Social Security: The Scam That Keeps on Taking

Alex Epstein rightly decries the fraudulent premises of Social Security:

Social Security is commonly portrayed as benefiting most, if not all, Americans by providing them “risk-free” financial security in old age.
This is a fraud.
Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their gross income — approximately 12 percent — for the alleged purpose of securing their retirement. That money is not saved or invested, but transferred directly to the program’s current beneficiaries — with the “promise” that when current taxpayers get old, the income of future taxpayers will be transferred to them. Since this scheme creates no wealth, any benefit one person receives in excess of his payments necessarily comes at the expense of others.
Under Social Security, every aspect of the government’s “promise” to provide financial security is at the mercy of political whim. The government can change how much of an individual’s money it takes — it has increased the payroll tax 17 times since 1935. The government can spend his money on anything it wants — observe the long-time practice of spending any annual Social Security surplus on other entitlement programs. The government can change when (and therefore if) it chooses to pay him benefits and how much they consist of — witness the current proposals to raise the age cutoff or lower future benefits. Under Social Security, whether an individual gets twice as much from others as was taken from him, or half as much, or nothing at all, is entirely at the discretion of politicians. He cannot count on Social Security for anything — except a massive drain on his income.

Frankly, I’m expecting never to see a dime of return on my Social Security “investment,” and to have scarcely any opportunity to save in my life. Taking four hours of my workweek away from me every week for the Ponzi schemes of older and larger generations is immoral to the borderline of criminality.

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Tom W
Tom W
13 years ago

A U.S. Supreme Court case – Fleming v. Nestor as I recall – circa 1960 ruled that individuals have no property right to Social Security “benefits.”
Congress can reduce them (it already has by increasing the retirement ages), or eliminate them, at any time and for any reason (or for no reason at all). This notwithstanding that workers may have been forced to pay into it, err, I mean “contribute” to it, for their entire working lifetimes.
Since 1960 the Democrat “advocates for senior citizens” and “protectors of Social Security” have opposed any and all efforts to give workers a property right to their “Social Security benefits.” [SO too with that scam group AARP.]
Better to keep the system risky so that they can keep the senior citizens scared and so voting for their “protectors,” and in the case of AARP keep them paying those minimal dues to their “advocate” so they can then be on the mailing list for “AARP endorsed” insurance / Medigap / pharmacy plan solicitations.
This is the worst kind of cynical political exploitation of people. It’s amazing that there appear to be NO Democrats of conscience holding political office who are willing to expose their Party’s scam and the fiscal crime that is being committed against future generations.

leprechaun
leprechaun
13 years ago

The only thing that will guarantee the insolvency of Social Security is when the Dems decide to give the benefits to ILLEGAL ALIENS . They’re already talking about it . The time they’ve worked in their home country and the time they’ve worked in the U S , including illegally if they can prove their employment , will be combined to calculate the benefit . The Feds ( Soc. Sec. Admin ) have already signed this treaty called a Transitional Treaty and it awaits the approval of Congress . We already have similar Treaties with over 40 other countries at a cost of $40 million annually . The Treaty with Mexico would cost in the hundreds of millions the first year and possibly over a BILLION $ annually thereafter , just for Mexicans .

Ragin' Rhode Islander
Ragin' Rhode Islander
13 years ago

Yeah, but it’ll curry favor with the Hispanic vote, that’s the most important thing.
More important than our national sovereignty.
More important than our national solvency.

Mike
Mike
13 years ago

For over 30 years I have heard people whine that “by the time I retire SS will be broke”.
Most of those people are now cashing SS checks every month or preparing to in the next few years.
The kind of idiocy in this post ios why people turn to the deceptively welcoming arms of the “progressives”.

Ken
Ken
13 years ago

There are two distinct parts to social security. One the highly recognized retirement based on working year contributions and number two an insurance policy that is higher than anyone of us would have purchased on each American that contributes into social security. The amount of funds withheld from your paycheck is split into two distinct and separate social security accounts.
Justin lets just say you slip with the skill saw and cut an artery six stories up and don’t survive the fall to the ground or blood loss. Yes social security provides a $50 burial expense to your spouse or next of kin but social security will also pay your spouse and each child either your social security retirement based on your age and contribution or under the insurance plan provide death benefit payments to your spouse and each child based on your contribution whichever is higher.
If you survived but medically documented and physically no longer can work, under the insurance part of social security you and I believe your wife and children will receive insurance disability payments from social security.
There is a lot more to social security than people realize. But if people want to change or do away with social security, just remember in case you die or become disabled at an early age you are thumbing your nose at you spouse and children.

Tom W
Tom W
13 years ago

>>For over 30 years I have heard people whine that “by the time I retire SS will be broke”. Most of those people are now cashing SS checks every month or preparing to in the next few years. The kind of idiocy in this post ios why people turn to the deceptively welcoming arms of the “progressives” Social Security goes cash-flow negative in about ten years. There is no “cash” in the misnamed “trust fund” because Congress has spent the money on pork barrel bridges to reelection. Once the system goes cash flow negative, to keep the checks going out Congress will either have to raise the “regressive” payroll tax so decried by “progressives” or massively raise income taxes to actually pay back the IOU’s in the “trust fund” … and/or cut benefits (as if an average “benefit” of $12k a year is such a great thing to begin with – within a few years in RI it may cover the average property tax bill, but not much more). Since people don’t “vest” under the current system, Congress can cut benefits at any time, such as reducing or eliminating CPI additions; raising retirement ages; or just plain cutting the benefit. They’ve already cut the benefit by: 1) increasing the payroll tax rate (including for people already in the workforce), meaning one pays more for the “same” “benefit,” 2) raising the retirement age (including for people already in the workforce), delaying the “benefit” and so lessening it, and 3) making Social Security “benefits” subject to income tax (for those making something over 30k a year, which ain’t “rich” by anyone’s standards). GIVEN THAT WE ALREADY PAY INCOME TAXES ON OUR “SOCIAL SECURITY CONTRIBUTION” WHEN IT IS TAKEN OUT OF OUR PAYCHECKS – AND AGAIN PAYING INCOME TAXES ON IT WHEN WE… Read more »

Mike
Mike
13 years ago

SS can be made solvent into the 22nd century by the simple expedient of making millionaires pay the same witholding rate as the rest of us pay.
So-called conservatives who fail to do this are commiting political suicide.

Justin Katz
13 years ago

Yup. All of our problems could be solved if only we’d tax the rich a bit more. Very expedient.
Welcome to socialism, Mike!

Pat Crowley
13 years ago

All you need to do is read this:
“Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their gross income — approximately 12 percent”
To know that author has no idea what he is talking about.
The withholding is 6.2%, not 12.

Tom W
Tom W
13 years ago

>>SS can be made solvent into the 22nd century by the simple expedient of making millionaires pay the same witholding rate as the rest of us pay.
So-called conservatives who fail to do this are commiting political suicide
There was a point in time that even Ted Kennedy opposed this (and he may still), for doing so would destroy the pretense that Social Security is a retirement program (it is really a welfare program).
By completely severing the connection between “contributions” in and “benefits” out, even Democrats would have a hard time denying the it is really an aged-based welfare program (in addition to the numerous income-based welfare programs).
>>”Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their gross income — approximately 12 percent” To know that author has no idea what he is talking about. The withholding is 6.2%, not 12.
Any economist will tell you that the entire 12% is ultimately paid by the employee (as is health care and other benefits), for the employer takes the entire cost of having that person on the premises into consideration when hiring, keeping vs. laying off, and in setting pay rates.
And let us not forget that there are thousands of self-employed “working people” – such as plumbers and electricians and carpenters – who get whacked for the entire 12%.
If Mr. Crowley had even had to make a payroll or worked outside of the coddled bubble of the public sector he’d understand that – it is he that “has no idea what he is talking about.”

George Elbow
George Elbow
13 years ago

Hey Pat, not that you’d know since, like your boss, you’ve never created a single job or employed a single person in your pathetic public-teat sucking life, but the employer must match what the employee pays, bringing the total paid on behalf of and as a result of the employee to 12.4% (which is “approximately 12%).
And as Tom W. explained, the self-employed workers amongst us pay the whole 12%.
You already proved to everyone that you can’t do basic math when you told us that Educational instruction expenditures grew at a rate less than Inflation, when in fact they outpaced Inflation by a whopping 42%.
Indeed, there is good reason why we refer to you as Patrick “I struggle with basic math” Crowley.
So why don’t you stick to nursing on the public-teat like the Entitlement-minded dependent leech that you are, and leave the math to the grown ups.

George Elbow
George Elbow
13 years ago

Hey Mike,
You should hedge your bets in the event that SS becomes insolvent.
There is an easy way to do that. Just go become a millionaire …become rich.
Apparently, it is very easy to do, doesn’t require hard work, risk, sacrifice, creativity, etc.
The only drawback is that you’ll have folks like yourself trying to attach themselves to you like a tic, thinking they are Entitled to that which is yours.
Please do report back to us, letting us know how you are doing as a “rich” person. Say, in a week or two? That should give you plenty of time to achieve this apparently simple task.

OldTimeLefty
13 years ago

Justin,
Getting the rich to pay their fair share isn’t socialism. It’s social justice, a concept which is obviously beyond your grasp.
OldTimeLefty

Justin Katz
13 years ago

Please. I don’t have to inquire after your proposed method of calculating payments and benefits for millionaires to suspect that your definition of “fair share” will entail overt redistribution of wealth. (I don’t imagine you’ll tolerate giving people who earned an average of $1 million per year over their working lives $163,696.08 per year in Social Security benefits, which is [I believe] what the current calculation method would yield.)

Mike
Mike
13 years ago

1. Taxing the rich at 6.2% is not taxing them “more” but just the same as the rest of us.
2. Yes, SS is a social welfare program and we should drop the pretense that it is something else.
3. SO WHAT? It’s been running well for 75 years and like the Interstate Highway System, is one of the most popular and best run government programs.
4. The continued war on SS by so-called conservatives, coupled with things like refusing to address the health care/prescription crisis, failure to seal the borders, a foreign policy of Hitlerian global dominance and a spying, snooping, torturing domestic police state are the reasons why so many people are running into the deceptively friendly arms of the “progressives”.

Justin Katz
13 years ago

Fine, but are you going to return their investment “like the rest of us”? That is, give out six-figure social security payments every year? See, a funny thing happens as dollar amounts get bigger: it takes more resources to fill them.
Throughout most of Social Security’s existence, population has been growing. We’re about to belch out a huge generation that is wealthier than the younger cohort. Throw millionaires into the mix, and the game won’t even last as long as most believe.
But you’re clearly not expecting to pay out to millionaires at the rate that we pay out to others, so it is “taxing them more.” Personally, I’d wager that the $124,000 that would be taken out of each $1 million, were the caps dropped, are more productive in the economy as it stands, which makes it reasonable to call the entire proposal a broadbased tax on the economy writ large.
As I said: welcome to socialism.

George Elbow
George Elbow
13 years ago

Justin,
Don’t confuse the Nanny-staters with logic.

OldTimeLefty
13 years ago

Justin, you said Please. I don’t have to inquire after your proposed method of calculating payments and benefits for millionaires to suspect that your definition of “fair share” will entail overt redistribution of wealth. And I don’t have time to inquire about your ideas on social justice, or even if you believe in the process. I also don’t have time or inclination to inquire about the wealth status of the people who founded this right-wing paean to corporate capitalism, but I suspect that all of the people who put this blog together in the first place have very little concern about their post retirement income. So we’re both suspicious people. We do have a similarity in that we both look to Jesus words to help guide us through this life. That being so, I’d love to hear you comment on Matthew 19 in which Jesus asked the rich man to give up his wealth and follow him. Jesus went on to explain that it is easier for a camel to pass through the eye of the needle than for a rich man to enter the kingdom of heaven. I’m sure you’ll have a great rationalization for ignoring the obvious meaning of Jesus’ words. I await your reply on this. You also said (I don’t imagine you’ll tolerate giving people who earned an average of $1 million per year over their working lives $163,696.08 per year in Social Security benefits, which is [I believe] what the current calculation method would yield.) You are quite right here, otherwise it’s simply enforced savings which I have no interest in. I want the money applied to social security benefits for all. That’s why it’s called SOCIAL Security. I also recognize in your last quote your knack for snotty criticism. A very elitist attitude that… Read more »

Justin Katz
13 years ago

You’re way off. I won’t presume to divulge the biographies of AR’s other contributors, but I’m a financially struggling carpenter. I have “little concern about [my] post retirement income” because I expect never to have the opportunity to retire. To the extent that my own financial well-being factors into my expressed ideology it is based on my assessment that the policies and worldviews espoused by others have consequences directly at odds with my ability to provide for my family and to advance in my financial security.
You’ll note that Jesus suggested neither that the rich young man give Him his possessions so that He might dole them out more justly nor that the wealthy must pay more than their share of taxes so that the government can ease the burden on those of lesser means. It seems to me that you (along with many who share your views) miss the question of motivation. Note what Jesus further goes on to say (Matthew 19:29, emphasis added):

And everyone who has given up houses or brothers or sisters or father or mother or children or lands for the sake of my name will receive a hundred times more, and will inherit eternal life.

I’d suggest that taking possessions by force actually does a disservice to the souls of the wealthy, by (1) spurring resentment and (2) perpetuating a false notion that doing so is sufficient, as well as the souls of the poor, by encouraging a sense of entitlement to share in Earthly things.

George Elbow
George Elbow
13 years ago

Old Time Lefty,
If your religion compels you to give away that which you earned, so be it. Have at it and don’t let us get in your way.
I too may feel compeled to give away some of my hard earned money to those who are truly in need.
But I will never accept giving it away at the “point of a gun” so to speak via Taxes due to YOUR compulsions.
Have a little trust, OTL. We don’t need you reaching into our pockets to help people. We are quite capable of doing it of our own accord.
You and your ilk are slowly but surely destroying this state and country, wringing out the self-reliance, individualism, self-sacrifice, the concept of risk / reward and the idea that choices have consequences.
Yes, you are slowly destroying all the things that made this country great, as you continue on your march to creating a Nanny-state.
Quick, name us a Socialist and or Communist country that you’d prefer to live in. And then tell us why you are trying to make this into that country, when you can just get on a plane and move there.

Tom W
Tom W
13 years ago

>>1. Taxing the rich at 6.2% is not taxing them “more” but just the same as the rest of us.
 WRONG. The Social Security “contributions” that don’t go immediately back out the door as Social Security checks go into the same federal pot as income taxes (the federal version of RI’s “general fund”). Most lower income people don’t pay any income taxes, and indeed pay “negative income taxes” via the earned income tax credit (EITC). So while they theoretically “pay” FICA taxes, on a net basis what they “pay” is recouped in non-existent income taxes and even EITC checks, meaning that they not only pay no taxes, but “make” money from the tax system. Contrast that with middle class and above people who not only pay FICA, but also “progressive” income tax rates – the proceeds of which also end up in that federal “general fund.” So “eliminating the cap” on Social Security / FICA taxes is not making the targets of that “pay the same” as everyone else, it is in reality an income tax increase, albeit one labeled as “FICA.” >>2. Yes, SS is a social welfare program and we should drop the pretense that it is something else. Thank you for your intellectual honesty regarding that. Now would you please so inform AARP, Rhode Island’s senior citizens and Patrick Kennedy of this reality. 
3. SO WHAT? It’s been running well for 75 years and like the Interstate Highway System, is one of the most popular and best run government programs.
 All Ponzi schemes run well at the beginning. As Social Security is a multi-generational program, 75 years is very much the beginning. As for it and the highway system, yes they are popular. So is Brittany Spears. And your point is? As for “best run,” given that… Read more »

Ken
Ken
13 years ago

Tom W,
Your statement; “Now, let’s talk about how minorities are prevented from accumulating wealth under Social Security, since if one dies before starting to collect one forfeits their “contributions.”” is a pure outright lie and misinformation.
As I mentioned in this post above; “There are two distinct parts to social security. One the highly recognized retirement based on working year contributions and number two an insurance policy that is higher than anyone of us would have purchased on each American that contributes into social security. The amount of funds withheld from your paycheck is split into two distinct and separate social security accounts.”
Social security will either pay the monthly retirement benefit or the monthly insurance death benefit which ever is greater but not both. How do I know this information, my wife died of cancer and social security walked me through the process to receive the $50 burial payment but also monthly death benefit payment from the life insurance which is greater than my wife’s retirement benefit for her age at death.
If you go to the social security web site and read the retirement benefits based on your top 40 quarters of ss tax payment contributions which is supported by a percentage of your tax payments and then read the benefits supported by the remaining percentage of your tax payments going into a separate account that pay for your life insurance policy (Survivors, Disability, Supplemental Security Income) then you might understand.
Link:
http://www.ssa.gov/

Tom W
Tom W
13 years ago

Yes there are survivor “benefits.”
But take, e.g., a single Black or Hispanic woman who raised two children, both born when the mother was relatively young. Not an uncommon minority demographic today.
The children are now over 18.
The mother passes away at 60.
Her lifetime of Social Security payments are forfeited – none of it will be available as an inheritance to the children, who might of used it to get a leg up in life, such as for a down payment on a first home.

Ken
Ken
13 years ago

Tom W,
Unmarried children 18 yrs and older can receive ss survivor benefits

Tom W
Tom W
13 years ago

Until what age Ken.
And are all over 18’s eligible, or just some … and if so, what are the criteria for those “some?”
And until what age?

OldTimeLefty
13 years ago

Justin,
1. I don’t believe you know what financial struggles are and I’m very certain that the people sponsoring your blog are very secure financially. Your word, my word, just words. Argument is impossible without facts, but I hold my aforementioned belief with firm conviction.
2. To whom do you think Jesus directed the rich young man give his goods? They would naturally go to the poor as a means of leveling the society. Jesus, himself had very few goods. He could have been a great success in business if he wanted to place his attention there, but he never considered accumulating wealth and he shared what he had and encouraged his followers to do likewise.
Why would he eschew wealth? So as not to distract himself from his life’s mission as a community organizer. He was so good at it that he was nailed to a cross for it. Martin Luther King Jr. was also so good at it that he was shot to death in Memphis helping striking workers. Funny how live reformers get turned into dead saints.
Remember, Jesus was a community organizer. Pilate was a governor. Read the bible again and try to let its message get below your neck. Use both hemispheres of your brain rather than just half of it.
I’ll waste no more time with scripture with you on this matter except to remind you that it was the self proclaimed religious of the day, in collusion with the state who got together and nailed him to a cross. Caiaphas and his religious cronies brought the charges and Pilate, the governor, issued sentence. Everything was buttoned up and legal due process was served.
George Elbow – you are not worth much more than a raspberry. Blftzzzz.
OldTimeLefty

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