‘Entitlements’ and welfare: the difference

There’s a big difference, easy to not notice, between “entitlements”, such as Social Security and Medicare, and “welfare”, such as Temporary Assistance to Needy Families.

Social Security and Medicare are paid for through special earmarked funds, which the people who benefit from these programs pay into.  They are different from welfare programs, which are paid for through general tax revenues, mainly the income tax.

Gary Flamenhaft, a guest poster on the Club Orlov web log, has a good explanation of how this works.

Some people criticized my claim about the Tea Party’s reason for shutting down the government: “They thought that the welfare system is bankrupting the country.  This is a laughable claim, because welfare spending looks negligible when compared to military spending.”

They pointed to the $850 billion Social Security program, the $821 billion Medicaid and Medicare program, and the $521 billion in other mandatory programs, calling them “welfare.”

There is just one problem with this critique: none of these programs are funded using the income tax. They are called entitlements, and the way you entitle yourself to them is by paying into them using a special payroll tax. Same goes for unemployment insurance, by the way.

entitlements720All of these are funded using something that is called a tax, but in essence they are joint savings accounts that you hold in common with many other people, with some rules on how the money is then spent on those who have paid into them.

Clearly, the Tea Party doesn’t like these joint savings accounts either.  We still need to distinguish them from “welfare,” or we won’t even know what we are talking about.

If you are not aware of this, the employer and employee each pay half of the payroll tax to the government, although if you are self-employed—lucky you!—you get to pay both halves.  [snip]

If you look at the US budget, on Table S-4 p. 168, you will see the distinction between mandatory programs paid by payroll tax and “appropriated” programs paid by income tax. There may be some overlap, but this gives you a general idea:

  • Subtotal, mandatory programs: $2,234 billion.
  • Subtotal, appropriated programs: $1,174 billion.

 “Welfare” is a different story.  Let’s define it as unearned payments, based on means testing or other measurement of need, funded through income taxes paid by others.

If you look at the US discretionary budget, on Table S-11. p. 203 you will see that the entire Health and Human Services HHS budget of $79.8 billion, does indeed look small compared to the defense budget of $496.0 billion: for every 6 dollars that go to defense, less than one goes to HHS.

But that’s not the relevant number either.

Because when most people talk about welfare, and especially Tea Party people or other ideologues, they are undoubtedly talking about transfer payments to individuals who presumably are lazy, no good bums, who don’t want to work.  In that case you have to look at the HHS budget in more detail.

Sacred-Bull-50265924544Welfare as such no longer exists, but on page 113, you will find the line item for “Temporary Aid to Needy Families” TANF, Bill Clinton’s idea for “eliminating welfare as we know it”, which totals $17.35 billion.

This is what I call welfare, and it looks extremely negligible compared to the $496 billion offensively large defense budget. For every 28 dollars spent on defense, less than one goes to the “lazy bums” if that’s what you wish to call them.

I could rest my case here, but there’s more.

You see, the “defense” appropriation doesn’t even come close to capturing the entire military budget, because it leaves out Homeland Security, The War on Terror “Overseas Contingencies”, interest on the debt, nuclear weapons managed by the Dept. of Energy, and many other items.

For that you will have to look at the War Resisters League pie chart

They’ve taken payroll tax funded programs out of the picture and show that total military spending amounts to $1,307 billion for fiscal year 2015.

fy12histmilitaryspendThey use 80% as the portion of the federal debt due to military spending, which could be questioned, but the rest of their analysis looks pretty much rock solid.

In any case we are talking about over $1 trillion dollars per year to maintain the US global hegemonic empire.

And so, in the final analysis, for every 75 dollars spent on so-called “national defense,” less than one goes to people in need.  Will the real welfare queens please stand up!

 via ClubOrlov: Tax Revolt Methods.

The main point of Flamenhaft’s post and a previous post is to not pay federal income tax, and he lists legal and other methods by which this can be done.

I myself pay a goodly amount in state and federal income taxes each year, claiming the usual deductions but not making a special effort to look for loopholes, and I criticize millionaires and billionaires who figure out ways to avoid paying tax.  They are very different from tax resisters with conscientious objections, such as Flamenhaft.

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2 Responses to “‘Entitlements’ and welfare: the difference”

  1. Bill Harvey Says:

    REAL good one, Phil. Very good explanation of widely misunderstood issues. The explanation can’t be given often enough. I’ll send it around. Thanks, Bill


  2. prayerwarriorpsychicnot Says:

    Reblogged this on Citizens, not serfs.


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