Sunday :: Jun 13, 2004

Some Truths About Social Security


by Mary

Tonight as I was cleaning out some of the obnoxious spam comments that sometimes afflict older posts, I ran across an interesting comment in a post a few weeks ago regarding an email making the rounds with lots of false statements about Social Security. It was such a tour de force that I thought it should be given more prominence. So without further ado, here are some truths about Social Security. Thanks to the poster, who left this comment. It was signed: "Actually, everything in the FICA piece is nonsense."

The author of this insidious piece of spam mail really needs to do some basic fact checking on these mass e-mails. Do you realize that each and every point in the post (from a popular forwarded e-mail) is either a straight-up lie, or at the very least, wildly inaccurate? Don't believe everything you read, without at least looking for some kind of reasonable source. By the way, any tone of disapproval in this post is for the original author spreading this trash, and not towards you for raising the question.

All right, here we go. On a point by point basis... with actual references to actual facts!

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:

1.) That participation in the Program would be completely voluntary,

Are you kidding? It's a tax. Taxes aren't voluntary. It is true that when the program first started, many jobs weren't covered by Social Security. If you worked in a job that wasn't covered, you paid no taxes, but also received no benefits. If you had a job that was covered, you paid FICA, and got Social Security. Simple. Not optional (except by intentionally changing careers, I suppose...) Link.

2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the Program,

The tax rate in the original 1935 version of the law was 1% each for the employee and the employer on the first $3,000 of earnings. This rate was raised in four initial steps through 1949 to 3% each for employee and employer on the first $3,000. At no time was it ever the first $1,400 and there was never any mention of a 1% cap.

3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year,

Nonsense. The 1935 law expressly forbids this idea, in Section 803, Title VIII. Feel free to look at the law here (Link) See the section titled "DEDUCTIBILITY FROM INCOME TAX".

4.) That the money the participants put into the independent "Trust Fund" rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and,

Yep. This is true, and this is exactly how it has worked from 1939 (when the Social Security Trust Fund was created) until today. Period. The way that fund works has never changed. If you want details on it, see Link. What you're probably referring to here is the way that the Trust Fund is included in the "Unified Budget" (started in 1969, based on action by President Johnson). This confused the Trust Fund with the General Fund for awhile, so in 1990 it was taken back out. This is only a matter of accounting practices, and in no way ever changed the actual handling of the Trust Fund itself. You can see more about this at the same URL as before (Link)

5.) That the annuity payments to the retirees would never be taxed as income.

Originally, benefits were not taxable. This wasn't a provision of the law, just the way it originally worked out. President Roosevelt couldn't really "promise" anything about this, nor did he. Originally the benefits weren't taxable as a result of a bunch of early rulings by the Treasury Department (you can look at them here: Link) not by anything Roosevelt did.

Since many of us have paid into FICA for years and are now receiving a Social Security check every month -- and then finding that we are getting taxed on 85% of the money we paid to the Federal government to "put away," you may be interested in the following:

Q: Which Political Party took Social Security from the independent "Trust" fund and put it into the General fund so that Congress could spend it?

A: It was Lyndon Johnson and the Democratically-controlled House and Senate.

Horse hockey. All Johnson did was unify the budget. The spending from the excess funds to Social Security have been done by every single president since him. All of them. Plenty of bi-partisan loathing to go around here.

Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding?

A: The Democratic Party.

There you go again. There was never any deduction. We've already covered the fact that the original 1935 law forbids this idea, but in case you forgot, here's the link again (Link)

Q: Which Political Party started taxing Social Security annuities?

A: The Democratic Party, with Al Gore casting the "tie-breaking" deciding vote as President of the Senate, while he was Vice President of the U.S.

Eh, not so fast. Feel free to look at this picture of the culprit who signed that change into law. Go ahead - Link . Did Reagan become a Democrat while I wasn't looking? And, by the way, the Republicans controlled the Senate from the 97th through the 99th Congress (1981-1987). So, who again eliminated the income tax deduction? By the way, it was recommended by a bi-partisan commision, headed by another Republican that you might know, named Alan Greenspan. If you'd like to read about Greenspan's commission (and see a photo of a much younger, much sexier Greenspan), check out Link. Little Bobby Dole's looking good too. Ultimately the 1983 amendments to the tax law were passed in the house on March 9, 1983, by a vote of 282 to 148. On March 23, 1983, it passed the senate 88 to 9. There was only one change in the Senate's version of the bill. It required that tax-free interest income be used in the computation to determine if the thresholds ($25,000 for a single filer and $32,000 for married filing jointly) were exceeded. Then, in a conference on March 24, 1983, the House accepted the senates change. The next House vote went down at 243 to 102 (apparently lots of representatitives got sleepy - it was, after all, 10:25 p.m. that night). Then the Senate got together again, and in the wee hours of March 25, 1983, voted 58 to 14 to pass it (again, lots of them got too sleepy, I suppose). You can see the bill, how it went down, and all of the amendments, sponsors, etc. at the wonderful Thomas site, which has great information about all the bills passed, with their histories, all the way back to the 93rd Congress. Check it out. Link.

Q: Which Political Party decided to start giving annuity payments to immigrants?

A: That's right! Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65, began to receive SSI Social Security payments! The Democratic Party gave these payments to them, even though they never paid a dime into it!

That's wrong! Ah, yes, the great Jimmy Carter. This guy gets more crap for stuff he never did, especially when it comes to those darned immigrants... In reality, in was tricky Dick Nixon who both proposed this, and then signed it into law. The program that you're referring to is called the SSI, or the Supplemental Security Income program. He signed it into law on October 30, 1972, calling it "landmark legislation". You can look at the info here: Link. You might have been correct to say that it was bi-partisan, as it was. What happens next is politics at it's finest... In 1996, Newt Gingrich and his boys decided to cut off SSI benefits for immigrants. There was, as they say, a bit of a public outcry, so they eased back a bit and came up with the Welfare Reform Law, which just cut off benefits for _most_ of the immigrants. Bill Clinton publicly protested the law, but gave in and signed anyway. So then, the Social Security Administration notified more than 660,000 old, blind, and disabled immigrants that their benefits were being cut off at the end of 1997. Well, as you can expect, once the newspapers started carrying reports of some of them killing themselves after being notified, Newt and his boys was in a heap of hot water! But, as you can expect, they stood their ground! Well, no, not exactly... well, uh, when danger reared it's ugly head, they bravely turned their back and fled... Nope. What the Republican congress did instead was a swift about-face, and passed Public Law 105-306, which restored the benefits to pre-1996 immigrants. Passed the Republican controlled house by voice vote, then the Republican controlled Senate by unanimous consent. They did manage to keep some restrictions on new immigrants (post-1996).

Then, after doing all this lying and thieving and violation of the original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away!

Seems to me that perhaps the lying is coming from the author of this popular mass e-mail. Ahem, see above facts. Nuff said.

And the worst part about it is, uninformed citizens believe it!

Clearly, uninformed citizens are willing to believe just about anything they read in a mass forwarded e-mail with absolutely no references to authentic facts, with you being a notable exception - thanks for questioning this stuff - you'd be amazed how many references to this thing are floating around the web right now, with almost complete acceptance of this as fact with no review whatsoever.

Perhaps we are asking the wrong questions during this 2004 election year! If enough people receive this, maybe a seed of awareness will be planted and maybe good changes will evolve.

Maybe they will, if people were presented with authentic facts.

So, in conclusion - it's really that I just had a problem with the utter regard for facts in every facet of the e-mail you posted that got me to respond. Again, I'm all for a discussion of FICA/the SSA/whatever, but just saying "Democrats suck", again and again, doesn't do it. Especially when each and every point in the mail is either a lie, or at the very least, misleading. Thanks for listening.

Mary :: 2:41 AM :: Comments (11) :: Digg It!