Social Security

Here's what the 1936 government pamphlet on Social Security said: "After the first 3 years -- that is to say, beginning in 1940 -- you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. ... Beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. ... And finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year."

Here's Congress' lying promise: "That is the most you will ever pay." (click here for more)

In 1935, President Franklin D. Roosevelt promised the American people that the new Social Security Tax would be invested at 3 per cent interest, so that, by 1983, the tax could be ended and returns on the investments would guarantee a retirement income for all Americans. 

But reality is different. Around ’83 Social Security had hit its second fiscal crisis. The tax went up - not away. Instead of 1% on $3,000, we now pay 6.2% on $168,600.  That is more than 6 times the original tax rate levied on 2.5 times the inflation adjusted earned income Our employer pays that much again in our behalf. We now get reduced and delayed benefits that are taxed again upon receipt even though the money was taxed before (FICA).

Still the Social Security sacred cow faces bankruptcy.The money collected for all these years from all the workers has been spent. The money is gone. Instead of a pile of money (asset) generating investment income, as in an annuity, the Trust Fund only has government IOUs.  The Trust Fund flirts with bankruptcy. The only asset remaining is a government promise to pay. The only way to keep that promise is to again increase taxes and/or reduce benefits. 

Social Security has always been a revenue scam. Average male life expectancy back in 1936 was 56.6 years. You could start collecting at age 65. What does that tell you?

Workers (and employers) must send money to a kind of bank account called Social Security Adminisration (SSA). That is not your bank account. The money sent there is no longer your money. Your money has been socialized. It has become part of The Commons. Politicians spend that money to buy votes. You, the worker, get what politicians allow you to get.

Remember, we are talking really big money!

Social Security is "actually antisocial insecurity. The forced extraction of money out of people’s paycheck has two effects.

Number one, it makes the peole think that they really don’t have to save, because Social Security is going to be there to give them a proper retirement.

Number two, it makes it harder for them to save on their own."

Which political party is responsible for this policy failure? (click here for more)

Also, the fund has no assets, only government promises to pay the debt. So the only way to pay the trillions of dollars the government owes is to raise taxes, borrow the money, or simply print it. Taxing leaves people with less to spend on their own wants and needs. Borrowing increases taxes just to pay the interest without lowering the actual debt - debt goes up not down. Printing money is also easy but destroys peoples' savings (including their savings for retirement) because of inflation and lowers the standard of living since inflation makes everything more expensive. 

So, does impending  reality stack up against the original promise? Is Social Security really secure for you and your children? Can you really afford to retire on Social Security? What kind of retirement is forthcoming from Social Security? The average benefit is about $1657 per month! Who can live on that these days?!

So you'd still rather not trust your nest egg to capitalists?

Each $100 saved in 1936 would be worth $.50 now thanks to government inflated money. Compare this to the stock market. Back in ’36 the DOW was at about $100. The DOW is now around $40,000.  So instead of losing almost all your savings to state sponsored inflation and depending on Social In-Security, each $100 invested in the DOW then would be worth about $40,000 now. 

How many hundreds (or thousands) of dollars have you and your employer paid into the so-called Trust Fund over the years?