6th postscript, April 1994. We continue the examination, begun in the two previous essays, of a medley of news articles. These articles concerned taxes and appropriations advocated, proposed, and/or enacted, by individuals, legislative or administrative bodies, up to the President. The time period is the terms to date of President Clinton, and the 103rd Congress. The discussions demonstrate how decidedly our country continues to avoid the lessons of history, at the risk of dire eventualities.

4. Other fallacious statements, in the editorial of April 10, 1994 (entitled "Journalists look at who pays taxes"), had to do with Social Security. First there is the statement: "In recent decades, Social Security taxes have become increasingly regressive--hitting most people hard while barely tapping the wealthy."

The Social Security System (SSS), to be appropriately appreciated, must be broken down into its component parts and characteristics. In its initial enactment in the 1930s, there perhaps was little reason to debate the justice or constitutionality of its features. Its initial raison d'etre was to provide income for the elderly, when they no longer could earn a living. Relatively few employers provided retirement plans prior to World War II. When the elderly could no longer work (and had exhausted their savings), they were dependent on their families or charity. It was noble legislation, considering the void it was filling, notwithstanding its inequities, and therefore questionable constitutionality.

Note that Social Security (SS) was not intended as a welfare program, per se. It was limited to covered working people, who along with their employers, made "contributions" to assure that the employees would have income, when they reached the legislated retirement age. At some point in the frequent superseding legislation on SS, the current minimum eligibility requirement for retirement benefits became forty quarters (ten years) of "payments-in". It was not "universal", but as the decades passed, more and more groups were added, until now few groups of working people are not covered.

In the over 50 years of existence of SS, there have been many changes to the initial legislation. Benefits (including survivor and disability income benefits, and Medicare) have been added, modified, and amplified, time and time again. As new benefits were introduced, as demographics changed, as management controls failed, etc., costs soared. To keep the program solvent, matching "contribution" rates were increased, and the maximum wages subject to the "contribution" rates were raised until the present horrendous levels have been reached.

A distinction and separate applications were made in the law between "contributions" mandated for Medicare, and that for the other benefits. Let us put aside the Medicare portion for the moment. The moneys paid into the SSS (instead of "contributions") could be termed "savings and investments", "premiums", or "taxes". The term "savings and investments" would be a misnomer, since the benefits to be received are not a prorated share, based on the contributions made by and for each individual, and the earnings (and compounding thereof), over the total range of years that the person worked.

The term "premiums" is misleading because SS departs considerably from insurance policies. A cursory examination, of payout charts for SS, do not reveal how far the benefits versus contributions for the spectrum of covered individuals, varies from what an annuity (with the life insurance industry) would provide. It is not an unlikely assumption, that the benefit formulas do not favor the higher paying contributor (i.e., does not favor the rich, as business with insurance companies would legitimately tend to do, because of economies of scale).

But there are other inequities in SS, that favor various contributors, and thereby violates "property rights". Without extra premiums paid in advance to protect against a PREDICTED degree of inflation, the insurance industry would not take the risk of offering policies, that protect against inflation (particularly against widely varying and extreme levels). Not so with SS! With automatic Cost of Living Adjustments for benefits, with belated and after the fact augmentation of the SS funds through rate and maximum level of applicable wages increases, the program highly favors older contributors (particularly those already receiving benefits, and no longer making contributions).

Perhaps the greatest inequity concerns risk level of contributors' "investments" or "premiums". Normally an investor requires greater benefits, if he endures greater risk. With the perceived risks due to our nations' inability to control deficits, and the ever increasing national debt (in whose securities SS reserve funds exist), many younger contributors feel they will never receive their benefits. Here the "taxation" is clearly "progressive" not "regressive"; the higher paid contributors (the wealthier) stand to lose more if the program defaults or if benefits are cut.

Another risk (this one has already come to pass), not anticipated with the initial SS legislation, was that the "socialists" would subsequently (and overtly) treat SS retirement benefits as a welfare program. The employees share of "contributions" come from after tax dollars, that is they have been subjected to income taxes. Under the laws for "other" retirement plans (e.g., IRAs), when distributed as benefits, these previously taxed portions would then be tax free.

Some years ago the Presidents and the Congresses started nibbling away at the SS feature, that all distributions were income tax free. Some SS retirement income, for some people, was made income taxable. Generally the people more effected were higher earning people. With the 1993 deficit reduction legislation, the 42nd President and the 103rd Congress began the blatant inequity of denying higher income retirees their full payouts through taxing benefits in the "progressive" (multiple bracket) income tax system. Some citizens and some politicians are calling for the complete denial (confiscation) of the "savings and investments" in the SSS of the more wealthy taxpayers. So much for the "regressive" argument!

A final injustice in the SS retirement features is that a non-working spouse qualifies for benefits, along with the working spouse, at no extra "premiums" (compared to an unmarried contributor).