Jewish World Review Feb. 23, 2005 /14 Adar I, 5765
Social Security deceit
President Bush's call to allow Americans to take a portion of
the money they pay as Social Security taxes to set up private retirement
accounts has to be a good idea. Why? The more of what a person earns that's
in his pocket and under his control, the better off he will be. At a later
date, when the details of the president's plans are known, I'll address the
various reform plans under debate. For now, let's look at some of the gross
political deceit, lies and unkept promises that have become a part of Social
Here's what a 1936 government Social Security pamphlet said:
"After the first 3 years that is to say, beginning in 1940 you will
pay, and your employer will pay, 1.5 cents for each dollar you earn, up to
$3,000 a year. ... Beginning in 1943, you will pay 2 cents, and so will your
employer, for every dollar you earn for the next 3 years. ... And finally,
beginning in 1949, twelve years from now, you and your employer will each
pay 3 cents on each dollar you earn, up to $3,000 a year. ... That is the
most you will ever pay."
Had Congress lived up to those promises, where $3,000 was the
maximum earnings subject to Social Security tax, controlling for inflation,
today's $50,000-a-year wage earner would pay about $700 in Social Security
taxes, as opposed to the more than $3,000 that he pays today.
The next big lie is from the same Social Security pamphlet:
"Beginning November 24, 1936, the United States government will set up a
Social Security account for you. ... The checks will come to you as a
right." First, there's no Social Security account containing your money, but
more importantly, the U.S. Supreme Court has ruled on two occasions that
Americans have no legal right to Social Security payments.
In Helvering v. Davis (1937), the court held that Social
Security was not an insurance program, saying, "The proceeds of both
(employee and employer) taxes are to be paid into the Treasury like
internal-revenue taxes generally, and are not earmarked in any way."
In a later decision, Flemming v. Nestor (1960), the court said,
"To engraft upon Social Security system a concept of 'accrued property
rights' would deprive it of the flexibility and boldness in adjustment to
ever-changing conditions which it demands ... " That flexibility and
boldness mean Congress can constitutionally cut benefits, raise retirement
age, raise Social Security taxes and do anything it wishes, including
If a private retirement company reneged on its promises, we
could take it to court. If Congress reneges on its promises, there's no
judicial course of action whatsoever.
Vital to any Ponzi scheme, like Social Security, is the ability
to recruit as many suckers as possible. In 1999, a little noticed part of
President Clinton's plan to "save" Social Security was to force 5 million
previously exempted employees into Social Security. If they were forced into
Social Security, it would have created billions in additional revenue. Guess
what. Twelve senators, including five Democrats Dianne Feinstein
(D-Calif.), Barbara Boxer (D-Calif.), Christopher Dodd (D-Conn.), Richard
Durbin (D-Ill.) and Edward Kennedy (D-Mass.) descended on the White House
to demand that President Clinton not support forcing 5 million of their
constituents into Social Security. They warned of the adverse impact on
employees in terms of lower rates of return and lost flexibility.
Isn't that great? These are the same politicians who are now
resisting President Bush's call to allow Americans to take a part of their
Social Security taxes to put into private retirement accounts. If they'd go
to bat for those 5 million workers to remain out of Social Security, to
avoid the adverse impact of lower rates of return and lost flexibility, why
would they fight to deny tens of millions of workers a right to use a
portion of their taxes to do the same?
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