Social Security Promise
Congresswoman Nancy Pelosi (D–CA) claims that the “sacred promise of Social Security” has “safeguarded the dignity, security and financial independence of generations.”
IN FACT, politicians have repeatedly broken the promise of how much taxes would be imposed to fund SS, induced widespread government dependency, and created severe generational inequity:
- Politicians enacted SS with an explicit promise that “the most you will ever pay” in taxes is “3 cents on each dollar you earn, up to $3,000 a year.” Adjusted for inflation, the maximum SS payroll tax is now 9.1 times that amount.
- Social Security hinders workers from saving by taking 12.4% of their paychecks, leaving them dependent on government during their old age while paying an average benefit of $23,712/year.
- PhD economist Martin Feldstein, professor of economics at Harvard University and President Emeritus of the National Bureau of Economic Research, estimated that SS “depresses private saving” by “more than two-thirds” of SS payroll taxes.
- If workers earning $50,000/year could save and invest half of their SS payroll taxes, they would have an additional $428,000 to $1.6 million of wealth by the age of 67.
- For workers who earned average wages and retired at the age of 65 in 1980, it took 2.8 years of receiving old-age benefits to recover the value of their payroll taxes (including interest). For workers who retired in 2003, it took 17.4 years. For workers who retired in 2020, it will take 21.6 years. This assumes that SS has enough money to pay scheduled benefits for the entire period, which it is not projected to have.
- Despite multiplicative tax increases on succeeding generations of Americans, SS is due to become insolvent in 2035 because it operates like a Ponzi Scheme.
- To keep SS solvent, payroll taxes will need to increase by another 25% in 2035, or benefits will need to be cut by about 19%.
- To put SS on the same financial footing as a fully funded pension plan, every person who currently pays SS payroll taxes would have to contribute an additional $272,237 to the program.
- Contrary to the popular myth that the SS Trust Fund has been looted, it has actually been boosted through tax increases.
- Contrary to the popular myth that SS is a saving plan, it is mainly a “pay-as-you-go” program that pays most of its benefits by taxing people who are currently working.
- About 95% of all SS payroll taxes were spent in the same year they were collected, and after 88 years of operation, the SS Trust Fund has enough money to pay for only 2 years of benefits and administrative costs.
- SS was primarily modeled after the European social welfare programs that began in Germany under Otto von Bismarck, a forefather of National Socialism (aka, Nazism).
