Obamacare and Social Security Have 4 Major Things in Common


It was this week in 1935 that FDR signed the Social Security Act. During the signing ceremony, President Roosevelt made the following observation about the issue at hand: “Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.” Today we can broadly address both. To the former: Save up! And to the latter: Definitely not a lifetime.

When Democrats forced through Patient Protection and Obamacare in March of 2010, America arguably dug itself deeper into greater insecurity, more dependency, and an ever-increasing fiscal-administrative state that is unanswerable to the people.

There’re few things that Obamacare and Social Security have in common:

1. They're costly. When Democrats rammed through Obamacare in 2010, they often cited the Congressional Budget Office's (CBO) “deficit-neutral” nod to the bill. Despite accounting gimmicks that Paul Ryan pointed out then and the additional $250+ billion “doc fix” provision (a remnant of the 1997 Budget Control Act passed under Clinton), that was ignored. Essentially, Congress has been patching up payments to Medicare providers through a series of temporary fixes. CBO, however, did not capture this reality in scoring Obamacare. If Obamacare was scored correctly, it would not be deficit-neutral. Michael Tanner, a Cato fellow, examined the law in 2012 and concluded that Obamacare really costs $2.7 trillion instead of the below $1 trillion, as advertised, and will add $826 billion to the national debt.

Similarly, the U.S. government spent more than $800 billion on Social Security last year, more than any government program. Social Security now constitutes about one fourth of our federal spending. In 1940, about 160 workers supported every beneficiary. In recent decades, that ratio was dramatically reduced to about 3:1.

2. They're unsustainable. Health care reform is a public policy challenge precisely because cost and coverage are generally positively related —expand access, get more people covered, have more utilization of health care, but incur higher costs. Obamacare can then be characterized as a trillion dollar bet on government mandate, not the free market, to lower cost. CBO, who gave the law the nod, backtracked two months after the law’s passage and said, “Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond. In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.” Major provisions originally were not scheduled to kick in until 2014 (now 2015), effectively manipulating the policy window to reduce the sticker price under $1trillion.

When it comes to Social Security, refer to the Trustees’ Report. Its conclusion is crystal clear. In sum, Social Security trustees reported that Disability Insurance is due to exhaust in just two and a half years in 2016. Old Age and Survivor Insurance will exhaust at 2033, at which point benefits will need to be cut significantly or large redistributive policy would require to remedy the fund.

Both laws, in effect, are massive redistribution programs, where healthy, young people pay upfront to subsidize benefits for the sick and the elderly, and receive little if anything on the back end.

3. They're tedious. House Ways and Means Committee released a compliance burden tracker back in February that cites the Obamacare compliance cost for government agencies at 128 million hours annually. Justice Scalia once joked by suggesting that the law is cruel and unusual. The best case for why the 2,700-page law is tedious actually comes from the administration, which last month unilaterally sidestepped Congress in delaying employer mandate and implementation of health care exchange. Instead of 128 million hours though, the Treasury punted the law down the road on its blog.

In terms of Social Security, the FICA rate of 12.4% is an employment burden that dampens hiring, which is why the Obama administration temporarily cut this rate for two years – to stimulate jobs. There’s also deadweight loss associated with Social Security that distorts the market.

If you’ve never visited a Social Security office, consider yourself lucky. GAO reports that over 3.1 million people waited for more than one hour, and 330,000 waited more than two hours in a 14-month period between 2009-2010. Another 3 million left without receiving service. That’s about one in every seven who received poor service from field offices.

4. They're extensive. Both Obamacare and Social Security are now massive monuments to the Progressive movement. Not only do they take up a significant portion of the government spending, but they also involve tens of thousands of workers, including thousands of bureaucrats from IRS, a key agency responsible for enforcing Obamacare. In light of recent expose of IRS practices, Daniel Henniger cries out “Big Government Implodes.”

So, take comfort, America. The State of the Union is “strong.” As long as the ruling class gets its way, the rest of us will be fine too. I am just an average college student writing another average piece contributing to this average conversation. Before long, though, the fiscal-administrative state will dominate our lives even more. Until then, here’s to our collective, affordable security. Cheers.