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Entitlement

In recent years, the word "entitlement" has come to mean exactly the opposite of what it once did.

The dictionary says it's "the act of entitling," "the state of being entitled," or "the right to guaranteed benefits under a government program."

Instead, it's used pejoratively, about someone who receive some benefit to which the speaker believes the recipient is not entitled. The "entitlement class" suggests that a group of people feel entitled to something they have not earned.

Recipients of Social Security and Medicare beneficiaries have insisted those programs are not entitlements because they were taxed - involuntarily required - to pay into the programs. They grow furious at being lumped in with "welfare moms" and others perceived moochers.

It turns out - as Wyoming Senator John Barasso was sharply criticized for saying last month - that Medicare beneficiaries on average pay about $1 for every $3 in benefits received. The gap is widest for "low-earning couples," which is to say most married wage-earners. (Last year's definition was a couple earning approximately $64,000.)

For that same group, Social Security benefits and taxes are almost evenly matched. For most other groups, Social Security withholding currently exceeds the amount of benefits they are likely to receive. The 3-to-1 ratio doesn't hold when both Social Security and Medicare are analyzed together, although most recipients still collect more than they contributed in total.

There are many ways to complicate the math of those programs, which were never meant to be simple savings accounts into which wage earners paid what they would eventually take out. The present value of money is different from its value at other times, and that matters because participants are not paying in and collecting on the same terms. Interest rates over the past few decades have fluctuated dramatically, from the high teens in the early 1980s to fractions of one percent now. The number and income of payers rises and falls relative to the number and benefits of recipients. Some people work a few years and collect for many more, and some work for many years and don't survive to collect.

Many factors can, and will, be used to obscure the issue. That's possible partly because the earnings and lifespan of most individuals vary from actuarial averages, so their own financial experiences can be difficult to relate to national charts and graphs.

But the bottom line, which is the number relevant to discussions about costs and benefits, that the average person comes out well ahead.

How that plays into the entitlement discussion is a fascinating study. Recipients rightly feel entitled to their benefits, because they played by the rules during their working years.

That's "entitlement" in its best sense: a contract between a taxpayer and a government agency, in which each has obligations. That's fair. The government is obligated to pay recipients their stated benefits, even if the math turns out to have been faulty.

The problem is that, over the long term, no entity can spend more than it collects. That's a point frequently made by people who want the government to "live within its means." In terms of funding, although not in setting policy, the "government" is taxpayers in aggregate. There's no one else to pony up.

That's why the deal must be changed. Either more money must come in from current wage earners, or less money must go out to current beneficiaries. The ratio of 3 to 1 is really bad budgeting, which doesn't make recipients any less entitled. Whether to pay is a moral issue; how to afford it is a math problem Americans have been ignoring for far too long.

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