Here we go again! Myths About Social Security! - AMAC Foundation
Over the years, I and my AMAC Foundation colleagues have written numerous times about Social Security myths, especially the most pervasive myth of all – that politicians have “stolen” (or otherwise squandered) Social Security money for other purposes. That myth showed up once again in many of the comments linked to AMAC’s recent weekly membership poll asking how Congress should deal with preventing the looming 2032 cut in SS benefits. Herewith a sampling of those member comments:
The Social Security monies need to be removed from the ‘General Fund’ so Congress cannot get their greedy hands on it.
If the swamp would stop stealing the SS money, and throwing it out to illegals, there would be plenty.
The only reform Congress should undertake is to repay the money it has stolen from the American Taxpayers. That should NEVER have happened in the first place.
Congress has been stealing from the Social Security fund for decades. We need some legal protection of the SS Fund.
These are just a few of a multitude of similar comments received, along with myriad comments about other myths like: Congress doesn’t pay into Social Security; illegals receive SS benefits; etc., etc., etc. There were, of course, also some very well thought out and valid member comments which honestly and fairly addressed the issue of Social Security solvency.
Setting the Record Straight
Nevertheless, after so many years trying to dispel the myth that Congress or any President has stolen Social Security money, I’m once again compelled to set the record straight – no politician, either Congressional or Presidential, has even stolen money from Social Security. As recently as 2020, there was nearly $3 trillion in Social Security money reserved for SS beneficiaries – a total which has since dwindled to about $2.56 trillion in order to pay full benefits. That reduction is because current SS income is less than needed to pay full monthly benefits, and SS reserves are now used to pay 100% of benefit obligations.
About Social Security Revenue
Social Security revenue (mostly from payroll taxes) is immediately invested by the U.S. Treasury in interest-bearing Special Issue Government Bonds on Social Security’s behalf. These bonds are redeemable, as required, to pay Social Security costs, almost entirely to pay benefits for those who are eligible (which does not include illegal aliens). Social Security income and assets are protected by law from any use other than paying Social Security benefits and a very small SSA operating expense (SS administration costs are only about 0.5% of income). More than 99 cents of every SS dollar received goes to pay SS benefits.
Defining the Problem
At one time, Social Security revenue was more than needed to pay benefits, and all excess income went into the Social Security Trust Funds in the form of those Special Issue interest-bearing Government Bonds. In about 2010, revenue from payroll taxes became insufficient to pay 100% of benefits, but interest on those reserved bonds as well as income tax on Social Security benefits kept the program in the black until 2020. In that year, Social Security combined income (payroll taxes, interest on bond investments, and taxes on SS benefits) fell short of that needed to pay full benefits. And that is when the reserved Social Security funds held by Social Security started being used to pay full benefits to everyone. Those reserved assets in the Social Security Trust Funds are forecasted (by the Trustees of Social Security) to be fully depleted in 2032.
AMAC poll results and “the Myth”
Therein lies the problem the recent AMAC Member poll sought opinion on, with this question:
Should Congress act now to prevent automatic Social Security benefit reductions projected for 2032?
The overwhelming majority (over 98%) of the many thousands of AMAC members who responded said “yes” – Congress should act now to reform Social Security to full solvency. And AMAC is promoting a reform plan to Congress which accomplishes that very goal. But please don’t fall for the myth that, if Congress would only pay back the money which was stolen from Social Security, that would be a viable solution to Social Security’s financial woes. No Social Security money has ever been stolen, so there is nothing to repay!