Thursday, February 10, 2005

Billmon has outlined the anatomy of a scam. 

Anatomy of a Scam

After Social Security numbers were assigned, the first Federal Insurance Contributions Act (FICA) taxes were collected, beginning in January 1937. Special Trust Funds were created for these dedicated revenues. Benefits were then paid from the money in the Social Security Trust Funds. Over the years, more than $4.5 trillion has been paid into the Trust Funds, and more than $4.1 trillion has been paid out in benefits. The remainder is currently on reserve in the Trust Funds and will be used to pay future benefits.
Social Security Administration
A Brief History of Social Security
March 2003

In the early years, the OASI program was funded on a modified-reserve basis. It was intended that a sizable fund would be built up, so that interest earnings could help to finance the outgo . . . Over the years, the original emphasis on building up and maintaining a large fund was reduced. Gradually, the funding basis shifted, in practice, to what might be called a current-cost or pay-as-you-go basis.
Report of the Greenspan Commission
Appendix J: Financial Status of the Social Security Program
January 20, 1983

The National Commission has agreed that there is a financing problem for [Social Security] both the short run, 1983-89 (as measured using pessimistic economic assumptions) and the long range, 1983-2056 (as measured by an intermediate cost estimate) and that action should be taken to strengthen the financial status of the program.
Report of the Greenspan Commission
Findings and Recommendations
January 20, 1983

We believe we express the views of all members of the commission when we say that it is our hope that the economy will perform better than we assumed when we made our estimates and that a larger reserve cushion will accumulate.
Greenspan Commission Report
Statement of Sen. Robert Dole and Rep. Barber Conable
January 20, 1983

Social Security tax rates for employers and employees will increase to 7.0 percent in 1984, 7.05 percent in 1985, 7.15 percent in 1986-87, 7.51 percent in 1988-89 and 7.65 percent in 1990 and thereafter . . . Raises the age of eligibility for unreduced retirement benefits in two stages to 67 by the year 2027. Benefits will still be available at age 62, but with greater reduction.
Social Security Administration
Summary of the 1983 Amendments
November 26, 1984

This bill demonstrates for all time our nation's ironclad commitment to Social Security. It assures the elderly that America will always keep the promises made in troubled times a half a century ago. It assures those who are still working that they, too, have a pact with the future. From this day forward, they have one pledge: That they will get their fair share of benefits when they retire.
Ronald Reagan
Remarks on Signing Social Security Amendments of 1983
April 20, 1983

Actual short-term experience has generally been more favorable than estimated at the time of the 1983 amendments, with income exceeding outgo by more than had been projected.
Report of the Advisory Council on Social Security
Appendix I: Developments since 1983
January, 1997

Total benefits paid in 2003 were $471 billion. Income was $632 billion, and assets held in special issue U.S. Treasury securities grew to $1.5 trillion.
Board of Trustees of the Social Security Trust Funds
2004 Report
March, 2004

Benefit payments and program administrative costs are the only purposes for which disbursements from the funds can be made. Program revenues not needed in the current year to pay benefits and administrative costs are invested in special non-negotiable securities of the U.S. Government on which a market rate of interest is credited. Thus, the trust funds represent the accumulated value, including interest, of all prior program annual surpluses, and provide automatic authority to pay benefits.
Board of Trustees of the Social Security Trust Funds
2004 Report
March, 2004

Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. We're on the ultimate pay-as-you-go system -- what goes in comes out. And so, starting in 2018, what's going in -- what's coming out is greater than what's going in. It says we've got a problem.
George W. Bush
Remarks at the Department of Commerce
February 9, 2005