Recently, one presidential candidate accused another of being a socialist.  To most people, socialism has a bad connation, related to our enemies during World War II.  In reality, much of the American economy is socialistic.  In socialism, money is collected from all but parceled to select groups.  America has embraced socialism in many forms.  Our progressive income tax system is one form.  The wealthier members of our society pay income tax at a higher rate and rightfully so.  Many of the higher economic class enjoy the benefits of the work their employees perform for them.  Yes, the employees make money for themselves but the employers make even more from the sweat of their workers.  So, the wealthy should pay more in taxes.

Medicare and Medicaid are two other instances of pure socialism.  In each case, the recipient is the beneficiary of a group contribution.  If you enjoy life-long good health, you will never fully benefit from the money you have contributed.  If you are a student at a public school or public university, you are a recipient of government money, collected from all despite the fact that all contributors may not be benefited by their largesse.  If you are a farmer and are paid NOT to farm (as a farm subsidy), you have enjoyed the benefits of socialism.

The money which runs the local, state and federal government is neither collected nor distributed equally.  At the local level, those who do not own properties do not contribute to local school and real estate taxes yet enjoy the benefits of sending their children to school as well as protection by the fire and police departments, not to mention the repair of the local infrastructure.  States contribute to the federal bank account yet enjoy an unequal return on their investment.  Many states pay far less tax to the Feds than they receive in federal funds.  Other wealthy states pay far more than they receive. 

One facet of our lives which is not socialistic is medical care for those not eligible for Medicaid or Medicare.  We pay for our medical care either as part of our contract (for those who are covered by their employer) or out-of-pocket (for those unfortunates who are not covered).  The 40% who are uninsured are simply gambling that they will not get sick or suffer a catastrophic medical situation.  The Hippocratic Oath prevents doctors from refusing care, so those in critical situations are usually treated.  However the cost of the uninsured fall upon all of the insured workers, raising the cost to their employers or those who have individual policies.  

Socialized medicine is common throughout the world.  The cost of medical care throughout the world is far less than here in the US.  Yes, we have some of the most expert physicians treating the most exotic of diseases.  However, too many Americans are going without care, suffering the consequences of manageable, chronic diseases such as treatable cancers, heart disease and diabetes.  The cost of drugs often forces us to make a decision between drugs, food and heat. 

A socialized program which seems to have worked quite well is Social Security.  When Franklin D. Roosevelt came up with the plan in the 1930s, it was seen as a method to close down the county poor houses.  In the program, employee contributions do not pay for a future retirement but instead simply pass that money to the already retired.  At the time of Roosevelt, 15 people contributed to the welfare of one retiree.  As the population has aged, particularly the “baby boomers”, we have now reached a point when 1.5 people pay for that single retiree.  As a consequence, Congress has had to pass bills which have periodically raised the ceiling to which workers have had to pay into social security with the ceiling currently at $102,000.

Our government has led you to believe Social Security is in trouble.  President Bush encouraged Congress to pass a program allowing people to invest a portion of their social security contributions into the stock market.  We now realize what a disastrous idea that was.  If you examine the premise of social security, you should realize that it is not in the dour condition you have been led to believe.  All the pundits agree that if SS proceeds at the current rate, the system will implode in 2042.  I have a simple explanation of why that won’t occur and a simple remedy.  In 2042, nearly all the “baby boomers” WILL BE DEAD.  A demographic shift will already have occurred, slowly returning the current 1.5 contributor:1 recipient ratio back toward the original 15:1 ratio at the time of Roosevelt’s program inception.

An interesting aside related to Social Security relates to the age 65.  Why 65?  It appears that during the reign of Otto von Bismarck of World War I-era Germany, aides decided (perhaps arbitrarily) that 65 would be a good age to provide life-long security to Germany’s aged.  When FDR came up with his plan for our current Social Security, he asked his staff statisticians to determine an age at which the Social Security retirement date should “kick in”.  His statisticians similarly determined that 65 would be a good age to begin paying retirement benefits.  The problem with that plan was that the actuarial tables which helped the government statisticians to arrive at 65 as the “magic age” was based on tables skewed by increased death rates in World War I and the Spanish Flu of 1919 which killed more than 40 million people world wide.  Today’s life expectancy of about 78 for a male and more than 80 for a female far out-distances the life expectancy at the incipience of Social Security.

In the meantime, the simple solution would to be to increase the ceiling at which SS taxes are collected.  The ceiling is slightly above $100,000.  I would increase the ceiling but not beginning at $102,000 but at $250,000.  Why should the federal income tax be progressive but not social security?  If the wealthy are enjoying increased incomes on the backs of their workers and paying federal income tax accordingly, then why should tax on social security be any different?