How the left got Americans hooked on welfare

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Occupy Wall Street protesters have been evicted from almost every major U.S. city. They have failed. But despite their movement's underlying anti-capitalist message, it did have at least one good point.

America's 1 percent is in fact reaping benefits from taxpayers with much lower incomes, and the federal government is to blame.

Sen. Tom Coburn, R-Okla., released a report last November looking at government welfare payments to millionaires. He found that since 2003, tax filers reporting at least $1 million in annual adjusted gross income have collected more than $9 billion in government retirement benefits.

Why is our cash-strapped federal government sending billions to millionaires? The answer begins in the 1930s, when Democrats where scheming on how to sell their expansive new programs to the American public.

Even at the height of the Great Depression, liberals knew they would have a tough time selling new programs like Social Security if they were viewed as welfare. Wilbur Cohen, then an assistant to Social Security Board Chairman Robert Altmeyer, explained, "The American public was and still is insurance-minded and opposed to welfare, the dole, and handouts."

So Democrats sold Social Security as "insurance" instead. A 1938 pamphlet promoting Social Security read: "Your Social Security card shows that you have an insurance account with the U.S. Government - Federal old age insurance."

This was, and is, a lie. Social Security is, and always has been a welfare program in that one set of people is taxed to pay for the benefits of another set of people. There is no legal obligation between the two.

The federal government was forced to admit this in the U.S. Supreme Court 40 years later in the case of Fleming v. Nestor. Plaintiff Ephram Nestor had paid Social Security taxes for 19 years. When he was deported for being a member of the Communist Party, he sued to collect on his insurance contract. The Supreme Court ruled that no contract existed, that Social Security was just a welfare program.

Since that time, Democrats have fought tenaciously not to give any ground on making sure all Americans are forced to participate in the Social Security system. Cohen, again, provided the rationale: "In the United States, a program that deals only with the poor will end up being a poor program."

This mentality has created what Coburn calls "an intentional effort to get all Americans bought into a system where everyone appears to benefit." According to Census Bureau data, thanks to programs like Social Security, Medicare, Medicaid, and food stamps, nearly half, 48.5 percent, of all U.S. households received some type of government benefit. And the cost to taxpayers is huge.

According to the American Enterprise Institute's Andrew Biggs, a typical taxpayer retiring today will have paid around $65,000 in Medicare taxes over his lifetime (inflation adjusted.)

But that same beneficiary will also receive around $174,000 in lifetime Medicare benefits (also inflation adjusted). That sounds like a great deal for the average American until you realize that, if you currently pay taxes, you are the one picking up that $109,000 difference.

Middle-class and upper-class welfare have become such common political tools that the question of whether millionaires should actually get the money -- whether it's a good use of taxpayers' funds to pay them -- rarely arises.

Cohen and the planners of the liberal welfare state have succeeded beyond their wildest dreams. They created the "third-rail" issues of American politics today. They succeeded in paralyzing their children and grandchildren, who are now confronted with the uncomfortable matter of paying the bill.

David Freddoso is The Examiner's online opinion editor. He can be reached at dfreddoso@washingtonexaminer.com.

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