07/14/2011 12:29 pm ET | Updated Sep 13, 2011

Gaining Perspective on Social Security and Medicare

In case you don't know why your mom's or grandma's Social Security and Medicare benefits are being used as puppets in Washington's budget and election season debates: 1.) Our government has a spending problem (which you probably know by now) and 2.) Our population is aging. Baby Boomers started turning 65 this year, and you may have heard from Republican presidential hopefuls that there won't be enough workers in coming decades to support the retirements and health needs of 70+ million Baby Boomers. Today's pressing problem is that there isn't enough money in the accounts to pay out 70 million checks to expectant older, disabled, and veteran beneficiaries, causing President Obama to request a raise in the nation's debt limit.

Before you call The White House or your Congressional leaders to complain or offer your suggestion, stop and gain some perspective. Ask yourself: Who is responsible for taking care of our veterans, our disabled, and our older people? For veterans, there is little question that we all owe them and their families for their service fighting our wars -- not just our current wars -- but the ones we have fought over the last century. (Frank Buckles, the last surviving American WWI veteran, died in February at the age of 110.)

But what about the deservingness of the disabled and elderly? Himself disabled by polio, President Franklin Roosevelt signed Social Security into law in 1935. When Social Security was enacted, there were 7.8 million people age 65+ in this country, and life expectancy for a 65 year male retiree was another 13 years. Its original goals were to provide income security for workers who would live beyond their working years. In 1939, spouses and children of retirees, as well as family members surviving when the beneficiary died were added. Benefits were extended to the disabled in 1956.

The Social Security ideal was that if people cannot work due to old age or disability, or due to an employer's perception that they are too old, then the government should step in provide for their financial needs. In 1967, the Age Discrimination in Employment Act (ADEA) made it illegal for an employer to terminate a worker between the age of 40 and 65 due to their age. ADEA's upper age limit was changed to 70 in 1978, meaning that employers could fire workers older than 70. In 1986, at the age of 75, President Reagan eliminated the upper age limit. This removed the inability-to-work issue from the deservingness rationale for Social Security. Today, all employees are allowed by law to work as long as they please. Therefore, based on the Social Security ideal, the government would not be required to take care of them just because they are older. The age eligibility for Social Security has already increased. By 2027, all workers will need to be 67 before they are eligible to receive the benefits we have come to expect. However, remember that Social Security is not only for retired workers.

More than one quarter of all American households have a member receiving Social Security benefits. While 38 million beneficiaries are retired workers or surviving older dependents, 1/3 of beneficiaries are younger than age 65, a total of 22 million people. Three million children under 18 receive Social Security benefits because their parent workers have retired, become disabled, or died.

When Social Security was enacted, it was assumed that once old age set in, illness and disability would follow. Thirty years later, when Medicare was enacted by President Johnson in 1965, the rationale for it was that if a person cannot get health insurance because of old age or illness, the government should provide the coverage. Similar rationale supports the Affordable Care Act's goal of insuring people younger than 65.

By 2014, Medicare expenditures of $736 billion are expected to bypass Social Security's $694 billion. The questions remain: Who is responsible for taking care of the aging, sick, and disabled Americans? If the government is not responsible, then who is? Should they take care of themselves? Should their families absorb the cost of caring for them? How about neighbors for people who have no family, or religious institutions?

Furthermore, should people who don't depend on their Social Security benefits or on their Medicare refrain from accepting it? In other words, should these entitlements we have come to expect be reserved only for those who truly need it? If your mom or grandma doesn't need her monthly check from the government, how would she and you feel about turning it down? Going without her monthly check may make her tap into your inheritance and change her income tax status. Inheritance and taxes! Do estate taxes affect the budget and the deficit? That's a hot political question for another day ... or is it?

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