As we once again proceed into the tax cut and budget battles in Washington, DC, the fog machine is firing on all cylinders. Among the fake facts circulated by those who should be experts is the notion that Social Security is “welfare”.
Social Security Disability Insurance is not a welfare program. It is an insurance program.
“The Balance”, a personal finance website tailored to today’s millennial, offers an excellent discussion of the difference between social welfare programs and entitlements in an article entitled “What Are Welfare Programs? List, Myths vs. Facts”:
“Definition: Welfare programs are government subsidies to the poor. That means recipients must prove their income falls below a target, usually some percentage of the federal poverty level. In 2017, that’s $24,600 for a family of four.
There are six major U.S. welfare programs. They are TANF, Medicaid, Food Stamps, SSI, EITC and Housing Assistance. The federal government provides the funding. The states administer them, usually providing additional funds.
Welfare programs are not entitlement programs. Those base eligibility upon prior contributions from payroll taxes. The four major U.S. entitlement programs in the United States are Social Security, Medicare, unemployment insurance and worker’s compensation.”
Another unhelpful misdirection is the common vernacular which describes FICA deductions as payroll taxes. Our paychecks offer the opportunity to have money directed into various benefits available to us as working men and women. A 401(k) deduction may be directed into a retirement plan. Employer health insurance premiums may be deducted at our direction. FICA deductions are insurance premium payments to pay for these insurance benefits:
- Our Social Security retirement pension
- Medicare Health Insurance for our retirement years
- A Social Security Disability policy to cover our working years.
Social Security disability attorneys are constantly counseling clients who feel ashamed they have applied for disability insurance benefits because they feel too proud to ask for a “handout”. In fact, they are only applying for an insurance benefit from a policy that has been purchased through years of payroll deductions. It’s not a matter of pride. It’s a matter of entitlement to benefits that have been bought and paid for precisely for financial protection in the event of disability.
Next time you hear a politician telling you that we need to cut back on handouts to the poor by reducing the budget for Social Security disability insurance, I hope that you will correct the record for all who might hear those fake facts.