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    Social Security: Has Become a Welfare Program

    04/13/2012

    Personal Freedom and Power 105:  Freedom and Governance

    "A wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government." 

    Thomas Jefferson - Inaugural Address - 1801

    The paramount duty of a governance system dedicated to human freedom is to protect each individual and their possessions from the force and fraud of others. 

     Social Security: Has Become a Welfare Program

    Comparing today’ Social Security to President Roosevelt’s intent, Robert Samuelson of the Washington Post concludes it is welfare: 

    It has become what was then called “the dole” and is now known as “welfare.” This forgotten history clarifies why America’s budget problems are so intractable.

    Samuelson claims Roosevelt intended to have something similar to a defined contribution plan.  Where the worker pays into Social Security and receives a monthly check upon retirement at age 65 based upon the amount paid, and the growth of the investment.  This was President Roosevelt’s intent when he said:

    "We put those payroll contributions there so as to give the contributors a legal, moral and political right to collect their pensions. ... No damn politician can ever scrap my Social Security program.”

    Wrongfully, politicians – Republicans and Democrats – have raided, manipulated and used the contributions for their immediate political purposes.  President Johnson included the Social Security tax revenue to hide the cost of the Vietnam War.  Nixon approved a 20% benefit increase and made sure every beneficiary knew of the increases just prior to the 1972 election.  Social Security was bankrupt within a decade. The most recent abuse was the two percent payroll tax holiday secured by the Democrats and a few Republics which increased the unfunded liability of Social Security. 

    Knowing promised Social Security benefits are an enormous driver of America’s debt, the media and the politicians are seeking solutions by increasing the retirement age, increasing tax rates, reducing benefits to the wealthy and more.  Samuelson bemoans that Americans’ assume they are entitled to benefits.

    What we have is a vast welfare program grafted onto the rhetoric and psychology of a contributory pension. The result is entitlement. Unsurprisingly, AARP’s advertising slogan is “You’ve earned a say” on Social Security.  …    

    Poor Samuelson, the liberal entitlement provocateurs denounce him as a stupid dunce.  Many yell and scream that Social Security is fully funded and doesn’t add to the debt. Many more have warm feelings because Social Security helped their aunt or grandmother.  The fact is Social Security pays out more than it receives and makes up the difference by taking money from the general treasury.  Thus, the American worker pays his or her Social Security tax (which is matched by the employer) and now every taxpayer pays again – the money paid out of the treasury.

    Of course the libertarians (I am included) ask what about the contract.  Government has promised benefits to working Americans, and now Samuelson and the politicians want to up the age to 70 to receive benefits, and some want to give less benefits to more affluent seniors. The DC elite will respond that the Supreme Court ruled there is no contract right to Social Security.  This is correct.  Seniors receive Social Security only because Congress authorizes the payments. 

    Stop and think - the President and Congress can do anything they want with Social Security.   So far, they have absolutely avoided suggesting a solution because seniors are scared that any proposed changes will decrease their benefit check.  So, the national debt explodes and politicians continue to dither.  Give Samuelson some credit, he confronted the issue.

    Which brings us back to the problem, government will raid, manipulate and misuse the money dedicated to Social Security.  It is naïve to think that if Congress and the President raise the age, increase the tax rate, remove the earnings cap and whatever new scheme is proffered that the manipulations would stop, and politicians would be excellent stewards of workers’ income.

    There is only one solution:  pay the benefits that have been promised and seek an honorable means to entice Americans nearing retirement to delay their Social Security benefits.  Most importantly, allow young American workers to invest their payroll taxes into a personal account – owned by the worker.  Only personally owned savings accounts will stop the immoral raids and manipulations by politicians.

    Young Americans must have the opportunity to invest their income - to be free from government manipulation. Thomas Jefferson understood the duty of good government:

    “… and shall not take from the mouth of labor the bread it has earned. This is the sum of good government." 

    5 comments
    Joseph Finnell
    09/28/2012

    I want to say one thing that never gets mentioned in this conversation. I have worked and paid into this account for over 40years I started working at 15 years old at the local grocery store to get a car at 16 when I would get my license. I have continued to work until i was 62 years old. During this time I personally have contributed close to 50,000.00 dollars of my own money which I could not take a write off because the Goverment did not make it a tax and all my employer's contributed the same amount that I put in. I have finished my education by going to classes in my spare time and it is payed for. I have been married for 36years and have two children who I paid for all their college educations. I have always paid my taxes on time. I have never been on unenployment nor has my wife. I did not have any input for Social securety or medicare, how will I get the money I put into an account that was stolen from to establish other accounts as foreign aid, welfair, food stamps, and all the grants that the american tax payer has funded when we thought that SS was for our old age to help us continue to be independant as a senior citizen's. I want to add my wife is 5 yrs younger than I am and has worked all of our married life.I'am a Vietnam veteran who spent two years taking care of wounded vet's in a hospital in the U.S. During our working career we have combined to pay in over 250,000.00 dollars along with our employers for SS and medicare and you think that we are on the take from the goverment as if we never contributed to these accounts. The other thing you mention is these are taxes, they are not taxes they were deducted from my pay check and i was not given the oppertunity to deduct this from my income for the year. I did not have any say how they used it but you want to say this is an entitlement. If this was a company instead of the goverment this would be called fraud by theft and someone would go to jail in the private secter. So how do you justify this theft from The American People. My check better be in the mail every month or some bueracrat that is getting payed from my hardwork is going to pay with alot more than he would want to pay with in the end.

    teda's picture
    Ted Abram
    09/29/2012

    Joseph,

    I totally agree, you and your wife must receive your Social Security. That is why I stated. “pay the benefits that have been promised.” However, America must convert to personal retirement accounts owned by the worker. Otherwise, government will steal our children's and grandchildren's money. Politicians always raid alleged trust funds, locked boxes, and other nefarious schemes. The conversion to personally owned accounts would involve less additonal debt, if people about to retire are induced and rewarded to delay receiving their benefits.

    Jim Dumas
    04/16/2012

    Though I agree with a lot of what you've said, let's also add that...for the most part...there are those that were given these benefits never paid into them. The Boat People from Vietnam, Hmong's, just about anyone who has moved to this country. I agree that the White House and Congress has gotten rich off the back of the working class people of this country. I also agree that, even though I've been drawing mine for five years now, I know my brother may, or may not, have his...through no fault of his own.

    But I do not agree that we should let young Americans invest in their retirement. Look at the fiasco that is Wall Street. What is going to happen if, as some have said, it happens again when these young Americans are ready to retire, and all of a sudden their retirement that they have worked for all their life, is gone? If we are going to do this, then there has to be an iron clad agreement, that any money invested for their retirement...if lost because of manipulation of the stock market, will be reimbursed to their retirement account. Wall Street won't go for it, and neither will any politician.

    Wendy Tedder
    04/23/2012

    Jim: Ted is right. I'd add that those of us who retired in 2008, experienced pretty much exactly what you fear will happen to young workers when they retire on private accounts: our 401k and IRA savings were gutted, Social Security offered no COL increase despite the near doubling of food and gas prices, our houses are not worth what we paid for them, and our standard of living has been drastically reduced with no real hope that things will improve soon. Many of us were downsized with the falling markets prior to our planned retirement dates, too, so don't assume that Social Security is real security of any sort.

    teda's picture
    Ted Abram
    04/17/2012

    Jim, Chile switched from a pay-as-you-go system in 1980. Workers in Chile could select to leave the soon to bankrupt system - similar to the USA's. New workers were required to enter the investment system. Basically, workers could invest in one of ten mutual funds. The results have been tremendous with an annual growth of over 10%. Jose Pinera the mastermind of the Chile's conversion has correctly stated , "They (worker in Chile) trust the private sector and prefer market risk to political risk. If you invest money in the market, it could go up or down. Over a 40-year period, though, a diversified portfolio will have very low risk and provide a positive rate of real return. But when the government runs the pension system, it can slash benefits at any time." Sadly in the USA politicians are considering changing their contract with the American worker. Ownership by the worker is the only solution to stop the raids and manipulations by politicians.

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