There is an ongoing debate about whether the Federal government and its spending policies are responsible for the current projections that by the year 2034, the outflow of payments will exceed the inflow of tax revenues to fund the Social Security Program.
The Social Security Act of 1935 was signed into law by President Franklin D. Roosevelt, as a national retirement benefit fund.The Act created a new federal agency, the Social Security Board, to ensure that American workers would continue to have income after retirement. The U.S. was just beginning to recover from the Great Depression. Millions of people were still out of work, and there was a major concern for the elderly and retired Americans who’d lost everything.
The Social Security Act required workers to make contributions from their paychecks to a “trust fund” for their retirement. Unfortunately, the Social Security Act was based on the false notion that separate accounts were set up for each individual’s contribution, to be distributed to the individual at retirement.
Currently, American workers contribute 6.2% of their wages to Social Security, matched by their employer’s contribution of 6.2%. With the onset of the baby boomer working generation, more money was being deposited into the Social Security Trust Fund than was being paid out. Today, retired baby boomers are drawing their Social Security with far less money being deposited by younger generations. The result is an evitable shortfall where more money is going out than is being deposited.
Social Security’s Dirty Little Secret
There is a far more pressing Social Security issue that has remained silent until now. Most people don’t know how Social Security actually works.
- There is no cash in specific accounts or a bank to pay out monthly benefit checks.
- Congress has been using Social Security taxes to fund other parts of the government because, the money is in a “trust fund” that is owned by the government, not the contributor.
- Social Security deductions go into a “Trust Fund”, owned by the government, with the understanding that money borrowed from the fund must be paid back with interest.
- Since contributors have no access to the mandatory deductions, the trust fund is a convenient slush fund for government “borrowing” apart from the federal budget
The government has borrowed a staggering $5 trillion from the Social Security fund, money that has been used and not repaid to the fund. The government never specified how the borrowed money would be repaid.
- The repayment money is legally held in a special type of treasury bond that by law cannot be used for any other purpose other than to put the money back into the Social Security fund.
- However, the government doesn’t cash the bonds in, they simply borrow the money with the promise to pay it back. https://marketrealist.com/p/who-borrowed-from-social-security/
According to the Social Security Board of Trustees, Social Security’s “surplus” scheme officially came to a permanent end in 2020 when the inflow of money became less than the outflow.
What About the Younger Generations?
Millennials and younger generations complain they are paying their Social Security taxes just to finance the 63 million retirees, about half of whom depend on their Social Security checks to pay part or all of their monthly bills.
The $5 trillion presently owed to the Social Security fund from excess government borrowing clearly lies with the government’s addiction to spending. Money is the drug of choice in Washington D.C., and whoever gets elected will get their fix sooner or later.
Can Anything Be Done to Put the Brakes on Government Spending?
We can fix it tomorrow, said Thomas Schatz, President of Citizens Against Government Waste. Congress must slash bloated government spending before it’s too late. His plan is a list of actions to cut the debt; but the problem is Congress will likely have a different group of politicians who have yet to know the powerful drug they will be using every single day, tax payer money, and their Social Security bank account. https://fee.org/articles/most-outrageous-government-waste/
Who Borrowed from Social Security…..U.S. Treasury Bonds Explained
With the recent warning that the Social Security Administration will only be able to pay 78% of benefits after 2033, some people are blaming the government leaders who borrowed from Social Security. President George W. Bush borrowed $1.37 trillion of Social Security surplus to pay for the Iraq War and for tax cuts for the wealthy. The fact-checking determined that Bush actually borrowed $708 billion and spent it on the war, with the balance used on the financial bailout of 2008. https://marketrealist.com/p/who-borrowed-from-social-security/
The Social Security program has become much like a state lottery or casino, not to fund the intended program like education and assistance for the elderly, but to fill holes in the larger budget where overspending has occurred. https://www.investors.com/politics/commentary/social-security-goes-bust-in-2020-leaving-half-a-trillion-in-annual-deficit/
The Cold Hard Reality is we Must Reign in Drunken Government Spending
- How about cutting or eliminating $196 million for the International Fund for Ireland, where the money went for projects that include pony-trekking centers and golf videos.
- Speaking of golf, the Pentagon announced it would spend $5.1 million to build a new golf course at Joint Base Andrews where there are already 19 military golf courses in the Washington area.
- The National Endowment for the Humanities misspent $4.2 million to conduct a “National Conversation on Pluralism and Identity.”
Sen. Rand Paul’s 2022 Festivus Report Shows Wasteful Government Spending of Taxpayers Money & Social Security Borrowing – Partial List
|Watching hamsters fight on steroids (NIH)
|Encouraging Ethiopians to wear shoes (NIH)
|Injecting 6-month-old beagle puppies with cocaine (NIH)
|Training mice to binge drink alcohol (NIH)
|Studying the romance between parrots NSF)
|Studying the social life and collective intelligence of ants (NSF)
|Using mice to study racial aggression (NIH)
|Interest Payments on the Debt (Treasury)
|Giving ineligible citizens COVID Economic Injury Disaster Grants (SBA)
|Using COVID relief funds to construct an 11,000 square foot spa
|Using COVID relief funds to purchase luxury cars
|Funding a 1.5-mile park in Austin, Texas, used for yoga and concerts (DOD)
|Maintaining 77,000 empty Federal buildings (GSA)
|“Basic education” projects in Jordan (USAID)
|Expanding the Washington, D.C. Streetcar that’s rarely used and unreliable
|Helping illegal immigrants avoid deportation (DHS)
|Subsidizing the free New York Staten Island Ferry (DOT)
|Boosting the Tunisia travel sector during COVID-19 (USAID)
|Unused hotel rooms for illegal immigrants (DHS)
The government solution is to cut retiree benefits by 22% by 2033, while increasing deductions to 7.6%.