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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Social Security is NOT Retirement Insurance
    #2265823 - 01/23/04 03:03 PM (13 years, 4 days ago)

SOCIAL SECURITY IS NOTHING BUT A TAX & WELFARE SCHEME DISGUISED AS A RETIREMENT PROGRAM
by Robert Greenslade

I recently watched, in disbelief, as two friends engaged in a screaming match in my kitchen over Social Security. One individual asserted there would not be any money left in his Social Security retirement account because President Bush was stealing the funds to pay for the war in Iraq. He claimed this is unconstitutional because the federal government is contractually obligated to pay him retirement benefits for all the money"contributed" to his account. The other individual countered that the President could not spend "all his money because it is locked away in the 'Social Security Trust Fund.'" He stated the "contributions he makes from his wages, which are matched by his employer, could only be spent to pay out Social Security benefits. Thus, the President could not spend Social Security contributions to pay for the war in Iraq." After five minutes of listening to the yelling and political barbs, I decided it was time to sit my friends down and attempt to interject some facts into their debate.

When I told them that there is no"retirement trust fund" because their so-called "contributions" are actually additional income taxes that are deposited in the federal government's general fund, and Social Security is nothing but a federal welfare scheme disguised as a retirement program, you could have heard a pin drop. Since this was contrary to everything they had been told about Social Security, they demanded I substantiate my assertions.

I showed them that immediately after going into effect in 1935, various parts of the Social Security Act were challenged as unconstitutional and reached the Supreme Court for decision in 1937. In Helvering v. Davis (301 US 619), the Court sustained the Act under Congress' power to impose taxes. In its decision, the Court revealed some of the truths about Social Security.

First, employees are not making contributions into a retirement program, but are, in reality, paying a "special income tax" which is deducted from their wages and paid to the federal government by the employer. This "special income tax" is imposed on the employee for the so-called "privilege" of being employed by an employer.

Second, employers are not making matching contributions into a retirement program for their employees, but are, in reality, paying an excise tax for the privilege of having individuals in their employ.

Third, there is no retirement trust fund. The Court stated: "[t]he proceeds of both taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way." (Bold added) Neither of the taxes are set aside to pay Social Security benefits. Both are general fund income taxes, which are used to pay the everyday expenditures of the federal government.

Since one of my friends is self-employed, I told him that he is paying at least 3 different federal income taxes. One on his so-called income and two under Social Security. Two he asked? Yes I replied because for tax purposes, you are treated as the employee and the employer all in one. This means, if you read between the lines, that you are paying one tax for the "privilege" of being employed by yourself as the employee, and the other for the "privilege" of employing yourself as the employer.

At this point, my friends were outraged and wanted to know why Social Security is a tax scheme as opposed to a legitimate retirement program. I told them the answer is basically two-fold. Since the federal government was never granted the constitutional authority to force the American people to participate or contribute to a retirement program, the only way Congress could extract the money was through taxation.

The second reason is it's a covert way to tax the American people. Since Social Security is a tax scheme disguised as a retirement program, Congress can structure the rates so the federal government collects more money in taxes than it pays out in benefits without enraging the people. Congress can then pat itself on the back and announce to the nation that there is a Social Security surplus for the year. This projects the illusion that Congress is fiscally responsible and doing a wonderful job protecting the retirement of seniors.

In 1999 for example, then Senate Majority Leader Trent Lott stated that the projected federal budget surplus was $110 billion all from Social Security taxes. TranslationSocial Security taxes in 1999 generated approximately $110 billion more than was paid out in so-called benefits. And, since these were general fund dollars that were not earmarked in any way, Congress was free to spend the money as it saw fit.

My friends were now seething with anger and wanted to know why individuals who have not paid a penny in Social Security taxes can receive various benefits under the program. I told them the answer is quite simple. Social Security is nothing but a government welfare or assistance program. The Founders would have classified it as a form of "poor relief." In 1960, in Flemming v. Nestor (363 US 603), the Supreme Court stated: "...eligibility for benefits...[does] not in any true sense depend on contribution through the payment of taxes." ; If Social Security was a legitimate retirement program, only those individuals who had contributed to the program would be eligible for benefits. But, since Social Security is a tax and social welfare scheme, Congress has total discretion to determine the qualifications for receiving various benefits under the program.

If Social Security is a welfare program, one of my friends asked, does that mean the federal government is not contractually obligated to pay out promised benefits even though he had paid into the program for 40 years? That's correct I replied. The Supreme Court, in the Nestor case, ruled that individuals paying Social Security taxes do not acquire any property or contractual rights, as they would in an insurance or annuity plan. In addition, the Court stated: "[c]ongress included in the original Act, and has since retained, a claim expressly reserving to it [t]he right to alter, amend, or repeal any provision" of the Act.

The truth about Social Security was finally beginning to sink in. One of my friends asked if he could take a stab at explaining Social Security. I told him to go ahead. Social Security, he said, is nothing but a tax and welfare scheme masquerading as a legitimate retirement program. Payroll deductions are not retirement contributions and do not guarantee the receipt of any benefits. They merely qualify the individual for consideration in a federal charity program that can be modified at any time. If Congress decided to abolish Social Security, the American people would not have any legal claim for promised benefits. You've got it I replied!

At the conclusion of the discussion, my friends were finally in agreement Social Security is one of the biggest scams ever perpetrated on the American people and nothing but a tax and welfare scheme disguised as a retirement program.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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OfflineAzmodeus
Seeker

Registered: 11/27/02
Posts: 3,392
Loc: Lotus Land!! B.C.
Last seen: 12 years, 21 days
Re: Social Security is NOT Retirement Insurance [Re: Evolving]
    #2265839 - 01/23/04 03:11 PM (13 years, 4 days ago)

hmm, interesting.  I have no idea if its similar in canada, but i don't invest in rrsp's that for sure. :thumbdown:


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"Know your Body - Know your Mind - Know your Substance - Know your Source.

Lest we forget. "


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InvisibleInnvertigo
Vote Libertarian!!
Male

Registered: 02/09/01
Posts: 16,296
Loc: Crackerville, Michigan U...
Re: Social Security is NOT Retirement Insurance [Re: Evolving]
    #2265934 - 01/23/04 04:02 PM (13 years, 4 days ago)

i don't plan on SS being there when i retire anyhow, too bad it's not privatized.


--------------------

America....FUCK YEAH!!!

Words of Wisdom: Individual Rights BEFORE Collective Rights

"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." -- Thomas Jefferson


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Invisiblecarbonhoots
old hand

Registered: 09/11/01
Posts: 1,351
Loc: BC Canada
Re: Social Security is NOT Retirement Insurance [Re: Evolving]
    #2266409 - 01/23/04 06:24 PM (13 years, 4 days ago)

Markets alone are not nearly enough to ensure the economic security of the majority of citizens

This lesson should of been well learned by now.


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  -I'd rather have a frontal lobotomy than a bottle in front of me

CANADIAN CENTER FOR POLICY ALTERNATIVES


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: Social Security is NOT Retirement Insurance [Re: carbonhoots]
    #2266626 - 01/23/04 07:44 PM (13 years, 3 days ago)

Your assertion is debatable. Government meddling will not guarantee you economic security. The social security systems of all the 'modern Western Democracies' are in danger of bankruptcy, they are actuarially unsound. Probably the worst of the lot is Germany's. Simple economic reality will catch up with us. By the time I am ready to retire, there will be NOTHING available. Those extracting money from the system are pulling out more than they put in, as the average age of the populations increase and a greater percentage of the populations move into retirement, the truth of what I am telling you will become apparent. If you are smart, you will not rely on your government's retirement system (unless you are very near the retirement age right now).


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


Edited by Evolving (01/23/04 07:47 PM)


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Invisibleafoaf
CEO DBK?
 User Gallery

Registered: 11/08/02
Posts: 32,665
Loc: Ripple's Heart
Re: Social Security is NOT Retirement Insurance [Re: Evolving]
    #2266645 - 01/23/04 07:50 PM (13 years, 3 days ago)

good facts


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All I know is The Growery is a place where losers who get banned here go.


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Invisiblecarbonhoots
old hand

Registered: 09/11/01
Posts: 1,351
Loc: BC Canada
Re: Social Security is NOT Retirement Insurance [Re: Evolving]
    #2266997 - 01/23/04 11:31 PM (13 years, 3 days ago)

What sort of econmic realities do you refer to? NAIRU? That kind of shit?

Of course we can afford social security, medicare, welfare, unemployment insurance, etc...we have for years. These social programs make up only a minor percentage of the GDP of rich, western countries. Usually, intrest payments on the national debt are more than all these programs combined. It's financing deficits will T-bills that is unsustainable.

Canada has balanced it's budget for many years in a row while still having social programs. Even though it has cut a tot of taxes.

Yes. We can afford to have a civilization.


--------------------
  -I'd rather have a frontal lobotomy than a bottle in front of me

CANADIAN CENTER FOR POLICY ALTERNATIVES


Edited by carbonhoots (01/23/04 11:33 PM)


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: Social Security is NOT Retirement Insurance [Re: carbonhoots]
    #2267208 - 01/24/04 02:13 AM (13 years, 3 days ago)

Quote:

carbonhoots said:
What sort of econmic realities do you refer to? NAIRU? That kind of shit?



I was referring to the expenses of government funded retirement, AKA 'Social Security.' My explanation was quite clear. If you are unable to understand it or believe it, that is to your detriment not mine. The current level of expenditures WILL increase as the populations age. Try to follow along now.

1) Current government retirement funding generally comes out of current revenue. THERE IS NO SOCIAL SECURITY TRUST FUND, it's all IOU's from the government, in other words -DEBT!!!

2) As more people hit retirement age, more funds will be paid out.

3) The percentage of elderly people in western societies is INCREASING.

4) This means that the percentage of working age people is DECREASING.

5) Birth rates in western nations are at below replacement levels.

6) In order to continue to pay out benefits at current levels (adjusting for inflation), taxation on working age people will have to be increased tremendously. Estimates in the U.S. are for an average 80% income tax (this is not just on the wealthy, there just aren't enough of them). Other western countries fare much worse because they have lower birth rates and lower immigration rates.

7) Current government retirement benefits DO NOT take into account changing demographics and make no rational actuarial assumptions.

Quote:

Yes. We can afford to have a civilization.



Only if people stop believing in socialist fairy tales. Funding has to come from somewhere for all the government goodies. Those who choose to ignore the facts, do so at their own risk. I for one, am taking rational steps to assure that I will be able to take care of myself and my wife. You can go on believing that governments can wave magic wands and everything will be all sunshine and peppermint, the facts tell a different story to those who are intelligent enough to understand. I suggest you read Aesop's fable, "The Ant and the Grasshopper" you could really learn a lesson from it.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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Invisiblecarbonhoots
old hand

Registered: 09/11/01
Posts: 1,351
Loc: BC Canada
Re: Social Security is NOT Retirement Insurance [Re: Evolving]
    #2267339 - 01/24/04 03:30 AM (13 years, 3 days ago)

I chop my firewood before it rains.

I suggest you look at countries like Norway, Sweden, France, Iceland and even Canada, who despite having greater natural challenges, manage to have much lower poverty rates and infant mortality rates than USA. (lower obesity rates too)

Socialist fanatasies? Like the one about multi-billion dollar companies paying living wages, or regulation of capital markets to ensure investment is tied to development?

How 'bout the one involving publicly owned utilities. We live in a fantasy world in BC, with the power company being publicly owned. 5.7 cents for a kilowatt hour, and any profit goes to the government, which they put towards highways, schools, hospitals and other things.

Maybe you think it would be better if a small group of Americans owned BC Hydro, charged more for the electricity, and kept nearly all the money to themselves while complaining that 'taxation is theft'.

I could go on.

What are you trying to say about old people and the fact that they are increasing and what not, that the math shows there will be massive hoards of poor old people? Only a few will be able to afford retirement?


Yes there are enough 'rich people'. The average CEO makes in a year what the average employ would make in 500 years. How bout that?

Why don't you complain about the 400+ billion a year military? That amount matches THE REST OF THE WORLD'S!!!

You seem to believe in Capitalist nightmares.


--------------------
  -I'd rather have a frontal lobotomy than a bottle in front of me

CANADIAN CENTER FOR POLICY ALTERNATIVES


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: Social Security is NOT Retirement Insurance [Re: carbonhoots]
    #2268769 - 01/24/04 06:35 PM (13 years, 3 days ago)

Quote:

carbonhoots said:
I suggest you look at countries like...



Hello, is anybody home? This thread is about government mandated and taxpayer funded schemes dressed up as 'retirement insurance' and their related fiscal problems. Try to keep up.

Quote:

Socialist fanatasies? Like the one about multi-billion dollar companies?(insert standard leftist drivel here)



No, silly. Socialist fantasies as in thinking that governments can keep spending and spending, and promising more and more without any consideration to the economic realities and liabilities of their programs. Too often questions are ignored such as, 'What will the future outlays be in relation to sources of funding?' and 'What kind of adjustments will be necessary, knowing demographic trends?'

Quote:

How 'bout the one involving publicly owned utilities....



How about addressing the topic of the thread?

Quote:

I could go on.



... and still not address the topic. Yes, I know.

Quote:

What are you trying to say about old people...



It's not 'trying to say,' I've said it more than once. Re-read the thread or print it out and take it to someone who can explain it to you.

Quote:

Yes there are enough 'rich people'...



No there aren't. Do the math, you could tax all the billionaires in the U.S. at 100% and still not be able to fund the future unfunded liabilities. The vast majority of funding for government programs of necessity comes from the average middle class taxpayer.

Quote:

Why don't you complain about the 400+ billion a year military?



Why don't you try to understand what the topic is and address that instead? For the record, I am against wasteful government spending on the U.S. military, I am against having our troops stationed in over 120 countries across the globe, I am against military adventurism, but THIS HAS NOTHING TO DO WITH THE TOPIC AT HAND.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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