Read My Lips: Social Security is not an entitlement
Congress and our “leaders” are all in a froth, again about Social Security, saying, continuing to pay such “entitlements” will add to the deficit and must be “addressed.” What this apparently means, is that our leaders are prepping us for a new scheme for not paying back the $2.5 trillion the taxpayers have funded the deficit via the mechanisms in place to move the SS surplus into the general fund of the Treasury – off the books. That’s right, the Social Security tax has served as a cash cow for the government bookkeepers.
PL 101-508, passed in 1990 allows this to happen; Social Security receipts and payments “shall not be counted . . for deficit or surplus purposes.”
The Old-Age and Survivors Insurance Trust Fund was created in 1939 and has generated a surplus – of our money – ever since. Where has the surplus been going? The Board of Trustees has given it to the Treasury in exchange for non-negotiable, interest-bearing “claims on the treasury,” not really “Bonds” since they have no market and can’t be sold, but are still being backed by the full faith and credit of the US Government.
Confused? It is no accident. As a result of this maneuver the $2+ trillion is not on the books, anywhere. Well, the SSA and the Treasury say they have an “accounting” of this number, but it is not recorded on the books and records of the annual indebtedness of the US Government. Here’s what the SSA has to say about it:
“The trust fund provides automatic spending authority to pay monthly benefits to retired-worker (old-age) beneficiaries and their spouses and children and to survivors of deceased insured workers. With such spending authority, the Social Security Administration does not need to periodically request money from the Congress to pay benefits.
Funds not withdrawn for current expenses (benefits, the financial interchange with the Railroad Retirement program, and administrative expenses) are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust fund.” Source - SSA
If these statements are accurate, then, when you and I begin to draw our “invested” funds which have more than adequately funded SSA until now, the US Treasury merely buys back these “interest-bearing Federal securities” and bundles them up and sells new ones in the same amount with no impact on the deficit. Social Security is not insolvent, and won’t be for nearly another generation – or more. The problem is, they can’t; PL 101-508 says not to keep track of it so, to pay it back, since it shall not be counted . . for deficit or surplus purposes when it happened in the first place new debt must be created.
Originally, SSI was set up using actuarial tables, of income, working years, and life span. It’s involved, but insurance companies began refining the art starting in the early 1700’s when annuities began to proliferate. Social security is no different, except in one important way; funding comes one-half from employees, and one-half from employers. Employers deduct this as an expense of doing business, employees do not. We get to pay tax on the tax. In addition our “benefit” is taxed again when we “withdraw” it. And to think there is a provision somewhere about double taxation – don’t get me started.
The tax rate has not changed since 1983 and is capped for high-income folks. It would have been simple years ago to remedy this, but efforts to raise the rate have been resisted stubbornly by various moneyed and business interests and their appointed and elected agents. This recession has eliminated more jobs in the $15-35 dollar per hour range than any other, and created more jobs in the $8-$19 dollar range than any other. Just dig through the latest jobs reports – it’s there. Another wrinkle is that we do not have a decrease in compensation to Americans. The problem is that SSA cannot collect from total compensation, because the increases which offset the losses to the lower wage earners are all bunched at the top where they are capped out.
So, it chafes me to hear about the woes of Social Security, and all the other support programs that are funded from SSA revenues. It is a red herring, a smoke screen and, I believe, a deception. WE DO NOT HAVE A FUNDING PROBLEM! WE HAVE A TRUST PROBLEM! AND, WE HAVE NO INCOME PROBLEM! WE HAVE A DISTRIBUTION OF INCOME PROBLEM!
Bruce Dearborn
Vashon Island
No comments:
Post a Comment