Entitlement Funding Social Security

Being a current recipient of social security, I have a little different view of social security than people still paying into it. The text calls social security the largest federal entitlement program. (Mikesell) I have always had a problem calling Social Security an entitlement program just like a welfare program where the recipient has not put a penny into it. The funding for social security came from an employee of a company, since it was deducted from the employee's paycheck each pay interval. The employers matched the employees deposit from their own funds, not from general tax funds. Social Security was a line item on our paychecks for our entire working lifetime. The money was put into a social security lock box for investment into treasury bonds, to be paid out at retirement to the employee.

Social Security started in 1935 with Franklin Delano Roosevelt. It was sold to congress and the people of America as a social welfare program to help the poorest among us, if they got too old. The average lifespan then was 61 in 1935. The minimum age that you could draw social security was 65. Therefore, it was not designed to pay out. It very soon became and was sold as an insurance program. As a welfare entitlement program, it was unconstitutional. FDR was losing every Supreme Court test of his alphabet soup programs, by five to four decisions. After he threatened to pack the Supreme Court in his favor with an additional four justices to make thirteen, one justice began to rule in his favor. FDRs alphabet programs started to win by five to four margins.

In the 1968, social security was massively over funded. Lynden Johnson needed money for his great society legislation, and his war on poverty, so he and the democratic congress stole Social Security funding for those purposes, which included his war in Vietnam. I use the word stole because that is exactly what the democrats did when they moved it to the general fund with no provision to return it to the social security trust fund. This started the change of social security from a social insurance program, to an entitlement welfare program.

Now that the lock was off the Social Security safe, later congresses stole from it also. Then along comes Jimmy Carter saying that Social Security fund is broke. He raised the tax for Social Security to 7.5% for every wage earner and matching amounts from the employer, with few exceptions. The average life span was 74 in 1977 with no change in the payout date of 65. Only today with the average lifespan of 80 is there any talk about changing the payout date.

Now if you look at Social Security as an insurance program that was raided by politicians wanting to buy votes, for their reelections, you may get a different perspective. In the very beginning, it was an entitlement program. Then to keep it constitutional, it was changed to an insurance program, with thieves at the gate guarding the money.

In 2011 the payroll tax cut was started. It took the social security deduction from 6.2 percent to 4.5 percent. With a nearly bankrupt Social Security, the difference can only be made up with the general fund, which completes the transformation from a social insurance program to an entitlement program, just like any welfare program. With the social security as part of the general fund, it is open to any type of tomfoolery that the rulers in Washington wish to perpetrate on the general population and exclude them-selves from participation.

References

Mikesell, John L. Fiscal Administration eighth edition. (2011) Wadsworth Boston MA 02210