"Well, I agree that the spending is a bit of a problem, but what about the transition period? People will be dying in the streets if you cut various welfare entitlements, including Social Security and Medicare--just like in the dark before time before we had all these safety nets! Social contract!"
You could start by abolishing minimum wage laws. If there is one thing that most economist can agree on is that minimum wage pushed the people at the bottom out of the workforce and on to welfare. Allow people a chance to learn job skills and move up into better paying jobs instead of sitting on welfare.
But yeah I believe that the concept of the social contract cuts to the heart of the pathos of neo-liberals.
Even under the law of the state itself, duress makes the contract void. Duress may include not only phisycal coercion to accept the contract, but also removing any practical alternatives to the contract from the victim. E.g., if A robbed B of food and water in the middle of a desert, and then sold to B some food andwater for a million bucks, then not only is A guilty of robbery, but also the purchase contract is void, so B may demand restitution of his million later. How is state not like A?
How did people live before Medicare and government dependence?
The recipients could suffer in the short term, but they won't be dying.
Problem is, the politicians are just as addicted to welfare as the recipients. Leaders know if they cut entitlements, they'll be out of office in a heartbeat. In a democracy, citizens tend to vote for those who promise something for nothing.
Most modern proposals for cutting welfare and SS and medicaid and the like will take the form of allowing those who've "paid in the system" to continue under the present system, and allow the young to opt out at will, with the gambit being that most would.