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Claims that Social Security is a Ponzi scheme are just part of a continuing right-wing campaign to smear our most successful, and most popular, government program.

Social Security was created in 1935 to solve a problem:  millions of Americans were living in poverty due to retirement or the death of the family breadwinner.

The solution was simple:  a system where every worker pays in, and in return is guaranteed a retirement income.  Benefits for widows, orphans and the disabled are
also part of the deal.


The system has worked.  Poverty among the elderly has declined from about 60% in the 1930s to about 10% today.

Social Security is not a retirement fund, it is social insurance.  Your taxes are like insurance premiums that qualify you for benefits.  The benefits you receive during your lifetime could be more or less than what you pay into the system.

If you die young and leave behind children, Social Security will pay benefits for your children until they are 18.  No IRA will do that.

If you live to be 110, your Social Security checks will never run out.  No 401K plan will do that.

If you become disabled and unable to work, Social Security has you covered, every month.  No “individualized account” will do that.

Our nation is struggling with huge budget deficits, but Social Security is not to blame.  In 2010, Social Security benefits exceeded Social Security taxes by $49 billion, but that was only about 3% of the federal deficit, and the shortfall was covered by the $2.5 trillion Social Security Trust Fund.   Slashing Social Security because of the budget deficit would be punishing people who did not cause the problem.

Some have argued that the Social Security Trust Fund is a sham, because it is invested entirely in US government bonds, which they call “a bunch of worthless IOUs.”  This flies in the face of basic economics.   An IOU is a promise to pay.  Our entire economy is built on IOUs.   When you deposit money in a bank, what you get back is an IOU, a promise to repay you when you want to make a withdrawal.  The bank lends the money to others, and it receives IOUs.  When you pay with a credit card, the credit card company actually pays the merchant, and an IOU is created from you to the credit card company.

The Social Security Trust Fund is invested in US government bonds for two reasons:  first, it prevents Congress from playing politics with the money; second, US government bonds are the safest IOU in the world, which is why they bear the lowest interest rate.


Social Security scare tactics include claims that Social Security has unfunded liabilities of “over $20 trillion.”  This fanciful figure comes from adding up all future benefits, as if we must have all that future money on hand now.  But Social Security has always been a system where today’s workers are paying for today’s retirees.  It’s worked for over 75 years, and there’s no reason it can’t continue to work.


We fund Social Security the same way we fund the Department of Defense—current expenditures are paid out of current tax revenue.  We know we have huge future defense obligations, due to our treaties with allies, long-term weapons contracts, and the cost of caring for veterans.  Our long-term, unfunded defense obligations are in the trillions of dollars.  This is a scary number only if we assume we have to pay it today, and ignore expected future tax revenues.


Social Security does face a long-term fiscal challenge.  The Social Security Administration projects that by 2036, the Trust Fund will be exhausted, and Social Security tax revenue will be about 25% less than expected benefits.  The payout of Social Security benefits is rising faster than tax revenue due to the retirement of the baby boomers, and longer life expectancy.  This doesn’t mean the system is broken.  It simply means that we need to make adjustments, by raising taxes, lowering benefits, and/or delaying the retirement age.  Small changes enacted now can have a huge impact over the long term.  Some Democrats in Congress have pointed out that requiring those with incomes over $250,000 to pay the same Social Security tax as regular working folks would provide the system with enough revenue for the next 75 years.


Social Security faced a similar challenge in the 1980’s, when it appeared the system would run out of money.  Congress and President Reagan agreed to a package of changes, including tax increases and a later retirement age.  There is no reason changes in the system cannot be made now, preserving the long-term health of Social Security for our grandchildren and beyond.


Mark Fernald was the Democratic nominee for Governor in 2002.


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Social Security was a good system until the Congress started stealing the money to pay for programs we didn't need or want.

When political discussion ensues, I am often reminded of the tale of four blind men describing an elephant. "It's a great wall the one at its side declared.  No said the second as he sat on the ground with his arms around a leg--its a tree!  You are both wrong said the third, Its a great serpent that breathes from the top if its head! The fourth man of course declared them all wrong as he swung from the rope like appendage on the other end!

The Social Security system of the United States Is perhaps the greatest and loftiest social experiment in the history of the world.  It has done what no other governmental system in the history of man has done--allowed its aged, infirm and poverty stricken citizens to live without the need to beg on the streets and live in despair. 


Does this mean it has no problems? Of course not. It worked so well solving its intended purpose that those who managed it came to believe it was an end all, cure all for all the ills and ailments of the entire citizenry. The definition of "need" for those in need changed. The basic premise that "food, shelter, clothing and emergency medical care" should be provided to those "in need" was stretched to include a lifestyle equal to the "median" lifestyle of all citizens. Commodities were demeaning so food stamps were issued and "need" now includes eating out! Government housing and free rent became the norm rather than the exception."Need" now includes a color TV and cable to watch it on. Cell phones are now routinely available to seniors just for the asking--paid for by the government, of course! Emergency medical care now includes the "Houveround---People Pay Little Or Nothing For an Electric Wheelchair!" It costs SS over $2,000.00 each! After gasses were added to the "need" list in medical care, it wasn't long until interocular lens replacement became the norm--cost to the government--over $2000.00 and rising! Any time Congress has an open check book which can be accessed by anyone providing "services" for those in "need" the money will flow like water in a breached dam until it is all gone.

The answer is not in eliminating the system. The answer is redefining the meaning of "need".  "Congress" is not stealing the money, they just can't remember the difference between "need" and avarice.

Calvin Howell


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