Last week we heard Obama pull out one of the really big fear cards he has to play. He claimed he wasn’t sure if grandma would get her social security check if the GOP doesn’t buckle under soon and hand him a new book of blank checks. The debt crisis debate has nothing to do with our nation’s debt and everything to do with politics, posturing and agenda. Even the most optimistic of proposals such as a balanced budget amendment and trillions in cuts only address the deficit and not the debt. But since it’s all being done behind closed doors, we don’t really know what is actually on the table except what is leaked for public opinion purposes.
How many people do you think even picked up on what he said when he threw out the SS nugget? If this were any municipality, or even state across America, threatening to cut public services or other high-profile jobs is always the first arrow drawn from the quiver. Every politician knows to get the public outraged ASAP is the fastest way to sway public opinion your way and get the people more open to the idea of tax hikes. Social security is akin to that strategy on the federal level.
What he is openly admitting is what is not publicly accepted as fact. There is no such thing as a social security trust fund. Never has been. The courts have ruled on it. It simply doesn’t exist. First, lets take a look at what the common perception is today.
You get your 6.2% FICA withholding taken out of your paycheck each week which is then matched by your employer, or doubled by you if your self-employed. That part is fact. What happens next is the myth. People are told that their withholding is cumulatively used to pay out benefits to recipients each month. Any surplus is deposited into the social security trust fund. In fact, the Treasury reports in excess of a $2.5 trillion dollar balance just sitting there as of Dec. of 2010.
Earlier this year, the news broke that benefit payments would exceed withholding revenue taken in this year much earlier than predicted. Previously, we were told that 2017 was the tipping point year. Turns out we’ve already gone past that tipping point and we are now dipping into that $2.5 trillion surplus. When that surplus runs out, we will have to then take money from the general fund to make up the difference.
We’ve also been told that our politicians have been raiding this trust fund over the years to fund their various pork projects. The trust fund is really just a filebox in a D.C. office filled with IOU’s. That’s been the ‘official’ leaked story for years now. We’re supposed to believe we’ve exposed the real story behind social security. Not so fast. Turns out the truth is even worse than most people believe. You would likely be happy if the myth version were true because the possibility would exist to someday repay those IOU’s, reform social security by raising the retirement age and ensuring that future revenues meet the ever-increasing elderly population benefit requirements.
By the way, I’m not breaking any new ground here or exposing anything. The real story is part of our history, it’s simply not the narrative being reported on. People would much rather believe that they really have their own dedicated shoebox somewhere in a treasury vault holding their contributions they’ve made to social security all these years. Yeah, maybe it’s filled with IOU’s, but at least it’s reserved for you just waiting for your retirement. I’m afraid not.
The truth is that social security is a tax. A bona-fide tax and not an ‘insurance policy’. In fact, back in 1937 when the federal government found themselves in court in Helvering v. Davis, they used virtually the identical approach used by the Obama administration in defending Obamacare. Publicly it was seen as forcing the public to purchase something under the authority of the Commerce Clause, that bottomless pit of government authority allowing Congress to justify just about anything it wants. Yet, when it gets into a courtroom, the official version changes and it is defended as an actual tax just like Obamacare.
I won’t bore you with all the legalese, you can find all of the background you want on the web. Suffice it to say it boils down to this. Social security was born just another revenue raising scheme under FDR disguised as an insurance policy. The Supreme Court has ruled it is just a tax and that you have absolutely zero ‘right’ to your ‘contributions’ you’ve been making. This has been re-affirmed in other court challenges over the years. Your FICA withholding simply goes directly into the general fund with a ‘special’ bond IOU issued by the Treasury into the ‘trust fund’. It’s a meaningless piece of paper merely used for accounting purposes.
Benefit checks sent out each month to recipients in reality come directly from the FICA withholding revenue stream with any shortfall made up from the general fund. No trust fund exists in reality. No shoeboxes in a vault. Nothing whatsoever set aside for your retirement. Just accounting gimmicks. All you’ve been doing is paying a tax just like any other all these years. It’s a grand scheme and one in which the public perception, even though it would appear to be not appealing, is preferable to the truth.
FDR had been losing court decisions with regularity. He proposed his infamous ‘court-packing’ legislation designed to expand the Supreme Court to 15 justices and thus allow him to fill more vacancies and slant the court his way. The sitting justices so feared this tactic that they immediately began changing course and started ruling in FDR’s favor on a variety of cases including Helvering v. Davis to dilute the need for the legislation which never did pass.
Part of the fallout, however, was the court accepting the government’s shell game tactics and allowing them to pass off a tax as a benefit. It continues on to this day. Poll Americans and you would find an overwhelming number that have never heard the real truth. We all believe we are just victims of regular old, greedy politicians who have simply stolen our trust fund money. As we would expect from politicians. It’s an easy sell and preferable to the fact that there is no trust fund and we’ve all been suckered by just paying a boring old tax all these years.
That’s why I say Obama is tripping up by shedding light on the truth. He really could withhold SS checks if the debt crisis comes to fruition. It’s a hugely unpalatable political decision to make, but he could do it despite the claims of many, mostly on the right. Talk about an ace-in-the-hole. Talk about a bargaining chip that would send shock waves around the world. The seniors would absolutely take to the streets and protest like you’ve never seen before. I can’t imagine even an ideologue like Obama would go down that road. But maybe this will serve to educate a few more people to the reality about social security.
As always, don’t believe me, research it yourself. You’ll find just another example of the truth being suppressed. By government, by academia, by the media. How sad when you think of how many people depend on social security as their sole source of retirement income. We were always told it was intended as a supplemental insurance policy designed to accompany your own pension or investments. Fact is it was always just another way for our government to raise revenue. But shhh! Don’t tell anybody.