The Monthly Treasury Statement issued on Wednesday from the Social Security Administration showed that total spending for the three social welfare programs administered by the agency — the Old Age and Survivors Insurance program, the Disability Insurance program and the Supplemental Security Income program — topped $1 trillion for the first time in history in 2017.
The program first hit $600 billion in spending in 1997, and it took nine years to hit the next benchmark, $700 billion. From there it took between three and four years to hit subsequent $100 billion spending benchmarks. Accordingly, the agency estimates that it will spend $1.6 trillion in 2026. From there it will be just a few short years before all funds are exhausted.
Most sensible observers have been warning for years that the program is in dire jeopardy, with all manner of schemes being proposed to rescue it from oblivion: expanding income brackets, raising both employee and employer “contributions,” slowing down the COLA (cost of living adjustment) or eliminating it altogether being those most often suggested. Some have recommended privatizing at least part of the program, which would still force people to save for their old age but at least would allow them the choice of where best to invest their money.
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On the other hand, there are those who are completely oblivious to the dreadful financial condition of the welfare-state program and think it ought to be expanded. Nancy Altman, president of Social Security Works, an outfit that favors expanding benefits, said, “If the U.S. [Congress] wants to allocate more money to Social Security, there’s no question it can afford to do so. It’s not a question of affordability; it’s a question of values.”
And then there’s Maya Rockeymoore Cummings, the CEO of Global Policy Solutions, a left-wing policy advocate for “disadvantaged” people, who has gone even further. She thinks that Republican attempts to pass income tax cuts without fully funding them will then give them an excuse for not funding Social Security adequately: “They [Republicans] will then say we can’t afford Social Security, Medicare and other safety-net programs. It’s a bait-and-switch situation.”
Cummings comes by her distorted view of the world legitimately: She is married to far-left Democrat Representative Elijah Cummings from Maryland.
Maya Rockeymoore Cummings also criticizes Social Security for being racist. Since African-Americans have a median net worth of just $7,100 (according to a report generated by her group) compared to $111,700 for whites, therefore, she says, “Minorities have a greater reliance on Social Security for most or all of their incomes.” There’s also another racial factor: Black men tend to die at younger ages than their white counterparts and so they aren’t around long enough to enjoy all the benefits from the program.
Given the program’s tenuous financial condition, most people on Social Security will live long enough to see the program run short of money. According to the Social Security Administration, taxes paid to fund Social Security go into the general Treasury for the U.S. government as a whole, and the money is spent; in return Social Security gets an IOU with a promise of interest payments on the money:
Tax income is deposited on a daily basis and is invested in “special-issue” securities. The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.
It is estimated that Social Security will pay out more than it receives in the year 2022. From then on, disbursements will either add to the country’s deficit spending and national debt — speeding the country ever faster toward hyperinflation of our currency and the impoverishment of most Americans — or Social Security’s promises won’t be kept to recipients.
They will be the first to complain, “I’ve paid into Social Security all my life! How dare they take my money away from me!” When checks from Social Security start being drastically reduced, those counting on the program will finally be forced to face the reality: Social Security was never anything more than a Ponzi scheme enforced by the government.
Image: Screenshot from the Social Security website
An Ivy League graduate and former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at LightFromTheRight.com, primarily on economics and politics. He can be reached at [email protected].
