Social Security: Originally printed around Sept 21

Article #2 for the first issue of 'Students For Reform'

"The Social Security Blanket Needs Patching"

The Social Security Act, signed by President Roosevelt on August 14th, 1935, was enacted to: “frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age”. In January 1937, taxes were collected for the first time and the first one-time, lump-sum payments were made that same month. Ernest Ackerman was the first person to receive Social Security benefits, he got a payment of seventeen cents that January. Ongoing monthly benefits started in January of 1940.

Social Security has generated approximately $10.7 trillion in income from 1937 to 2005, while only paying out about $8.9 trillion. However, for 11 of those years we did not create a surplus and we appropriated Trust Fund bonds to cover the difference. The estimates the bonds covered range from $24 to $26 billion dollars.

Most of you are going to expect me to take the side of Social Security and the approximately $1.8 trillion in surplus, but I only hope to show its current state and expose problems that the Social Security office itself admits.

First and foremost, Social Security is a tax, and anyone covered by Social Security in their employment is subject to- and must pay- the FICA payroll tax. Social Security has never been a voluntary program, despite whatever internet rumors you might have read. The Social Security Trust Fund created in 1939 has never been lumped into a generic government fund. Originally, benefits of Social Security were not taxable income, but in 1983 Congress authorized taxation of Social Security benefits.

As it currently stands, the retirement age for anyone born in or after 1960 is 67. Let’s assume, using the government’s Social Security website calculations (http://www.ssa.gov ), that you were born in 1980 and that you will retire in 2047 at 67 years old. You’ve made about $20,000 this year. With assumed inflation, you would have received around $4,100 dollars (roughly equal to $860.00 today. These numbers are in terms of current benefits). The website says these numbers could be cut from 26 to 28% by 2040 if our current system does not change. This information is based on the estimated ratio of workers to retirees falling from 3.3:1 (today) to 2:1 within the next 40 years. Over the next 75 years, our government expects a $4.6 trillion shortfall in revenue, with negative cash flows beginning in 2017.

- Geoff Whiting