well. For example,
instead of someone receiving $10,000 or
$20,000 a year in Social Security
income, he would earn $20,000 or $30,000
or more in employment income. The
federal government would save the
$10,000 or $20,000 Social Security
expenditure (plus more or less
considerable Medicare expenditure), and,
in addition, state and local governments
would collect significant additional tax
revenues out of the expenditure of the
newly earned employment incomes.
It must be pointed out here that the
phaseout of the Social Security and
Medicare programs, or the undertaking of
any other measure that would be
accompanied by an increase in the number
of people seeking employment, calls for
an intensification of efforts to abolish
or restrict as far as possible prounion
and minimum-wage legislation. This is
necessary in order to make it possible
for the larger number of job seekers to
find employment. Union pay scales and a
government-imposed minimum wage operate
to prevent this by arbitrarily and
forcibly holding wage rates above
free-market rates, thereby holding the
quantity of labor demanded below the
supply available.
Raising the Social
Security/Medicare Retirement Age Beyond
70 and Closing the Programs to New
Entrants
The next step in the elimination of
Social Security/Medicare would be
raising their retirement age beyond 70.
This could be accomplished by further
incremental annual increases, this time
of one calendar quarter with the passage
of each year. Thus, by the end of an
additional 20 years, the Social
Security/Medicare retirement age would
be 75. At that point, based on the same
data as cited previously, the annual
savings in the cost of Social Security
retirement benefits would be slightly
more than 59 percent, while the annual
savings in Medicare expenditures would
be almost 31 percent.
Raising their retirement age 1 year
more, over an additional 4 year period,
would bring the total lapse of time from
the initial implementation of the
phaseout reform to 40 years. Under this
arrangement, everyone age 36 and above
at the start of the phaseout reform
would be able to look forward to
enrolling in Social Security and
Medicare no later than at age 76, if
that is what he wanted. At the same
time, if he wished the equivalent of
being able to retire at age 70 on a
Social Security income, all that would
be required of him would be to make
provision for a maximum of the 6 years
between age 70 and age 76 at a level
equal to what he would previously have
received under the Social Security
Program.
Forty years is a sufficient period of
time to enable everyone age 35 or below
at the time of the initial
implementation to make adequate
provision for his own retirement at age
70, or even at age 65 if that is what he
wanted. At this point then, the Social
Security and Medicare programs would be
closed to new enrollees.
Thereafter, with the passage of each
year, the cost of the programs would
steadily diminish. Based once more on
the same data as referenced previously,
after an additional 9 years, by which
time the minimum age of those still
receiving Social Security and Medicare
would be 85, the annual cost of the
programs could be expected to be reduced
by 88 percent and 66 percent
respectively. With the passage of 10
years more, by which time the minimum
age of those still receiving benefits
was 95, the annual cost of Social
Security would be reduced by 99 percent
and that of Medicare by a further 16 to
17 percent, for a cumulative reduction
of 82 to 83 percent.
The failure of Medicare expenditures to
diminish further is the result of the
fact that approximately 17 percent of
Medicare expenditures are made on behalf
of people under the age of 65—14.9
percent on behalf of those who are
disabled and 2.1 percent on behalf of
those with end-stage renal disease, who
require dialysis.5
Just as payments on behalf of the
elderly do not account for all Medicare
expenditures, so too expenditures made
under the heading of Social Security are
not exclusively for the benefit of
retired workers. While expenditures
providing retirement income were $468.2
billion in 2009, there were in addition
expenditures of approximately $89
billion for Survivor’s Insurance and
$118.3 billion for Disability Insurance.
Thus, the overall total expenditure
under the head “Social Security” came to
$675.5 billion.6
The complete elimination of Social
Security and Medicare would, of course,
require the elimination of these aspects
of the programs as well. Possible first
steps in this direction would be the
establishment of means tests for the
receipt of such aid along with the
return of such programs to the states
and localities. These steps could begin
early in the phaseout.
The Effect of Eliminating Social
Security/Medicare on Real Wages and the
General Standard of Living
As previously indicated, from the very
beginning of the process of eliminating
Social Security/Medicare, everyone 66
and above would have the opportunity of
enjoying a life largely free of federal
income taxation on earnings derived from
employment. Everyone 66 and above would
have an employment-income exemption in
excess of $100,000 per year, in terms of
present purchasing power, for the
remainder of his life. The most that
anyone would have to do to secure this
opportunity in a given year would be to
abstain from taking Social Security
income in that year, if he were eligible
to receive it. Retirement years marked
by this freedom from income taxation
might thus become truly “Golden Years.”
In addition, the progressive elimination
of the Social Security/Medicare system
would operate to promote saving and
capital accumulation. The saving of
individuals would steadily replace taxes
as the source of provision for old age.
The increased capital accumulation that
this made possible would, of course,
increase the demand for labor and the
productivity of labor, which means that
it would increase wage rates and the
supply of goods, which latter would
operate to reduce prices. Thus, real
wages and the general standard of living
would rise. The rise would be a
continuing one insofar as the rate of
capital accumulation was permanently
increased as the result of greater
saving and a correspondingly greater
concentration on the production of
capital goods relative to consumers’
goods.
*****
At the same time, however, over the
course of the many years that would be
required for the burden of Social
Security/Medicare to reach the vanishing
point, all those people thirty-five and
below at the time of the start of the
phaseout program, and many of their
children, would painfully learn the
meaning of having to pay off a national
debt. For the financial obligations
incurred under Social Security and
Medicare are in fact an enormous
national debt. They are an enormous
national debt incurred to elderly and
infirm people incapable of caring for
themselves. People incapable in large
measure simply because they had been
promised that the government would care
for them and thus that it was not
necessary for them to save.
Two major lessons to be learned from the
financial disaster constituted by Social
Security/Medicare are that the
government should be prohibited from
incurring any significant national debt
and that a governmental promise of
pensions or provision of future medical
care is a category of national debt. All
levels of government should be
constitutionally prohibited from
incurring significant amounts of debt
beyond a very short term, including,
above all, pension obligations of any
kind.
Hopefully, there is a special place in
Hell reserved for all the political
con-men and intellectual shysters of the
last generations who endlessly dismissed
the significance of national debts with
such glib phrases as “we owe it to
ourselves” and asserted that national
debts need never be paid. These, of
course, were the same con-men and
shysters who again and again ignorantly
denounced saving as cash hoarding and
the cause of depressions and mass
unemployment.
And in the case of all the government
officials who over a period of decades
and decades knowingly used the proceeds
of Social Security taxes to finance
current government spending, these
con-men and shysters descended to the
status of major criminals, guilty of the
crime of embezzlement on a scale
unprecedented in all of human history.
They diverted literally trillions of
dollars of what people were led to
believe were their savings, set aside
for their future benefit, into current
government spending. The spending was
for projects desired by these officials
and designed to keep them in office by
fostering the illusion that the
officials had performed the miracle of
providing seemingly valuable current
benefits at no corresponding cost. Of
course, the reason for the apparent lack
of cost was that the costs were covered
by the proceeds of embezzlement.
Social Security and Medicare have caused
a massive diversion of savings into
government consumption not only by
diverting the proceeds of Social
Security and Medicare taxes into current
government spending, but by first, and
more fundamentally, undermining one of
the most important motivations for
private saving and investment, namely,
the need to provide for one’s old age.
The effect of Social Security and
Medicare has been to remove the apparent
need for much of that saving. Not
surprisingly, in the conviction that the
government was now providing for
people’s old age, the rate of saving in
the United States has declined
precipitously over the years, falling
all the way to zero in some years.
The government, of course, made no such
actual provision. For the accumulation
of actual physical capital assets based
on decades of private saving and
investment, that in a free economy would
have been the source of future financial
security, it substituted its promise to
levy taxes on future generations, while
it consumed the funds that should have
gone into saving and investment and a
resulting accumulation of capital
assets.
It must be realized that this lost
private saving and investment and its
corresponding accumulation of capital
assets was essential just to maintain
the stock of capital assets, let alone
increase it. This is because in old age
and retirement, people consume the
wealth they have accumulated to provide
for that period of their lives. If the
generations following them are not
engaged in making their own, fresh
provision for old age and retirement,
the consumption of a current generation
of the elderly serves to deplete the
overall stock of capital assets in the
economic system. From its inception in
1935 to the present day, the Social
Security system, reinforced by Medicare
since 1965, has served both to undercut
people’s motivation to provide for old
age and retirement by means of saving
and also, as the taxes to finance these
programs have increased, their sheer
ability to do so. Thus more and more of
the savings and capital assets
accumulated in the past have been lost.
One can see the effects of this
decumulation in the withering of the
industrial base of the United States and
in the accompanying dramatic decline of
formerly major centers of production,
such as Detroit, Cleveland, and St.
Louis. The wealth that was once present
there has disappeared, sucked up into
the voracious consumption of the
government, under the leadership of
ignorant, dishonest, and vicious
politicians and officials.
Of course, the customary explanation of
the decline in America’s industrial base
is the competition of foreign producers
paying lower wages. However, the truth
is that if American producers had had
more capital, they would have been able
to produce more efficiently and at lower
costs, thereby more frequently
offsetting the advantages foreign
producers had by virtue of being able to
pay lower wages. Indeed, for
generations, American producers had been
able to do this. Their superiority in
terms of capital invested per worker
enabled them to offset even enormous
differences between American and foreign
wage rates through the higher
productivity of American workers
resulting from greater capital
investment.
True enough, foreign investment and the
international movement of capital have
become much easier since the second half
of the last century than it was in the
first half. But investing in foreign
countries does not reduce the capital
invested in the countries in which the
investors reside. To the contrary, it
increases that capital. This is because
the investment greatly increases the
productivity of labor and the total of
what is produced in the foreign
countries, and a major portion of that
additional production is capital goods
that are exported to the country of the
investors. Just as investment in the
western states of the United States by
citizens of the country’s eastern states
served to increase the wealth present in
the eastern states, on the foundation of
goods received from the western states,
so too investment by American citizens
as a whole in places like Japan and
China serve to increase the capital
goods in the United States as a whole,
by virtue of the capital goods coming
into it from Japan and China. These
capital goods can be seen not only in
masses of foreign-made components and
parts used by American producers, but
also in numerous factories, such as the
automobile plants built by Japanese and
Korean firms in the United States. The
influx of foreign capital can also be
seen in the fact that it is that foreign
capital that largely finances the budget
deficits of our spendthrift government
and prevents those deficits from
consuming still more of the previously
accumulated capital of the United
States.
Thus, the cause of America’s industrial
decline is not investment outside the
country. Nor, of course, is it
exclusively the result of Social
Security and Medicare and the decline in
saving and investment that they in
particular have caused.
There are numerous additional causes of
America’ economic decline. However, all
of them share with Social Security and
Medicare the fact that they represent
instances of government interference in
the economic system that serve to
undermine capital accumulation and the
rise in the productivity of labor. First
and foremost among them is the
government’s limitless appetite for
spending and the unending expansion of
its powers and activities that growing
spending feeds. The additional spending
is financed to an important extent by
arbitrary increases in the money supply,
i.e., inflation, and the closely related
policy of credit expansion and its
consequent massive waste of capital.
Along with inflation and credit
expansion, there is the confiscatory
taxation of income that otherwise would
have been heavily saved and invested,
most notably, profits, interest,
dividends, and capital gains, as well as
inheritance taxes, which are a tax on
capital already accumulated. In
addition, there is the granting of
monopoly privileges to labor unions and
all other government interference and
regulation that arbitrarily serve to
raise costs of production and reduce
output per unit of input, insofar as the
output being reduced is the production
of capital goods.7
The Special Problems of
Eliminating Medicare
The elimination of Medicare, especially
after age 70, requires that steps be
taken to make medical care for the
elderly affordable outside of Medicare
(and outside of most private medical
insurance plans as well). This requires
eliminating as far as possible all of
the government intervention that over
the generations has been responsible for
increasing the cost of medical care. In
my essay
“The Real Right to
Medical Care Versus Socialized
Medicine,”
I present a detailed explanation of the
various ways in which government
intervention has been responsible for
the rise in the cost of privately
provided medical care and a program of
pro-free-market reform that would
dramatically reduce the cost of such
medical care and make it affordable for
the most part to people without medical
insurance.
Though written in 1994, in order to help
prevent enactment of the so-called
Clinton Plan, its findings are as
applicable today as they were then, and
should be considered as an essential
part of my proposals for eliminating
Social Security/Medicare. The only
significant details that would need to
be changed are the replacement of the
absurdly and unnecessarily high costs of
privately provided medical care in 1994,
reflecting all of the government
intervention in medical care up to that
time, with the still far more absurdly
and unnecessarily high costs of
privately provided medical care today,
which incorporate the effect of the
massive inflation of the money supply
that has taken place in the intervening
years.
Reform in the Spirit of
Classical Liberalism
An important feature of the program of
reform that I have presented is that it
need not be accepted in toto. Its
advocacy of a rise in the Social
Security/Medicare retirement age to 70,
and even to 75, could be accepted by
those who wished to retain these
programs but limit them to an older
population than is the case at present.
The enactment of either of these
limitations would be an important
victory. One that would take nothing
away from the goal of the ultimate total
elimination of Social Security and
Medicare and would serve as an important
step on the way to the achievement of
that goal.
This program will undoubtedly seem much
too slow for some supporters of
individual rights and freedom.
Nevertheless, I believe that it is in
fact the most rapid means of achieving
its ultimate goal that does not entail a
revolutionary overthrow of what have
come to be established rights in the
law, however wrong-headed the law has
been in establishing those rights in the
first place. Proceeding in this way is
an essential aspect of Liberalism in its
classical sense. Fundamentally, rights
to entitlements of any kind, that must
be paid for involuntarily by other
people, are no more legitimate than the
alleged property rights of slave owners
in their slaves. Yet to avoid civil war,
Liberalism would have urged a policy of
compensated emancipation rather than one
of violent emancipation. Today, in
fundamentally similar circumstances,
Liberalism must limit as far as possible
the disturbance that would otherwise be
caused by the elimination of
illegitimate, perverted rights.
Individualism Versus
Collectivism
At the most fundamental level, what this
discussion of reform serves to bring out
is the conflict between the philosophies
of individualism and collectivism.
Social Security and Medicare are
monuments to collectivism. Both rest on
the premise that the individual cannot
make his own provision for old age by
means of saving and that instead he must
rely on that great collective, Organized
Society, i.e., the Government, to make
provision for him.
The individual, of course, is the party
with by far the greatest interest,
indeed, the only really powerful,
life-or-death interest, in providing for
his old age. The rest of the world can
never experience the matter with the
intensity with which he will one day
experience it if he lives to old age,
nor with the intensity that he would
experience it relatively early in life
if he were accustomed to think clearly
about the future.
Many individuals, of course, do not
think about the future, or not
sufficiently about it. But many in this
category, perhaps the great majority of
them, would do so if they lived in
conditions in which they were familiar
with the suffering of others that
resulted from bad choices and were not
protected from themselves suffering the
consequences of their own bad choices.
In any event, it cannot be that a
solution for any presumed inadequacies
of the individual lies in removing his
responsibility for providing for his
future and placing that responsibility
instead in the hands of a mass of other
individuals. For those other individuals
must be presumed to be not only equally
incompetent, but they also lack the
motivation of self-preservation that
each individual experiences in matters
of his own life and well being. Indeed,
the notion that the alleged incompetence
of the individual is a basis for turning
responsibility over to the collective
reduces to the absurdity that those who
are incompetent to run their own lives,
in which everything is at stake for
them, are thereby qualified to run the
lives of others, in which virtually
nothing is at stake for them.
The consequences of enacting this
absurdity are not only economic
destruction through the undermining of
saving but also the potential for
nothing less than a virtual geriatric
holocaust. That will be the result when
masses of elderly people, without means
of their own and dependent instead on
the support of masses of anonymous
strangers, wake up to find that the
strangers have grown tired of supporting
them.
A foretaste of this outcome can be found
in the “death panels” that many
observers discerned in the healthcare
legislation enacted in the last
Congress. It can be found within the
last few days in news stories about
efforts to stop dialysis treatments for
elderly patients. (See, for example,
“When Ailments
Pile Up, Asking Patients to Rethink Free
Dialysis,”
The New York Times, April 1, p.
1.)
With government control of medical care
and what is considered proper medical
protocol in the treatment of diseases,
even those who have managed to provide
for their own future are at risk.
Despite their endless posturing and
pretense, politicians do not love the
masses—of any age. What they love is
their own power. They pretend to love
the masses as a vehicle for gaining
power. History shows again and again
that once they gain it, the lives of
millions become expendable.
The actual fact is that while the lives
of the elderly are of inestimable value,
when taken one at a time, to the
individual elderly person concerned,
they are of no actual value to
politicians and government officials.
Indeed, from the perspective of the
self-interest of all-powerful officials,
contemplating the land and the people of
their country as their personal
possessions, existing for no purpose
other than their—the
officials’—glorification, the existence
of the elderly stands as an actual
impediment. For the elderly consume
substantial amounts of the resources of
the collective that the officials
control, and at the same time they
produce little or nothing, and no longer
have any prospect of ever doing so. If
they ceased to exist, the officials
would have resources available to put to
other uses that they would certainly
judge to be more important.
Today, of course, the elderly still have
the vote, and that may protect them for
a time. But all-powerful government is
clearly the direction in which we are
moving. We are placing ourselves more
and more in the power of government
officials who regard us the way a farmer
regards his livestock. We will be able
to live, in poverty and as slaves, so
long as we are useful to them. But when
we are too old to be useful to them, we
will be left to die. As the Times’
article referenced above put it, we will
then be spoken of in terms of such
euphemisms as having “chosen `medical
management without dialysis,’” i.e.,
“medical management” without treatment.
If we want to protect the value of
individual human life, particularly in
old age, when it is most vulnerable, we
must reverse direction and start
dismantling Social Security and
Medicare, two potentially deadly
collectivist institutions. We must
restore to the individual the
responsibility and the power to
determine his own future through
forethought and saving. The individual
must have his own individual property
with the freedom to use it for his own
well-being, as he sees fit. Government
officials must be barred from the
process.
* Copyright © 2011 by George Reisman.
This article is a revised and expanded
treatment of the subject that appears on
pp. 976-77 of the author’s
Capitalism: A
Treatise on Economics
(Ottawa, Illinois: Jameson Books, 1996).
George Reisman, Ph.D. is Pepperdine
University Professor Emeritus of
Economics and a Senior Fellow at the
Goldwater Institute. His website is
www.capitalism.net.
1. In fiscal year 2012, expenditures for
Social Security are projected to be $761
billion, while those for Medicare are
projected to be $468 billion. Total
federal government spending in 2012 is
projected to be $3,699 billion. Source:
Fiscal Year 2012,
Budget of the U.S. Government
Washington, D. C.: U.S. Government
Printing Office, 2011), p. 174 (Table
S-3).
2. An exception may be the budget
proposal currently being developed by a
number of Republican members of the
House of Representatives, which
reportedly seeks to reduce federal
government spending by $4 trillion over
a period of 10 years, in large part by
replacing direct federal spending for
Medicare by federal subsidies for the
purchase of private medical insurance.
(See The Wall Street Journal,
April 4, 2011, p. 1.)
3. Source:
Annual
Statistical Supplement to the Social
Security Bulletin,
2010, p. 228 (Table 5.A1.1).
4. See Medpac,
June 2010 A
Data Book, Healthcare Spending and the
Medicare Program,
p. 34 (Chart 2-2. Medicare enrollment
and spending by age-group, 2006). This
chart shows that almost 31 percent of
Medicare’s spending is on account of the
age-group 65-74. At the same time,
Social Security Data show that the 65-69
subgroup accounts for 55 percent of the
larger age-group. The larger proportion
of people in the younger subgroup
offsets to an important extent the
higher per capita medical expenses of
the older subgroup and suggests the
possibility of the degree of cost
reduction indicated.
5. See Medpac, ibid., p. 33 (Chart 2-1).
6. See
Annual
Statistical Supplement to the Social
Security Bulletin,
2010, p. 1.
7. For elaboration of this last point,
see “The Undermining of Capital
Accumulation and Real Wages by
Government Intervention,” pp. 636-39 of
the author’s
Capitalism: A
Treatise on Economics
(Ottawa, Illinois: Jameson Books, 1996).