In the late 1930′s the U.S. Congress established a Social Security Fund to maintain aging and disabled workers, through the Federal Insurance Contributions Act (FICA). This fund is a payroll tax, which today is simply under 7.65% of the wage, and it currently supports both Social Security and Medicare (Social Security is 6.2% and Medicare is 1.45%); employers should also pay just under 7.65% of the wage to match your contribution. Your monthly Social Security check is going to be calculated relative to how old you are whenever you retire and the amount deducted from your wages during your working years. Although the amount anyone will get is figured according to their contributions in the past, every Social Security check comes from the weekly and monthly payroll deductions obtained from wages and matching money paid by employers in the present. This amount is simply over 15% of the gross wages of almost all workers, up to and including wage cap around $88,000 annually (the Medicare portion is deducted to a higher cap). This is a little less than one-sixth of all wage income. If many are working, then one-sixth of that labor may pay higher benefits and take care of the elderly and disabled adequately; if few are working, then benefits must be reduced and several from the elderly without other income may reside in privation. Obviously the power for Social Security to pay for benefits depends on the ability of our economy to produce income.
By law, any surplus FICA tax collected through the Social Security Administration is transferred to the U.S. Treasury Department and exchanged for government bonds. The accumulation of these Treasury Bonds is exactly what the government calls our Social Security Trust Fund. This fund, however, is a complete fraud, since the Treasury Department doesn’t invest this money by any means that preserves it, or require that the government departments receiving it must pay it back in the future. Like several taxes, it’s spent as part of the annual Federal Budget and gone forever. It makes no sense to even discuss repayment. Even though these bonds do earn interest annually (additional Treasury Bonds), the eye is a fraud also; these bonds, both principle and interest, don’t represent a fund, nor is the administration of this fund a trust, as any dictionary will attest. This bogus fund is simply an IOU from Americans to Americans.
Within the Reagan, Bush-1 and Clinton years, the Congress and the President attempted to balance the nation’s budget (following the Reagan tax cuts from the early 1980′s) by raising FICA taxes beyond what was required to fund Social Security. The federal government then took by statute (Borrowed!) these excess dollars to assist fund our other government expenses: Housing, Education, Defense, etc. However these excess dollars are spent, and the bonds, along with the interest due, are simply promises by government to raise the Income Tax in the future when these bonds are due. For the Social Security Administration to keep bonds, redeemable only through the authority of the U.S. Congress to raise the Income Tax to repay those bonds, and to call those bonds a Trust Fund, is ludicrous along with a fraud. The Social Security Administration would have you believe that it will cost taxpayers less to fund Social Security obligations in the future when these bonds are mature and redeemable. It is truly amazing that people this stupid can be given positions of importance and rely upon government.
The idea that the Social Security Administration and also the Treasury Department are independent entities with legal standing like citizens or corporations is bogus. The us government in the entirety has legal standing, but its parts are not similarly independent. The illusion of separation and independence between your SSA and the Treasury is maintained because the FICA tax is a regressive income tax, striking the working poor harder compared to wealthy. The Social Security tax was instituted 25 years following the Tax was established by Congress; it would happen to be simpler in 1938 to raise the Income Tax on everyone to fund Social Security, but then the wealthy would have objected to paying their fair share, so the politicians bowed towards the demands of wealth and we are dealing with the continuing misfeasance in our tax structure today. If our society were just now creating a tax structure to pay for our collective bills, Social Security would get its funding in the general Tax just like the Defense Dept., Education Dept., Health and Human Services, etc.; because we would require that structure to be fair, by being equitable, in how taxes are elevated; and fiscally responsible by taxing our productivity to avoid any kind of debt or phony financing scheme.
Once the government sells a bond to any citizen, business, or foreign entity, it is obligated to payoff that bond when due, even when that requires reducing other expenditures, including Social Security, or raising taxes; because government must pay its debts first of all. We often hear the word “full faith and credit of the government” with regard to guaranteeing the payment of government debt; without which the government couldn’t entice one to lend to it. However the “full faith and credit of government” does not matter with regard to the Social Security Trust Fund, because when we the people both own and owe a debt, your debt does not exist; so neither government faith nor credit are applicable in working with this problem. It is a mistake for the Treasury Department to issue Treasury Bonds to the Social Security Administration in return for surplus Social Security Tax, because it confuses everyone into believing that they’re real obligations for payment by the government and also the taxpayers that support the government; BUT THEY ARE NOT!
The Social Security Administration has monthly demands on its cash flow, and when its income is projected to be under its outflow, Congress will need to raise taxes (in one form or another), or reduce benefits to recipients, to keep the Social Security Administration books balanced. It simply is not important whether Congress raises taxes and that income is given straight to the SSA to satisfy its obligations, or Congress raises taxes to payoff government bonds held by the SSA, and those proceeds accustomed to fund Social Security. Either way taxes are raised exactly the same add up to cover the cost of maintaining the Social Security system. The Trust Fund bonds themselves are baloney, because they have zero value and liability to we the folks.
It ought to be obvious to any or all that courts will give trial to cases of debt between different persons, corporations, and countries; however they would not hear a case where a person, corporation, or country was suing itself to collect a debt owed to itself. If the SSA had used its annual surplus to buy industrial bonds in U.S. companies or government bonds of foreign countries, it would have legal standing to have a court enforce repayment of its investments plus interest, so that the earnings of these companies or the taxes of foreign countries could be utilized by the SSA to aid our elderly. Such is not the case using the Social Security Trust Fund. The American people cannot sue the United states citizens to make payment of a debt they owe privately. We’ll either tax ourselves to meet the contemporary needs of Social Security or we’ll reduce benefits to the level that we are able to afford.
Think about a village moron carrying out his everyday life, being given menial tasks by a number of businesses so that he might possess a supporting income. The specific act that determines this body’s a moron is the fact that when he spends his wages he writes himself an IOU for the money spent. If our village moron chose to retire and cash-in his IOU’s at some bank, what bank would loan him money wherein he was both creditor and debtor related to his IOU’s? You just cannot be indebted to yourself.
Amazingly enough the American people have a government that is operating within this moronic manner. The U.S. Treasury may be the area of the moron that spent the money to support us, while providing IOU’s, and the Social Security Administration may be the part of the moron that holds some of those IOU’s, and thinks they are collateral that the citizenry may redeem for future income. This area of the moron even accepts additional IOU’s as interest about the IOU’s that are non-existent spent money. The significant citizenry would be the bank (taxable income) that the Treasury and Social Security Administration want to come and cash-in those IOU’s in the future.
America Government cannot buy its own debt in any form, in a department or agency, and profit by, or receive income from this kind of action. Government does not invest in corporate stocks and bonds, or own industries to create profits from goods sold to consumers. It taxes the productivity of commerce and spends those taxes yearly. There is not one penny of cash in our so-called Social Security Trust Fund; we may only tax the productivity of the present; and also the productivity of the future, when and just when it becomes the present.
The national budget was balanced the very first time in a generation in 1998. In fact, it produced a 70-billion dollar surplus; and 1999, 2000, 2001 had larger surpluses. The extra dollars delivered to the Treasury through the Social security Administration and utilized by the Treasury to pay our general expenses, amounts to another Income Tax; it’s by no means an investment that can be redeemed to pay for any future need. These budget surpluses are not all from Income Tax; they’re mostly from the Social Security Tax, because workers have been overcharged for Social Security for nearly Two decades to balance Federal Budgets; not to build a trust fund.
It is impossible to protect future Social Security requirements with today’s FICA surplus. We can only supply ourselves with increased goods and services today, or lessen the taxes to be collected the coming year, or pay off a little portion of the key on the National Debt. There is no difference in income to government, regardless of its name; Tax, Social Security Tax, Medicare Tax, Excise Taxes, Usage Fees for nature, Import Duties, etc.; each one is levied by government to provide income, and spent by government in annual budgets. Government doesn’t tax the past or future and government doesn’t save or invest within the last or future, only the present.
If it truly is sensible to over tax individuals to support one part of government and provide them an IOU that could be redeemed at a profit in the future, then why don’t you change all of our Income Tax, Capital Gains Tax, etc. into FICA Tax? So that the Treasury Department could borrow our government spending requirements in the Social Security Administration and issue many more bonds that we would presumably become an unbelievably wealthy country as those bonds mature. We are able to all become morons and live off the interest, without disturbing the key. Whether the government establishes two kinds of taxes to fund itself or ten kinds of taxes does not matter; if a person or more tax streams consume more than they require, their tax minute rates are too high; and if a number of tax streams takes in less than it requires, their tax rate is too low. The moving of tax receipts from areas of excess to regions of deficit is internal bookkeeping, not an investment. Excess funds that are spent instead of being refunded are gone and irretrievable.
Within our current economy the baby-boomers are getting into their most productive and profitable work years, a comparatively large number of taxpayers paying relatively larger amounts of Social Security tax, as well as Tax. The present seniors are enjoying relative affluence in their standard of living. Just a few years from now when the baby-boomers are retiring and swelling the ranks from the non-working, there will necessarily be considered a higher tax burden to support those retirees. The cash that’ll be open to fund Social Security will depend totally on the ability of future workers to pay for taxes to government. And also the bonds mounting up in the so-called Social Security Trust Fund are void and worthless. If tax income cannot be increased, there’s practically nothing that government can do to alter what is coming except raise the age of retirement minimizing the amount of benefits to become paid, to complement the amount of tax that may be taken from people who labor in our economy.