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About Paul R. Hollrah
Paul R. Hollrah is a freelance writer. He is a member of the Civil Engineering Academy of Distinguished Alumni at the University of Missouri - Columbia and a Senior Fellow at the Lincoln Heritage Institute. He currently resides in Tulsa, Oklahoma.
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Attacking Entitlements
Paul R. Hollrah
August 23, 2011
Democrats complain endlessly that “millionaires and billionaires, big oil companies, and corporate jet owners” are not paying their fair share. It’s all political flim-flam, which is what Democrats do best, and it’s all beginning to wear a bit thin. If nothing else, their propaganda writers need to take a few days off so they can come back with some fresh inspiration.

Maybe while the speechwriters are off getting re-inspired and Democrats find themselves at a loss for words, the rest of us can get serious about doing what has to be done to get our economy back on track. For example, in what passes these days for real courage in Republican circles, former Minnesota Governor Tim Pawlenty went way out on a limb, suggesting that the time has come when wealthy retirees can expect not to receive an annual cost of living increase in their Social Security checks so that low income retirees can have meaningful increases.

He doesn’t seem to realize that what we need to be talking about, if we’re going to reverse the trend and actually reduce our national debt, is not a modest contribution toward debt reduction, but real sacrifice. What that means is that low income retirees...those with annual incomes of, say $50,000, could look forward to a 5% reduction in benefits, with monthly stipends becoming smaller and smaller so that, by the time we reach annual incomes of $150,000, and more, Social Security payments would completely zero out. We must begin to means-test Social Security.

The old argument that “they paid into the system their entire working life and they deserve to get full benefits” just doesn’t wash anymore. We’re too far down the road to economic Armageddon to play that silly game any longer. To continue sending monthly checks to T. Boone Pickens, Warren Buffet, and George Soros because “they have it coming to them” is sheer madness. And to suggest that we can put even a tiny dent in the problem by increasing taxes on “millionaires and billionaires, big oil companies, and corporate jet owners” is even more insane, and no one but a liberal Democrat hoping to fan the flames of class envy would even suggest it.

Another “entitlement” that absolutely must be addressed is the burgeoning growth of the Supplemental Security Income (SSI) boondoggle. Searching for SSI references on Yahoo or Google we find the first four or five references to be advertisements from lawyers who specialize in lying to the Social Security Administration in order to obtain monthly disability benefits for able-bodied recipients who are many years away from retirement age. Senator Tom Coburn has said that SSI payments to able-bodied recipients amounts to about 40% of their total outlays.

One such advertisement explains that “Supplemental Security Income (SSI) is a Federal assistance program designed to provide income those who have limited assets with which to support themselves.” The ad explains that the SSI program is managed by the Social Security Administration (SSA), but financed by the general fund. Because the program is not financed by Social Security taxes, there are no work requirements necessary to qualify for SSI...In order to qualify, an individual must be 65 or older, legally blind, or meet the definition of permanent disability provided by the SSA. Because SSI is a need-based benefits program, the financial eligibility of potential claimants is based on two categories of assets: income and resources, where “income” refers to the amount of money a person receives from wages, other benefits programs, food assistance programs, pensions, etc., and “resources” refers to the value of assets such as cash savings, equity, or real estate.

The advertisement declares that, “In order to qualify for SSI, a family’s combined income and resources must total less than $3000.”

All of this may be true, so far as the official rules are concerned, but that’s not how it works in actual practice. All over the United States, able-bodied men and women in their thirties, forties, and fifties, with family incomes in excess of $50,000 a year and assets in excess of $100,000, and their dependent children, are receiving billions of dollars each month from the Social Security Administration because of alleged disabilities.

What sort of disabilities? The disabilities which prevent many from being self-supporting range from alcoholism to drug addiction, and from gambling addiction to bi-polar syndrome. And because the Social Security Administration requires a claimant to be turned down for benefits at least twice before they can be represented by counsel, an entire field of legal practice has sprung up comprised of lawyers who specialize in lying to the Social Security Administration, convincing administrative law judges that their clients are unable to support themselves. Published reports show that some administrative law judges approve from 80% to 100% of contested applications where claimants are represented by counsel.

It’s just a game that is played by lawyers, for the benefit of lawyers, that we all pay for. As a necessary first step the Congress should tighten the rules defining disability and require all those receiving benefits to re-qualify before juries comprised of ordinary hard-working citizens.

Another “entitlement” that demands attention is the federal minimum wage.

Since gaining control of Congress in 2006, Democrats have pushed through three increases in the minimum wage, a combined 40% increase from $5.15 to $7.25 per hour. Studies show that, for every 10 percent increase in the minimum wage, the total number of jobs available decreases by up to 2 percent. The impact on entry-level jobs is even greater. For each 10 percent increase in the minimum wage, the number of entry-level jobs for teenagers and unskilled workers is reduced by from 4 to 5 percent. Those most victimized by these unconscionable increases are black teenagers.

Beginning in 1938, Democrats and the leadership of organized labor have maintained an unholy alliance in support of the minimum wage, but for different reasons. Democrats have adopted the minimum wage as a matter of party orthodoxy because it is a cheap way of buying the votes of the poor, the unskilled, and those just entering the workforce. Organized labor has fought for an ever-increasing minimum wage because of the upward pressure the minimum wage puts on hourly wages for union workers. At the very least, the Congress should establish a two-tier minimum wage...a $5.15 per hour minimum wage for teens and unskilled entry-level workers and a $7.25 per hour wage for those with experience and marketable skills who find themselves temporarily unemployed. If Obama really means it when he says he wants to put people back to work, minimum wage reform is the perfect place to start.

But the single most important reform the Congress should undertake is a complete overhaul of our federal tax system. The key to that reform should be a transition from an income-based tax system to a consumption-based system.

The consumption-based tax system is far preferable to the so-called “flat tax” because liberal and Democratic demagogues would never accept a system in which an individual with a $1 million annual income would pay an annual tax of only $200,000, while a taxpayer with annual income of $20,000 would pay tax at the same 20% rate, or $4,000. Liberals and Democrats would never be happy until the taxpayer with the $1 million annual income would pay annual taxes of $900,000, while the $20,000 earner...who smokes, drinks beer and wine, and wears $150 Nike sneakers...pays absolutely nothing in federal or state taxes.

If liberals and Democrats want a so-called “progressive” tax system, the best way to achieve it is with the Fair Tax, under which individuals, rich and poor, would receive a regionally calculated monthly stipend equivalent to the imputed taxes per individual on the basic necessities of life...food, clothing, shelter, healthcare, and transportation. Since the wealthy spend a great deal more on non-essentials than the less fortunate, they would end up paying the bulk of the federal tax receipts. However, the important point to be made is that the Fair Tax would result in everyone paying something toward essential government services; everyone would have some “skin in the game.”

Liberals and Democrats have long survived and prospered relying on their belief that the American people are incurably stupid. And while we may concede that they’re probably right about most of their constituencies, more and more members of the broad middle class are “catching on” every day. They have come to realize that: a) the amount of money that government spends over and above revenues must be borrowed and added to our national debt, b) the only way to increase tax revenues and reduce the deficit is by having more people working and paying taxes, c) to increase taxes on the investor class...millionaires and billionaires, the big oil companies, and corporate jet owners...at a time when job creation must be our primary goal, is counter-productive, and d) the smaller we can make government, the smaller will be the deficit added to our national debt.

If it is true that the purpose of the terrorist is to strike terror in the heart of the intended victim, then yes, we conservative and our Tea Party allies are “terrorists” and “hostage takers,” and proud of it. By holding Obama’s feet to the fire in recent budget cap negotiations we have struck terror in the hearts of high-tax, big-spending Democrats. But even longtime Democrats are getting wise to all the demagoguery. They are coming to the realization that, while their party has flim-flammed them for more than three generations, Barack Obama is the biggest flim-flam artist of all time. What they will do to Obama and to congressional Democrats next November will not be pretty, but for those of us who believe in justice it will be fun to watch.








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