Guest blog post by TIA's CEO and founder, Sheila Weinberg:
One of my Facebook friends, George, expressed his frustration that his Social Security check is now (or soon will be) referred to as a "Federal Benefit Payment."
He made the following points:
- This isn't a benefit; it is our money paid out of our earned income! Not only did we all contribute to Social Security, but our employers did too. It totaled 15% of our income before taxes.
- If you averaged $30K per year over your working life, that's close to $180,000 invested in Social Security.
- Instead, the folks in Washington pulled off a bigger Ponzi scheme than Bernie Madoff ever did.
- They took our money and used it elsewhere. They forgot (oh yes, they knew) that it was OUR money they were taking. They didn't have a referendum to ask us if we wanted to lend the money to them. And they didn't pay interest on the debt they assumed. And recently they've told us that the money won't support us for very much longer.
- But is it our fault they misused our investments? And now, to add insult to injury, they're calling it a "benefit," as if we never worked to earn every penny of it.
"Let's take a stand," he urged. "We have earned our right to Social Security and Medicare. Demand that our legislators bring some sense into our government."
I hate to be the bearer of bad news, but the federal government's official stand is that Social Security checks are federal benefit payments. Like, almost all Americans, my Facebook friend has bought into the smoke and mirrors that hide the truths about the Social Security program.
George points out that he and his employer contributed to Social Security. The truth is Social Security "contributions" are handled as pure and simple taxes that are lumped in with income taxes and used for whatever the elected officials decide to use them for. Steve Goss, the Chief Actuary of the Social Security Administration has stated, "Benefits are not directly related to or committed upon the receipt of earnings or the payment of taxes."
George also noted that he has invested in Social Security and he should get this money back with interest. Unfortunately, Social Security is a pay as you go system. George's contributions are not "invested" for him. His contributions are taxes that are used to pay for current retirees and other parts of the government as Congress chooses.
Despite elected official's assertions that Social Security benefits are guaranteed, the promised benefits are not reported on the federal government's balance sheet as a liability. This is because government officials believe the federal government doesn’t owe anyone Social Security benefits beyond the checks that are currently written. In testimony before the Federal Accounting Standards Advisory Board Goss affirmed, "An overriding uncertainty exists under the Social Security (and all Federal Social Insurance) programs. This is the Government’s right and ability to alter potential future benefits. Until benefits become due and payable, there is no binding commitment over which a worker has control and so no liability can be recognized."
Like George I believe citizens are owed the benefits they have been promised, and Social Security should be reported as a liability on the federal government's balance sheet. At this point in time under current law, Social Security benefits are due to citizens and it is probable that the benefits will be paid. But as pointed out, this contradicts the government's official position.
George calls for his fellow citizens to take a stand. I believe the first stand that needs to be taken is to get the government to acknowledge that Social Security is a liability. If they are not willing to do that, then the Social Security Administration, the administration and members of Congress need to be honest with the American people. Social Security operates like a regular income tax, aiding the government’s debts in a multitude of areas, but the money is not saved or invested as promised. Therefore, citizens should not expect to receive the same amount (or any at all) of benefits as they paid into Social Security.