Hardly a day goes by now without someone or other trying to convince people that Granny is on the public dole. CNN reporting Social Security as "Aid" is absurd since Social Security is an entirely self funded program paid for by people and their employers. Social Security is NOT an entitlement in the same sense as a Welfare program since an individual qualifies for it only by virtue of having themselve, a spouse or a parent who paid into the program for at least forty quarters.
A Welfare program as The Weekly Standard correctly notes is..
“The universe of means-tested welfare spending refers to programs that provide low-income assistance in the form of direct or indirect financial support—such as food stamps, free housing, child care, etc.—and which the recipient does not pay into (in contrast to Medicare or Social Security).”
Economic Bloggers, Politicians and Individual Commentators alike have claimed the Supreme Court has ruled that Social Security is a just another tax and as such Congress can take away your benefits. The case they are referring to is Flemming vs Nestor. If you read the case you will see what the Court actually ruled on was eligibility. The Court affirmed Congress has the authority to take away benefits for Cause. The ruling does not say Congress can just eliminate benefits for everyone, it merely affirms that paying into Social Security does not give everyone who paid into the program an explicit guarantee they can collect.
Since Social Security was ruled Constitutional in Helvering vs. Davis in order to take away benefits from everyone the program would have to be challenged as being Un-Constitutional again. If a challenge prevailed our government would still have to pay back the Social Security Trust Fund.
Section 4 of the Fourteenth Amendment, declaring that "The validity of the public debt of the United States, authorized by law, . . . shall not be questioned," is confirmatory of a fundamental principle, applying as well to bonds issued after, as to those issued before, the adoption of the Amendment, and the expression "validity of the public debt " embraces whatever concerns the integrity of the public obligations. P.294 U. S. 354.
By virtue of the power to borrow money "on the credit of the United States," Congress is authorized to pledge that credit as assurance of payment as stipulated -- as the highest assurance the Government can give -- its plighted faith. To say that Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. P. 294 U. S. 351.
In addition the Social Security Administration reports..
"Far from being “worthless IOUs, “the investments held by the trust funds are backed by the full faith and credit of the U.S. Government. The government has always repaid Social Security,with interest. The special-interest securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government."
The IOU's you hear about are no different then the IOU's held by anyone who loans money to our government including foreign countries, private pension funds, money market accounts, etc. The Social Security Trust Fund isn't broke our government is.
There are plenty of real Welfare programs but Social Security isn’t one of them. Another fallacy the majority of writers and politicians are promoting is that Social Security adds to the deficit. Common sense should tell anyone that what adds to the deficit is unfunded spending or spending by borrowing. The interest paid on the debt is the direct consequence of those actions not the other way around!
Lets put this in a perspective that will make it even clearer try telling China or a private pension fund or even a bank that collects on the debt owed them by cashing out of treasury bonds they are adding to the deficit. I can assure you their attorney’s would let our government know in no uncertain terms that the interest paid on their loan to our government was the cost of servicing the public debt.
Put yet another way if our government borrows from a private entity to pay some of the special issue treasury bonds the Social Security Trust Fund is owed the deficit hasn't grown the debt has simply changed hands from one creditor to another.
Baby Boomer's by Law had to pay into Social Security a program that was instituted before they were born and they are every bit deserving of getting their money back as other's who hold the U.S. Debt.
"Now let’s look at how that $2.7 trillion Social Security surplus arose. In 1983, President sponsored an increase in Social Security taxes, changing the program from pay-as-you-go to collecting much more taxes than it paid in benefits. The idea was to have the Boomers prepay part of their old age benefits."
Yet how many times have you heard journalists and politician's claim the Social Security Trust Fund was moved into the general fund then spent and is now broke? From the SSA “the old-age survivors insurance trust fund is a separate account in the United States Treasury”.
Social Security also has a Myths and Facts page that points out the fund has never been “put into the general fund of the government.” It explains how people mistakenly believe otherwise. The same page also points out that people pay taxes on the money earned that they paid into Social Security.
Since President Reagan tweaked the program a single individual earning $25,000 or a married couple earning $32,000 or more have to pay taxes on the income received from Social Security again. In other words double taxation! Meanwhile GE paid nothing in taxes on $14 Billion in profits and got money from Granny's taxes to boot!
In 1983 the retirement age was raised and this may be a cynical observation on my part but it appears to me that those clamoring the loudest for the age to rise again for people to collect the SS benefits are not employed in laborious positions. Could it be that the people promoting the falsehoods about Social Security have some ulterior motives of their own?
“By law, Social Security cannot deficit-spend and cannot borrow, so it is obvious that Social Security cannot add a penny to the federal deficit”.
Now that companies are cutting 401k plans and/or under funding private pension plans, not to mention all the money lost in the stock market crash of 2008 it is of even greater importance that people know they are being sold a bill of goods on Social Security. Don't fall for the Age War Fare Propaganda Granny didn't bankrupt America and she's not collecting Welfare by receiving Social Security.
Footnote (Nancy Altman was assistant in his position as chairman of the bipartisan commission that developed the 1983 Social Security amendments)’s