Social Security Theft?

Congress stole money from Social Security!  Not exactly.

Social Security (SS) funds are by law “invested” in Treasury instruments.  In other words, they are loaned to the federal treasury, just as when we buy savings bonds, we are loaning money¹ to the government.  Funds to pay Social Security benefits are obtained by the treasury instruments being paid back.

The only “stealing” that occurs is spending more than comes in (from all sources).

In 2015, SS payments were about 886 billion, but payroll taxes were only about 795 billion.  The gap of about 91 billion is met from the income taxes coming back from the payments (31 billion) and the interest on the SS investments (92 billion).  The 34 billion² surplus increased the size of the trust fund.  This (increase) has been happening every year for decades.  However, with the number of disabled and retired people increasing faster than the number of working people, this surplus gets smaller every year, and will become a deficit unless something changes.

The only way to avoid cutting SS payments is to increase the interest rate on the SS investments.  That cannot happen without at least one of the following:

  • increaing the deficit
  • increasing taxes
  • decreasing spending (on something else)

Social Security has always been a matter of robbing from the “rich” (younger working people) to give to the “poor” (disabled and retired³ people).

I recommend learning more about this by reading the SS Facts and Figures and Motley Fool’s general comments

¹So if you don’t think the government should be borrowing money, don’t buy savings bonds.
²Two billion dollars in round-off errors!
³I’m retired, but not poor.  I can live comfortably on my Social Security—paid for by three people making $21/hour.

Hits: 2