The Real Truth About Social Security

I received this email from a friend of mine Gayle Stenson. Gayle is a former school teacher in a rural district in Missouri. I thought it was interesting given all that's going on in Washington at the moment.

She writes:

I began doing some research on Social Security for several reasons. I remember when I was very young I began paying attention to the reports heard on the news from Congress and local legislators that SS was on the brink of collapse. It wouldn't be able to continue paying for retiree's benefits in another 10-15 years. And for the rest of my life reports would surface rather regularly as to the woes of SS. I used to wonder though, at how much money was paid into the SS trust funds every day.

If you think about it, it has to be an incredible sum of $$. Now here we are at this crisis in Washington about the debt ceiling and the country's deficit and how much it spends and once again "entitlements" is at the forefront. To hear politicians, the only things driving the debt are SS and Medicare and Medicaid. The old puzzlement as to just how SS works prompted me to investigate. This is what I found.

Since its inception in 1935, SS is paid for, ie.,benefits, by payroll taxes. And from all the sources I've found, nearly every year, and in fact maybe every year, the amount of payroll taxes coming into the funds each year EXCEED what goes out. The federal government takes the excess ( I have read in some sources the Feds takes all the funds), spends it,, and replaces the funds taken out of the SS trust funds and replaces the funds with IOU securities, issued on paper by the US Treasury, which are held in an actual file cabinet in a place other than the Treasury.

These bonds are non-negotiable on the open market for the obvious reasons of market volatility. The Federal government pays interest on those SS fund securities at market value. Some of the securities mature and are paid off by the government by raising money to pay off those securities by selling bonds, etc, on the open market and so benefits to retirees are paid. I think this is probably an over simplification of the process, but it reveals the bottom line. Right now, and this is not fuzzy math, funny money, or what some political pundit or politician maintains, but fact, the Federal government now owes the Social security trust funds 2.6 TRILLION dollars. And actually that amount is closer to 2.7 trillion in actually hard, cold cash.

The notion that the GOVERNMENT pays for SS benefits is a bald faced lie. Now we hear that those terrible Baby Boomers are retiring and once again the SS funds are being strained. Since they, the federal government, has done nothing but lie, mislead, and con the American public for decades, why do I question this notion that once again, SS is on the brink? Obvious, I would think. Oh, one more thing. Taxes for SS are paid through wages. In 2010, 6.2% was paid on earnings up to 106,800 matched by the employer. That dropped in 2011 to 4.2 for the employee but 6.2% remained for the employer. Self employed was higher but also dropped in 2011. It seems to me that if the payroll tax was extended to incorporate a higher wage, that would boost the surplus for SS for that large Baby Boomer population as well as safe guard the fund for future retirees. But then that would be a "shared sacrifice" and that is NOT to be entertained.

Social Security should not be in trouble if the stewards of the SS funds did not take the money out, spend it, and then decide they couldn't afford to pay it back. SS is not part of the budget except for the interest paid on the IOU securities SO when you hear some politician or news pundit or economist say that SS is breaking the federal budget, know they are not telling the whole truth.

Medicare......imagine the amount of money pouring into Medicare. But Medicare is not protected by being a trust fund. I wonder what the REAL story is there?????

Let people KNOW the TRUTH about Social Security!!! Don't let the Federal Government STEAL 2.6 trillion for OUR retirement funds! PASS the word or better yet, DO the Research and find out yourself!

I'd like to add a note about Medicare. Medicare waste and fraud amounts to billions of dollars of our money every year. Some reports even say that organized crime has entered into the picture. We could go a long way towards making Medicare solvent if we just eliminated some of the fraud and waste instead of cutting it.