We are a nation of closet welfare junkies, which helps explain why we can’t have an honest Social Security debate. Social Security and Medicare are our biggest welfare programs, but because Americans regard “welfare” as shameful, we’ve found other labels for them. We call them “social insurance” or “entitlements.” Anything but welfare. Democrats and Republicans alike embrace the deception. No one wants to upset older voters. Well, if you can’t call something by its real name, you can’t discuss it honestly.

Welfare is a governmental transfer from one group to another for the benefit of those receiving. The transfer involves cash or services (health care, education). We have welfare for the poor, the old, the disabled, farmers, and corporations. Social Security is mainly welfare. Workers’ payroll taxes pay today’s retirees’ benefits. The taxes aren’t “saved” for the workers’ own retirement. There have been huge disparities between taxes paid and benefits received.

Ida May Fuller, the first retiree to receive benefits in 1940, paid $24.75 and got almost a thousand times that ($22,888.92). In the 1950s and ’60s, many beneficiaries received 10 or more times the amount their payroll taxes would have returned if invested in U.S. Treasury bonds and kept for retirees (they weren’t). Indeed, most beneficiaries who retired before 2000 have received – or will receive in the future – a surplus in benefits over what their taxes would have returned if similarly invested, write Sylvester Schieber and John Shoven in their history of Social Security, “The Real Deal.” This surplus now has a present value of almost $16 trillion, says Schieber, of the consulting firm Watson Wyatt Worldwide. (Shoven is a Stanford University economist.)

Naturally, the elderly don’t see themselves as freeloaders. They think they’ve “earned” their Social Security benefits by paying payroll taxes. Using the “terminology of insurance … (was intended) to mask the huge welfare payments being made,” write Schieber and Shoven. People falsely believe they’re “only getting what they have paid for.” That is even less true of Medicare, where payroll taxes don’t cover current costs.

This mass deception may seem harmless. After all, most Social Security recipients have been responsible citizens and productive workers. Why accuse them of living on government handouts? The answer is that today’s myths perpetuate unrealistic expectations and prevent honest debate. Americans regard “earned benefits” and “welfare” differently. The first is a right, the second a privilege. In theory, welfare should serve some public purpose and not just enrich the recipients. By admitting that Social Security and Medicare are welfare, we allow relevant questions to be raised. Do all beneficiaries “need” their welfare? Is the cost “unfair” to taxpayers or burdensome to the economy? Have the conditions that originally justified the welfare changed?

For Social Security, they have. In 1935, Americans 65 and over were 6% of the population. They’re now 12% and by 2030 are projected to be 20%. Most Americans can now save for their own retirement. The Social Security debate ought to involve moral values and economic realities. How generous a “safety net” for the elderly can a decent society afford? How can changes be made without being too disruptive? Instead, the debate has focused on baffling accounting concepts (trust fund “solvency,” “unfunded liabilities”).

Despite what you’ve heard, the real issue is not Social Security’s “solvency.” It is the total cost to the government of baby boomers’ retirement, including Social Security, Medicare, and Medicaid (which covers much nursing home care). It is to prevent those costs from becoming economically oppressive and politically poisonous. Even if the Social Security trust fund is made permanently “solvent” – in the sense that taxes cover benefits – the costs of all federal retirement programs may still become undesirably high. In 2004, Social Security, Medicare, and Medicaid were 8% of national income. Left alone, they’ll reach 14.5% by 2030, projects the Government Accountability Office.

If these costs are too high (and I think they are), the only way to curb them is to cut benefits. Neither Democrats nor Republicans want to face that reality. Bush’s proposal for “personal accounts” diverts the debate. To enhance their appeal, he promises to exempt anyone 55 or older (anyone born in 1950 or earlier) from any benefit cuts. Some other proposals would lower the exemption to 45 (anyone born in 1960 or earlier). Well, that covers most of the baby boom, which stretched from 1946 to 1964. If the real problem is the baby boom’s retirement costs and you exempt baby boomers from benefit cuts, then (by definition) you ignore the problem.

On these issues, we can’t think straight unless we talk straight. We can’t control our welfare habit unless we admit our addiction. Don’t hold your breath.