THE GREAT SOCIAL SECURITY RIP-OFF: The Federal Government’s Giant White Lie

Lie: The Social Security system is running out of money because there are many more Americans reaching retirement age and fewer paying into it, it was a poorly designed system to start off with and we are going to have to find a way to fix it, or we are going to be out of money to fund it by 2013.

And, we are letting them get away with it.

In 1935, President Roosevelt signed the Social Security Act into place, announcing that it would be “voluntary.” In 1937, just two years later, they enacted a mandatory 2% tax to support the Act. They were quick to add that the annuities paid back out in benefits would not be taxed. In 1983, they started to tax benefits for higher income earners and Al Gore, as Vice-President, cast the deciding vote to make all benefits taxable income. This means that you pay taxes on the amount deducted from your check for FICA, and you also pay taxes on the benefits when you receive them, (subject to some exceptions). That’s double taxation.

The Social Security taxes were to be kept in a separate account, untouchable by the government for other general fund uses. In 1985, the Social Security Fund was moved
“off line,” ostensibly to enable the feds to keep better track of it. In fact, the surplus in the Social Security fund had ballooned so such an amount that the federal government felt obliged to correct the situation by starting to “borrow” from it. How much the feds owe the fund at this stage of the game is anyone’s guess and will probably be accounted for at some point long after the ongoing court case Cobell v. Norton is resolved.

In that case, the feds were obliged to manage monies for Indian tribes and Indians so that they wouldn’t spend it all away. Now the truth is, the Indians want an accounting of all of that money and the Department of Interior and its Bureau of Indian Affairs can’t seem to find the accounting records. They’re probably in the same location as the records are that will show how much money the government has “borrowed” from Social Security.

Now, of course, the lie. We’re running out of money. How much money would be in the system had it not been “borrowed?” Since it was “borrowed,” what is the interest? If all of this money had been left where it was, would we be in this “problem?” And, are those of us who paid taxes on that money twice already going to have to pay up a third, or fourth time? Or, are you kind folks on Capitol Hill just planning on phasing Social Security entirely out?

The final question for this posting is, “When are we Americans going to start getting some straight answers?” When the chickens come home to roost? Or when the Phoenix Lights move to Scottsdale?