By Matt Cover September 14, 2011
(CNSNews.com) – Democrat Rep. Jim Cooper (D-Tenn.) said that most Americans do not understand that federal entitlements are not “bank account” programs that hold their money, adding that Social Security is not even a legal guarantee.
“Are these vested benefits? Are these contractual benefits?" Cooper asked of Social Security benefits. "Well, it turns out theyʼre not. Legally, theyʼre not even promises. Theyʼre scheduled benefits and most Americans are not even aware of that.”
Cooper, asked about potential reforms to Medicare and Medicaid, said that the core problem was that the public does not understand the true nature of entitlements.
“Many Americans donʼt really realize that Medicare is a government program,” Cooper said at a press conference with fellow Blue Dogs on Wednesday. “We have to start first with diagnosing the problem, helping all Americans understand the true nature of the programs.”
“Many people think that Social Security and Medicare are bank account programs, and money that theyʼve paid in is stored up in their name just for them,” he said. “That is a widespread misconception.”
Cooper said that Congress could do itself a favors by explaining to Americans that the payroll taxes deducted from their paychecks go into the governmentʼs coffers and are used to pay benefits for current retirees and are not saved for their retirement.
“Thereʼs a lot we could do to help people understand that the payroll taxes they pay in this month are paid out next month to somebody theyʼve never met, a complete stranger,” he explained.
Cooper also said that Congress should be explaining that it does not account for entitlement spending in the normal way, but puts it off on what he called a “government credit card,” rather than accounting for it through the normal budgeting process.
“Thereʼs another huge set of issues having to do with government accounting,” Cooper said. “We put most of these precious, vital programs on the government credit card, as opposed to treating them in the regular budget process.”
Cooper is referring to a process known as off-budget accounting whereby Congress accounts for the Social Security and Medicare trust funds separately from its regular revenue and spending calculations. This process separates entitlement spending from the regular yearly budget, often making it difficult to gauge how much money the government actually spends in a given year.
Many critics have argued that bringing entitlements back into the regular budgeting process is a more honest way to account for them because it would allow the public to see the entirety of federal spending and taxation every year.
Cooper noted one final misconception that Congress should correct--that most people believe that Social Security benefits are legal obligations of the federal government. In fact, he noted, they are nothing of the sort. Instead they are merely “scheduled benefits” that can be altered at any time.
“A further issue has to do with the legal treatment of these programs,” Cooper said. “Are these vested benefits? Are these contractual benefits? Well, it turns out theyʼre not. Legally, theyʼre not even promises.Ttheyʼre scheduled benefits and most Americans are not even aware of that.”
Cooper said Congress has “a lot of work to do” to educate the public about the true nature of entitlement programs.
“So we have a lot of work to do here as a Congress to start getting peopleʼs heads in the game and understand the true nature of the dilemma,” he said.