Opinion

Biggest Social Security Lie: Government Stole the Money

lawmakers social security benefits medicare government“The bigger the lie, the more it will be believed,” Nazi Propaganda Minister Joseph Goebbels said. What could this possibly have to do with Social Security? Sadly, a lot. Scarcely a week goes by that either myself or one of my colleagues does not read a post or get an e-mail from someone expressing their utter outrage that the federal government has spent all the extra Social Security money accumulated over the years. And on what do folks think the supposedly stolen funds were spent? It runs the gamut, but wars, congressional pensions, and the Peace Corps are among the top three oft cited.

This must be stated as emphatically as one possibly can, so here it is-the federal government has not taken a dime from Social Security and spent it on anything other than Social Security benefits.  Period.

Of course, it’s foolish to try to convince someone who has already been persuaded otherwise.  So, perhaps a test is in order.  Question: has anyone’s Social Security monthly benefit check actually decreased in any month this year over last?  Answer: no.  The reason is that all of the past Social Security payroll taxes which have accumulated have been invested in special issue U.S. Treasury securities yielding about two percent.  It is precisely these funds that are now being used to cover the shortfall in Social Security.

Social Security’s shortfall is serious, but not because funds have been stolen.  The program ran a deficit in 2018, and it will do so every year into the future, barring congressional action.  The deficit is purely a demographic phenomenon.  Simply put—

people are living longer, and families are having fewer children.  Thus, there are currently fewer workers contributing payroll taxes relative to those collecting benefits than at any time in the history of the program.  This is problematic, as the surpluses will be exhausted in 2034 according to The Social Security Trustees.  It could be earlier with a deep recession.

Social Security is 83 years old.  The average life expectancy when the law was enacted in 1935 was about 65 years of age.  In other words, most people collected monthly checks for just a few years.  But life expectancy is now in the mid-80s, and record numbers of Americans turn 100 each year.  To collect a monthly check for 30 years or more is not uncommon.  The program was simply never set up to deal with this.  The full retirement age was increased just one time in 1983, and by only two years from 65 to 67.  Early retirement has remained at 62, a number hardly considered “old age” like it was nearly a century ago.

Where do we go from here?  For starters, Social Security must be preserved and modernized.  Sixty three million people receive benefits.  Every beneficiary will receive a catastrophic cut across the board of 21 percent in just over a decade without any action.  By law, Social Security can only pay benefits commensurate with its income, and it will only be able to pay about 79 percent of promised benefits starting in 2034.

The good news is there is still time to modernize this important but dated program.  AMAC has devised a solution that does not raise taxes, as our belief is the problem is not that Americans are taxed too little.  By making modest adjustments in cost of living calculations, small changes affecting the highest 50th percentile, and increasing the retirement age to reflect reality (no current retiree or near retiree would be affected), the program can be made whole again and stave off the insolvency projected in 2034.  Read more about AMAC’s plan here.

To reiterate, the next time you hear someone saying, “The government stole Social Security money,” remind them this is patently false.  If the surpluses had been spent, monthly benefits would have already been sliced.  And there’s another myth out there that states, “I’ll never get back what I put into Social Security from all the years I worked.”  Truth: the average person gets back all he/she ever put in plus a nominal rate of interest in about six years, but that’s the subject a future article.  This generosity of Social Security, of course, is also part of the program’s long-term funding problem.

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BabyFace
1 year ago

Love this feed. Any posters alive since Covid-19? Thoughts?

JANICE WRIGHT
2 years ago

I read somewhere that legal/illegal immigrants can draw social security checks off of their sponsors even if they have never worked in this country. Is that true?

Mark
2 years ago

AMAC suggestion to fix social security is very complex. Why not just raise the early retirement age to 64 or 65? I would also suggest means testing the benefit. Maybe those making over $200,000 get nothing.

Paul Lindberg
2 years ago

Another factor you don’t seem to understand, Jeff, is that while I paid good money into the SS system all my working life, now the amount I get out is in inflated dollars, which are worth less than half the value of the dollars I put in much my working career.

Helen Oliver
2 years ago

What about the addition of SSI recepients and Medicaid. Are you saying these funds did not come out of Social Security funds? SSI and Medicaid are available to people who never paid into Social Security. Please check this out.

D Zansitis
2 years ago

Too many people get SS that have never put anything into it..I think that’s a huge problem, and why the money will run out.

Peter E
2 years ago

Checks have not gotten smaller but they don’t keep up with the true levels of inflation. Pushing the retirement age to make workers work longer may sound like a good solution. People doing physical labor will find it difficult or impossible to do that.

Barry A Black
2 years ago

Correction: we, the employers, make less than our employees for the same job.

Barry A Black
2 years ago

Investing SS dollars in government bonds at a measly 2% is the same a stealing or misappropriating our money. If they had privatized SS, with a financial advisor/expert, we would have higher return. The dysfunctional US government cannot run anything successfully and this is another good example. I also find it amazing that we, their employers, make much more than we do for the same job! It’s past time to shrink the bureaucracy and operate as the largest business in the world.

Ed D
2 years ago
Reply to  Barry A Black

Consider this from InsideSources.com: “In one way, Social Security itself makes that goal relatively easy. The rate of return on the average worker’s Social Security contributions is around 3 percent. That’s almost nothing. A conservative 401(k) or IRA can return twice that. Aggressive investing — the sort that young workers should be making — can yield three or four times that.

Because Social Security’s rate of return is so low, the typical worker is actually better off paying into Social Security until about age 40, and then walking away — giving up all claim to retirement benefits but also being relieved of the 12.4 percent combined tax that the worker and the worker’s employer pay.

If the typical worker, starting at age 41, invested that 12.4 percent in a 401(k) or IRA, she could expect to end up with a nest egg about the same size as the Social Security benefits she forfeited. In other words, Social Security is such a bad investment that the worker is better off walking away from 20 years’ worth of retirement contributions than continuing in the system.

This points to a clear way out of Social Security. Tell workers 40 and younger that they will receive no Social Security retirement benefits, but that they must continue to pay Social Security taxes until their 41st birthday. From that point forward, they must invest in a 401(k) or IRA the 12.4 percent they were paying to Social Security. This will start a wave of workers who are off Social Security. Over the course of the next 60 years, Social Security would gradually wind down, and then disappear.”

Anita Johnston
2 years ago

Will AMAC send this conversation to President Trump to see if he will appoint a trusted colleague to investigate?

brian.dutton
2 years ago

As stated by an earlier comment, why doesn’t AMAC show
1) How many people/$ are paid out per year to people that never paid into it. Show it in 5 years increments…it will be a real eyeopener.
o Break it down by ages also IE 21-25, 26-30, 30-35, etc.
o Show the years people have been on SSDi.
2) Why are there NO Audits to investigate people/$ that are on SSDI that are working part time ?
3) How many illegals-green cards are receiving some kind of SSDI assistance and dollarize it per year.
4) How much is the FED getting back by taxes that people have contributed for 30-50 years?? I don’t mean multi-millionaires… I mean under $100k per couple per year incomes

Total mismanagement and complete breakdown in how to handle TAXPAYERS money. The inability to have actual proven criteria before any dollars are paid out is inexcusable. The red flags are everywhere. The erosion of a basic personal accountability and responsibility continues.

Rodman
2 years ago

Increase the withdrawal to include all taxpayers, not just the limit that is put on it now.

Tom Abraham
2 years ago

Jeff, your not convincing anyone. Were you an adult when LBJ was president and began robbing the system. Just curious. How old are you?

Ed D
2 years ago

Only counting the net Social Security payments I receive,in 38 months, I have received more than what I alone contributed in 38 months.

Anne-Marie
2 years ago

If there wasn’t so much corruption and abuse in the system and the government would be more careful as to who gets it maybe then they wouldn’t be accused as they are the ones responsible to administer it

Sherry
2 years ago

not to mention all of the benefits they give away to illegals

John K
2 years ago

If the “average” person gets all their money back in six years, it’s just more proof that SS is another wealth redistribution scheme. Part-time and lower paid workers get a much better return on their contributions, than those of us that had a 35 year minimum work history. Perhaps you are not counting the matching contributions that were made by employers. That is a 6.35% tax that could have been put in paychecks. I just started receiving SS, and calculated my breakeven age as 81 and a few months, and that’s with Zero % interest on contributions since 1972. Yes, cost of living adjustments will shorten the wait, but only by a few months.

Bottom line for me, I will not get my money back for 19 years (14.5 years, if I had waited until full retirement age). Either way, it takes me beyond 2034, when under the current program, I will see a 21% benefit reduction, which will extend the breakeven age even further. The math is pretty simple, no matter whose propaganda is being peddled. With this article, I had to look twice to make sure I wasn’t redirected to the AARP site.

Ben Kennedy
2 years ago

Interesting read (Fiction of course). Goebbels quote appropriately led this article. I was paying into Social Security in those days when LBJ did loot the Social Security. It was a private account free of any Government meddling and had so much money in the trust that LBJ said it was just wrong to let it sit there doing nothing when we as a Nation could put that money to work and do great things. He explained that the money should be put into the “General Fund” and all future claims would simply be paid out of the General Fund (This was around 1964 or 1965). Tip O’Neal was Speaker and LBJ had a rock-solid majority on Capitol Hill. They made a law saying the Government could seize the money and transfer it to the General Fund. Once he signed it into law it was spent on the “Great Society” LBJ dreamed would make him the most beloved President in American History (past, present, and future). The problem, the US Government was involved in a very expensive war in SE Asia (I served there) and a Space Race with the Russians to prevent the Soviets for Claiming the Moon as a Soviet Property (Worry about a moon based missile launch facility drove the Space Race). The Great Society Program widely expanded the Federal Government by adding many new bureaucracies to the taxpayers’ burden. The result; by 1972 the American People were warned that Social Security would go broke. Capital Hill became Federal Employees under LBJ’s Great Society. This severed them from the States they represented so that they no longer had to seek perks and pay raises from their State Capitals. They got to vote all of that for themselves. Then, they started cutting deeply into the Social Security pay raises for Senior Citizens, but under Nixons “Cost & Wage” Freeze (to control the Depression (renamed Recession out of the fear created by “Depression”. We have talked “Recession” ever since then. Because of the Wage & Price “Freeze” Capital Hill could not vote themselves a pay raise, so they instead voted to make their money “Tax-Free” (which would be a substantial pay hike for the American people). Yes-Yes-Yes, the Federal Government did in “Fact” Loot the retirement account of the American people in the mid-sixties, and ten years later, they told us it was unsustainable. This was my first realization of just how Criminal the US Government could be under the “Great Society”. Our Federal Representatives also began to go nationwide seeking campaign money as well. Their States no longer mattered to them.

stevenjacobs
2 years ago

Social Security makes payment under the SSI program to disabled children under 18 whose families have little income and resources. SSI payments are based on need rather than prior work and may be paid to children regardless whether a parent is retired, disabled or has died.

based on NEED-not retirement status, not on amount the worker paid into the system for forty years-just a welfare payment using SOCIAL SECURITY FUNDS-that sounds like THEFT to me

stevenjacobs
2 years ago

nice article

the Government STOLE the Social security money
the government pays out social security money to scammers like “:bipolar ” cheats

Is this author Nancy Pelosi’s son in law or something?

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