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April 16, 2009

Safety Net or Dragnet?

Quote of the Day: “Government welfare programs — if they should exist at all — should be limited to helping those who really need assistance. They should be safety nets, not dragnets that capture everyone.” — Mark Skousen, “Econopower,” page 55

Subject: Safety Net or Dragnet?

What politicians call a “social safety net,” isn’t. It’s a dragnet.

  • A safety net would catch people when they fall
  • A dragnet entangles everyone, even when they don’t need help

Warren Buffet qualifies for Social Security and Medicare. Is Warren falling? Does he need help? Of course not. Why then have the politicians created dragnet programs that provide benefits to people like him, and to millions of others who don’t need help?

One thing is clear — dragnet programs give politicians vast power, foster dependence, and create huge constituencies who will fight to preserve such programs.    

Social Security and Medicare are classic dragnets. They ensnare everyone. Everyone pays, but the returns are poor and mismatched to needs. Benefits go to many people who don’t need them, and often those who need the most help get the least.

I know a woman who receives only $400 a month from Social Security. She struggles to survive. She has no safety. She has no net beneath her. For her, and for millions of others, the so-called “social safety net” is a myth.

Meanwhile, all of today’s workers are caught in the dragnet, forced to pay regressive payroll taxes that diminish their ability to save, while fostering a need to cover emergencies using credit cards with impoverishing interest rates.

Dragnet programs usually have one other feature — fraud. For instance, politicians describe Social Security as a retirement plan, or as retirement insurance. It’s neither.

True insurance takes the form of a true safety net. It protects you in the case of unlikely but severe problems. But Social Security gives money to everyone, regardless of need. No insurance program works that way.

Neither is Social Security really a retirement plan. A true retirement plan invests money to create new wealth so that more can be paid back than was paid in. Instead, Social Security works like a ponzi scheme, taking money from today’s workers to pay benefits to yesterday’s workers. It robs capital from the economy rather than adding to it, and will pay future recipients less than they could have earned from savings.

Sadly, the politicians now want to create a new dragnet program that will once again fail as a safety net. And they’re once again using fraudulent claims to con us. The politicians tell us that more than 45 million Americans lack health insurance. But they don’t tell us what their own census surveys show about the un-insured . . .

* 37% live in households earning more than $50,000 a year
* 19% live in households earning more than $75,000 a year
* 20% aren’t citizens
* 33% already qualify for current government programs

Subtract out those who could afford major medical coverage if they wanted, non-citizens, and those who fit under existing programs, and the un-insured problem shrinks dramatically — probably to less than 10 million people.

Much of this problem could be fixed be removing legal requirements for what insurance has to cover. We could return to true insurance, which would cover major health problems, and not the medical equivalent of oil changes and tire rotations.

And here’s something else the politicians won’t tell you . . .

Congress could wipe out the un-insurance problem in one swoop — not by creating a new dragnet program, but simply by letting people keep more of their own money.

In addition, the insurance deduction could apply to payroll and Medicare taxes too. These are regressive taxes that hurt low income Americans far more than income taxes do. Best of all . . .

A standard health insurance deduction would help everyone, not just those with lower incomes.

We don’t need another government dragnet to give Americans what they could provide for themselves. What we need is less government and lower taxes.

Tell your Congressional employees to reduce their meddling in health care. Use your personal comments to ask for a tax deduction for health insurance premiums. Mention the two government studies that support this idea and the census data that shows the true size of the un-insurance problem. You can just cut and past from this Dispatch if you want.

If you’ve used our Educate the Powerful System before, do the following . . .

If you’re sending your first message to Congress using our system, click on this link, scroll down to the form, fill it out, and send your message.

Forward this message to your friends and ask them to join Downsize DC by sending their own message to Congress.

Thank you for being a part of the growing Downsize DC Army.

Perry Willis
Communications Director, Inc.

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