“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 Social Security Guarantee.
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.
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.
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.
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.
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.
Jeff, FASTEN YOUR SEAT BELT.
they have been stolen giving benefits too illegals. I Would say that’s stealing
How are disability payments tied to Social Security dollars?
What effect did the democrat change have on it when in or around 1963 they took it out of Social Security funding and put it in the General Fund. This was around the time the Viet Nam war was starting to kick into high gear. I’m not saying that any of the money went into that but it sure sounds fishy. I do know that that is when those that did not put anything into it started get money out of it. That also puts a burden on it. Also it is government run and jokingly monitored. That makes me wonder how much is being stolen by illegal payouts just like what’s going on with ‘Medicare. I know one thing that would fix it real quick. Take congress pension away and put them on it like they are supposed to be.
Not what my Congressman has been saying.
I wonder what rock Jeffie has been living under? The Congressional record proves the opposite of his surmise, dating back to then President,Lyndon Baines Johnson, who initiated the first “borrowing” of soc. sec. funds. It’s not borrow if there is no attempt to pay it back. As for paychecks not being decreased, that may be true but, they are nowhere near the amount they should be (estimated to be 3 to 4 times what they currently are). Think again Jeffie. I’ve been here since FDR created this monster.
You really think the $’s used to buy the bonds we’re put in a fund to pay back in the future? I feel those funds were spent and the bond are the IOU’s
Where are the funds for Social Security kept? My understanding is that LBJ took them out of the trust FDR set up and put them in the general fund, which means they can be used for anything the government wants to use them for. If they are in the general fund even as a separate account, the government can shave off a little here and a little there, reduce the growth or whatever else they want. I would like to know the truth
This article is very disappointing. Technically, I suppose it may be true the government does not “steal” the funds, but it almost immediately “borrows” the funds back with the purchase of U.S. Treasury Bonds. Let’s put that another way: Instead of putting the funds into an independently run social security trust fund, which then invests the funds conservatively at a market rate of return, it instead “invests” the funds in its own treasuries with their paltry rate of return. If any publicly held company were to take its pension funds and invest 100% of those funds it in its own corporate bonds, its officers and directors would likely be indicted for self-dealing and pension fraud. While it might be okay to put some portion of pension funds in corporate bonds to preserve liquidity, it is never okay to put all of one’s eggs into a single basket. U.S. Treasury bonds are debt obligations of the U.S. Government and when it puts social security revenues into those bonds, it increases the national debt by an equivalent amount. So, what is happening is analogous to a Ponzi Scheme whereby hard assets (social security tax revenues) are traded for debt obligations allowing the federal government to expand its ever increasing spending habits without having to either raise taxes or cut spending.
Jeff: it’s called a Ponzi scheme. When you take money from someone, with a promise to pay out a dividend after a certain period of time, and then do something else with that money.
Such as: paying it out to people who have never paid in to it.
Such as: using it as welfare and disability insurance.
Such as: Making it mandatory & not allowing one to opt out or the freedom to remove their money.
IT’S A PONZI SCHEME TO THE “T”. It’s criminal and corrupt socialism at it’s worst!
PS: Bravo Mr. VanDerGinst – great post!
OK – I’ll accept what has been said here – but it is actually an inadequate article. Why is there any term such as “Social Security Trust Fund”? What laws were changed in the 60’s & 70’s that have lead to IOU’s instead of actual cash-in-the-bank for this program (Social Security)? Doesn’t SS now include more than retirement benefits? For example there is a small (less than $300) payout for the actual death of a person. Aren’t people who have never paid into the system getting benefits paid to them too? What about the fraud on this system (e.g., children collecting the benefit of their parents, after the parent dies)?
Additionally, if the explanation is as simple as stated in this article, a simple graph would show the intake and outgo – which would make the “problem” more easily understood.
What does ring true is that I have taken my SS statement & done the math – and it shows that my projected benefits do payout all that I have paid in, over the period of time to the targeted date of my expected lifetime. So if I live longer than that year, I get “free money” from my fellow citizens. If I die earlier than the expected lifetime, I leave this money to my fellow citizens. This ignores the life span of my spouse – which is potentially another avenue of “free money” from my peers.
A better article – or a reference to a better article would make this more valuable. But I must say that we do all need a dose of “reality” on subjects such as SS (& others – like the “gold standard” and how the government deficit works – our national debt is going to kill all of us!).
By the way my post about a plan that exists to save social security well because of how it funds the solution to save social security it’s a possible private alternative that could exist still even if social security did not so we could privatize it.
For those that are not aware of the tax reform bill called The Fair Tax, it would fund SS and the rest of the govt. needs. Along with putting your full paycheck into pocket, the IRS will be eliminated the dreaded April 15th.
AMAC would be a great orgiazation to help promot the the Fair Tax….more info at HR 25…it really is so simple, the only thing needed is the People to demand it from their congressman.
Jeff, you couldn’t be more wrong. The Federal Government has raped and pillaged our Social Security fund and just this past year, they have cut both my wife’s and my benefits. Do you work for the Feds, because you sure sound like they’ve hired you to do a PR piece on Social Security.
Wrong….Social Security was in a fund all by itself and had it been in that fund instead of the general monies that LBJ took out and put into the general fund….during the 80’s and early 90’s, it would have enjoyed interest of 10% instead of the meager 2% now. The government has “borrowed” from the fund issuing Treasury securities (IOU’s) to the Social Security Funds. And the government has used these funds for other things than just social security….unemployment, disability (which so many use to stay at home instead of working). While you ay not agree, using social security for ANYTHING other than issuing checks to the elderly is called stealing.
Ponzi scheme is the first thing that comes to mind with social security. It takes people paying into the program to keep it going. The investment in government bonds is bogus. The proceeds of government bonds gets consumed running and expanding government that creates no products and no profit. The antithesis of government bonds is corporate bonds where the proceeds are used to create new wealth by investing in new products and processes. Bottom line, if you’re counting on SS as your sole source of income, you’ve made a drastic mistake. Counting on government for your welfare is the definition of insanity.
The tiered COLA concept is wrong. The damn program is already heavily bottom loaded. It’s part annuity, part welfare, and this “solution” will only make that worse.
Yest the US did not steal SS money, they did borrow with no intent on paying it back. Did the same thing to USPS under Clinton, only no intention of paying that back.
What part of ponzi scheme do you not understand? Sure make small changes to reflect present day demographics however, money put into social security should be for social security only and not ever put into general fund. To do otherwise is looting.
In addition, put all federal employees including congress into the SS system and you will see it become solvent over the weekend!
Sorry, Jeff. You’ve got it totally wrong. Those funds were not “invested” in Treasury securities – they were BORROWED by our government, and we have to borrow to pay them back. The money has gone elsewhere to fund government, but it is backed by the “full faith and credit” of the U.S. government, which is worth less and less as we become more deeply mired in debt.
I started receiving SS when I was 66. That was the age for full benefits. So the age requirement changed twice, not once.
It is my understanding that benefits are being paid to people that did not contribute the “Social Security insurance” premium” & / or to non-citizens . Also that money was recatagorized to or borrowed by the Obama admin. I heard that Obama also took Medicare monies to help pay for Affordable Health Care Act (aka Obamacare” Socialized medicine plans) from the Medicare Insurance PREMIUMS paid by working citizens …. again giving Obamacare to people that did not pay in to the system &/or non-citizens
These were both called INSURANCE NOT BENEFITS…. this is called “fraud” aka LIES
“STOLEN” is legally incorrect; a more accurate term would be “MISAPPROPRIATED”>>Congress has “BORROWED” SS funds for years for a number of frivolous pork~barrel projects, and have no intention of paying it back. Legal challenge to this practice survived with a shameful Supreme Court decision in 1960. Flemming vs. Nestor held that SS reserve MAY be used for general appropriations, in effect sanctioning wrongful use of wages withheld by Uncle Sam, SUPPOSEDLY for benefit of all wage earners EXCEPT 535 people: CONGRESS!! It should be noted that CONGRESS does not participate in SS system>>SURPRISE!!! If they DID SS deficits would be fixed before you could say “FILIBUSTER!!” Just another example of Congressional elitism!
Somebody better check Jeff Szymanski credentials! We all know the Government borrowed our money & put I.O.U.’s, then they expanded the program to disabilities, and then to illegals. If they had kept the program as originally intended, it would be alive and well. The AMAC should not have “Poliitcal” communications people writing factual articles, because we know there standards, and it is insulting to your members.
Until the American people stand up to our so-called government they will continue to do what they want. All we do is read the articles and listen to talk shows and complain. Why can’t organizations start the movement to FORCE the government to change
If all of this is true then the fictional concept of a Social Security Trust Fund would be sitting on roughly $2.6 trillion dollars. Show me a balance sheet that indicates that is the case.
You say surplus funds in your article. So is there a difference between surplus(extra money) and the base amount being paid out? What about the start up of Obamacare? Didn’t they take billions out of SS to start that failed program? Is Obamacare considered part of our SS benefits?
Social Security trust fund reserves are by law invested in US Treasury securities. So, this, in a way, it finances federal government spending. But this has nothing do with Social Security’s shortfall. Social Security still owns all that money and earns interest on it. The program’s financing problems arise instead from its benefits exceeding the revenue (including interest) that it generates.
What do you call taxing the SS benefits if not a reduction in benefits?
I just found out about AMAC and if this is the garbage you are spewing, I won’t b around long!
The Leftist Socialist Fascist solution is to Eliminate anyone over 65 years old … Except themselves of course!
It has been public knowledge for maybe a decade or more and YET there has been NOTHING done to fix THAT problem or to correct the problem by putting the money back to where congress took (ROBBED) it from.
There are a LOT of people that would really need it when the money gets depleted because of ALL of the ROBBING of our money we put in so we would NOT have to earn billions of dollars so we could live a comfortable life.
We the people have doubts about how ExPresident Obama stoled $ 1 billion dollars to invest in a off shore account from Social Security funds? How is it possible illegal immigrants who never paid one penny into Social Security able to receive checks from Social Security? Who do we have keeping track and accountable for our funds. Please don’t tell us it’s our politications for they cannot even balance our budget or reduce the national debt.
Jeff, investing the money in worthless T-Bills is stealing it. Give me your money and I will give you worthless script. Tell me how that will work out for you. Sure, sovereigns can print money, but to what end? The truth is we are going to default on the debt, one way or the other. We either have a reset, and all paper assets become worthless (you made a bad investment) or they monetize the debt by printing more fiat currency. Our Debt-to-GDP ratio continues to climb, and is either approaching or is over 100%. It won’t be long before we go full Venezuela, Mad Max Style. This is not dissimilar to a family receiving a credit card in the mail and they foolishly use it, take a vacation, go out to dinner, etc. It creates a wealth effect. Then when the debt accumulates and the interest rates rise, They are forced to pay most of their income out as interest to service the debt. That is a poverty effect.
The only way the social security reserves would have been safe is to invest them in Gold-backed currency. As the economy grew, the value of the gold would have had to increase or the volume would have had to increase to match the quantity of US dollars in circulation. If they had continued to back the dollar with gold without a government fixed price of $35/ounce and the tangible assets of our hard labor would have increased, either the value of the gold would have increased which would have secured our SS funds, or the cost of everything from houses, cars, labor, food, etc. would have deflated, which would have made our SS funds worth more. This Keynesian economic model has stolen the product of our labor, and left the middle class destroyed. Right now the thrifty (savers) are punished and the foolish imprudent (spenders) are rewarded. As the Bible says…the borrower is subject to the lender.
Just wait and see what happens when interest rates increase 2%. I hope you are prepared.
You are forgetting one thing here, since Rowe vs Wade over 20 million babies have been aborted while we as tax payers have paid and are still paying! If you calculate the figures of aborted children, what they would of contributed to SS you will understand the amount that is actually missing.
Jeff’s article would carry a lot more weight with some citations, or something/anything that could corroborate his claims. I do recall hearing, either from a PBS documentary (unlikely) or Dinesh D’Souza’s last film (probably), that JFK was the first to “borrow” money from SS to fund one of the corps (Peace or CCC? Although CCC is state specific, so would seem unlikely.) This could be researched, I’m sure. Jeff, I’m sorry, but in order to make your point convincing, I think you need to provide some research results. But sure wish you were right…..
Amac, I never thought you’d publish propaganda. Are you doing one next week stating the Holocaust never happened?
More propaganda Szymanski, I lived through this particular period with JFKennedy and Johnson, I listened to their speeches as they tried to justify taking these funds and transferring them to the General Fund. Some like you said, ” Just paperwork” but in truth, we lost millions in interest that we would have had otherwise. A lot more than a measly 2% According to Kennedy a large payment was made to UNICEF with a portion of these funds. Under the initial rules, none of this money could have been paid to those not legal citizens, nor any other welfare scam the politicals decided to fund. I suggest you quit reading propaganda as research and spread you wing to include actual history and truth. You would do a greater service to all.
People are living longer yes, but a large number of people don’t have the ability to work at their current jobs. Arthritis, exhaustion from cancer etc., competing with younger people, sure just raise the age @%^$%!! The majority of people pay into SS all their lives. Just raising the cap would make SS solvent, so everyone can pay in all their lives. The big donors wouldn’t like that now would they.
I’m sorry Jeff, but You must be one of the DumbocRATS who refuse to admit ANY of their crimes. Nearly EVERY administration since Kennedy has STOLEN money from Social Security, under the guise of a loan. There were a few accurate points made, like the fact of living longer, but that’s just a small part of the decline of the S.S. coffers. The BIGGEST REASON, is that the money was stolen by CONgress. I would have to assume that a lot of the stolen money went to pay off the claims of sexual misconduct, and bribes paid out by the DumbocRATS.
Well, there’s really no such thing as “Social Security Funds”….you paid a tax..period. True, an illegal tax..an unconstitutional tax, but still a tax. And it’s a ponzi scheme, because the people drawing SS currently, are funded by those working now! Just as the TAX you paid while you were working was paying those drawing SS then!
Everyone would be a LOT better off, had they been able to KEEP that money and invest it as THEY saw fit…although, most people drawing SS get way, Way, WAY more back then what they put in!
I think we seniors knew that a long, long time ago! And they try to punish us for the money being gone from the SS fund…money which we paid into the fund during our working years, and is rightfully our own money for our retirement years! Yes, they stole the money to fund other projects and we want our money back! They did not get our permission to borrow the money, they just took it so yes, it is stealing and that is a crime. The crooks in government need to pay back all that money so we seniors can have a decent life while we can, and I paid into the fund for 47 years. I don’t think any of us thought that one day, it would be like “pulling teeth” to get our money not realizing at first that it was stolen from us by the different administrations to pay for other things……..it was reckless what they did. They pulled the wool over our eyes for sure!
I personally believe that the government has not been able to take any of the monies deposited into Social Securtiy, no matter how hard they have tried, simply because there are established safeguards against it.
My question is… When someone passes away before collecting or have just begun to collect their ss funds and their spouse collects some of the ss funds then, it comes time for that spouse to collect their own, or they have no spouse or underage children to collect those funds, where do those funds go?
Very good article ! That really put tings into perspective for me and was plain simple and to the point . Good Job !
I’ve heard the other side, and both are interesting, but I don’t know which is true. However, I’d like for you to answer these questions: from what fund did Obama get all that money that he sent to Iran, and why was he allowed to do that without any repercussions from Congress? They are supposed to hold the pursestrings in this country, and if Obama could send billions to Iran, why can’t Trump spend billions on the wall?