Slider,
I just finished an E-Book on this subject and there “ain’t no” money in the Social Security or Medicare Trust Funds – Just IOUs! And, the IOUs are as bogus as the tax and accounting schemes that created them.
Extract:
Social Security Trust Fund Surplus - Myth
(A Social program with no Security, no Trust, no Fund, and no Surplus)
QUOTE:
pages 20-21: In February 2005, President Bush, in several speeches to arouse supports for Social Security, Private Retirements Accounts (PRA); said this:
"As a matter of fact, in 2018, the system goes into the red. And by the way, there's not a Social Security trust. In other words, people think your money goes into the trust and it's held for your account and then you get it out. That's not the way it works. It's pay as you go. It goes in and it goes out. And to the extent that there's money more than the retirees receive, like it is today, it goes to other programs. And so, what you've got is an IOU, kind of a bank of IOUs. It's an important concept."
President Clinton said this:
"Trust Fund balances are available to finance future benefits...but only in a bookkeeping sense...they do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes or borrowing." --President Bill Clinton in his Analytical Perspectives section of the 2000 budget.
June O'Neill, former Director of the Congressional Budget Office (CBO) at the CATO Institute's Conference for Women and Social Security:
"It holds no real assets. Consequently, it does not generate funds to pay future benefits. These so-called trust fund 'assets' simply reflect the accumulated sum of funds transferred from Social Security over the years to finance other government operations,"
Advice to both Presidents and to the public has been misleading. There are no surplus tax revenues to place in the Social Security Trust Fund because of Federal Income Tax (FIT) and Federal Insurance Compensation Act (FICA) laws that direct employers to commingle federal taxes withheld from employee paychecks. (Note: Even if surplus balances did exist, spending the money on something else and putting IOU’s in a government account is not an appropriate means of building assets for future beneficiaries.) Further, spending “make believe” surplus cash that doesn’t exist and putting IOUs in a phony Trust Fund evades the law that requires that FICA (OASDI-HI) taxes can only be used to pay Social Security and Medicare benefits, plus program management expenses. The “make believe” FICA surplus is money confiscated from workers by their employers so corporations can afford to build modern factories in low-wage countries, overseas.
Commingling FIT & FICA Taxes Withheld from Employees
Business expense deduction of employee-paid FICA & FITW taxes reduces corporate tax liabilities by $100s of billions every year and deprives the U.S. Treasury of equivalent amounts. These accounting practices unjustifiably reduce corporate taxes, cause federal deficits to surge out of control and distort Social Security and Medicare assets and liabilities, and make understanding US budgeting almost impossible. The government is fooling the people and itself.
Social Security and Medicare (FICA) Taxes, US Treasury: “The Federal
Insurance Contributions Act (FICA) is a federal law that requires two separate taxes be withheld from employee wages: a Social Security tax and a Medicare tax. The law also requires an employer to pay the employer's portion of these taxes at the same time. The employer's portion will be the same amount as that required to be withheld from employees' wages. Each of the FICA taxes is imposed at a single flat rate.” In 2006, the Social Security Tax is 6.2% on a ceiling of $94,200 or $5840.40; the Medicare Tax is 1.45% No limit, no ceiling.
The 2006 Social Security Trustees “Summary of 2005 Trust Fund Financial Operations” reported that the OASDI Trust Funds received total income of 701.8 billion (Contributions 592.9, Taxation of Benefits 14.9 and Interest 94.3) and expended 529.9 billion. "Assets increased by $171.8 billion in 2005 to $1.86 trillion because income to each fund exceeded expenditures." The report also stated: "Over the 75-year period, the Trust Funds require additional revenue equivalent to $4.6 trillion in today's dollars to pay all scheduled benefits. This unfunded obligation is $600 billion higher than the amount estimated last year.”
Comment: Like the two Presidents, the Trustees have not adjusted reported FICA revenues for Corporate “Business Expense” tax deductions.
2005 Business Expense Deductions of FICA and Individual FIT Taxes:
The actual combined FICA taxes (contributions) amount of $592.9 billion reported to SSA are reduced by an estimated “Business Expense” tax deduction of $207.5 billion. This means the IRS only receives an estimated $385.4 billion in actual cash instead of the $592.9 billion reported to the SSA. Interestingly, the NET income of $385.4 billion in contributions plus interest and benefit tax revenue of $109.2 is only $494.6 billion. That is $35.3 billion less than the 2005 benefit expenditures of $529.9 billion. Using real math instead “fuzzy” math exposes the fraud. The so-called Social Security Trust Fund SURPLUS of $171.8 billion reported by SSA in 2005 transposes to an estimated $35.3 billion dollar DEFICIT!
UNQUOTE
For more please read the FREE E-book: "Getting Ready for Hard Times" debtism.com
Yesterday I got over 1200 hits on my debtism.com website, the vast majority of which were downloading the E-book. It has also been a topic of discussion on:
Prudent Bear prudentbear.com
and Gold is Money goldismoney.info
chat forums.
To date, NOT ONE visitor has challenged my interpretation of law that lead to these perspectives. Before publishing the E-Book, legal points were discussed with counsel, tax practitioners, an economics professor, and the local newspaper.
Following is an extract of letter to the Editor from John Koraska to the Tyler Morning Telegraph, published on the Op-Ed page, September 7, 2006
"Politicians Making SS Failure Probable"
>>>One irrefutable legal fact is: An employer may retain approximately one-third of the individual Federal Income Taxes and Federal Insurance Contribution Act taxes withheld from employee paychecks; although workers are led to believe those taxes are sent to the Internal Revenue Service or the Social Security Administration.<<<
(Note: I discussed this with the Opinion Editor and he wouldn't have printed the letter if it couldn't be documented.)
While the Social Security Trustees CLAIM there is a $1.86 trillion surplus that will grow until 2017-2018, I have documented THERE IS NO surplus, the money is spent faster than it is coming in.
I posted this on BIG DOG’s Boom Boom thread, but he asked me to stop because it wasn’t the appropriate forum for this discussion. If after reading this, you share that view, just say so and this will be my last post on the subject. TIA
SargeK |
