27 Nov 2023 4:28 pm
Most people have that same understanding .Buffalo » 27 Nov 2023, 4:00 pm » wrote: ↑ You are right in theory, but the payroll tax both employee and employers goes into the general fund and replaced with worthless government "IOU'S" (Treasury Bonds) and promptly spent. You have Reagan and Greenspan to thank for the biggest heist in American history. With the help of Alan Greenspan, Reagan pulled off one of the greatest frauds ever perpetrated against the American people to pay mounting government debt caused by Reagan's tax cuts for his rich buddies.
Instead of being a proud day for America, April 20, 1983, has become a day of shame. The Social Security Amendments of 1983 laid the foundation for 30-years of federal embezzlement of Social Security money in order to use the money to pay for wars, tax cuts and other government programs.
The payroll tax hike of 1983 generated a total of $2.7 trillion in surplus Social Security revenue. This surplus revenue was supposed to be saved and invested in marketable U.S. Treasury bonds that would be held in the trust fund until the baby boomers began to retire in about 2010. But not one dime of that money went to Social Security.
Social Security cannot pay full benefits for a single year without borrowing money. The IOUs in the trust fund are not marketable, and they have no monetary value. They are worthless!
One way to fix the system is to make ALL incomes (earned and unearned) subject to the tax with NO caps on income.
There is another take by some that would disagree:
this is quite a few years old.
The federal government hasn't pilfered a dime from Social SecurityThe fact is that Congress, despite borrowing $2.9 trillion from Social Security, hasn't pilfered or misappropriated a red cent from the program. Regardless of whether Social Security was presented as a unified budget under Lyndon B. Johnson or as a separate entity (i.e., off budget), none of its funding has been conflated with normal federal spending. What's more, Social Security is already generating interest income from the federal government on its borrowing. As of Dec. 31, 2018, the $2.9 trillion in special-issue bonds and certificates of indebtedness were yielding an average of 2.85%. Since these bonds range in maturity from 1 to 15 years, there's plenty of opportunity to take advantage of rising yields and adjust the program's bond investments as needed. Ultimately, Congress' borrowing allowed Social Security to collect $85.1 billion in interest income for 2017, and it's expected to provide $804 billion in aggregate interest income between 2018 and 2027. In other words, when opponents of this borrowing complain about the program not receiving interest, they're simply not doing their homework. Making matters worse, some folks want to see this borrowing repaid in full. Doing so would require the federal government to find $2.9 trillion in borrowing elsewhere if that happened. But more importantly, it would deprive the program of valuable interest income, pushing Social Security into the red very quickly. Cash sitting around in a vault would do no one any good as it'd be losing purchasing power almost every year to inflation. Lastly, regardless of whether Social Security owns government-issued bonds or cash, it doesn't change the asset reserves held by the program. It's $2.9 trillion either way. To suggest that repaying these bonds would put the program on more solid footing is simply not correct, as it'd have no impact on the program's total assets, and it would actually hurt its revenue-generating prospects. Long story short, Congress is in the clear on this one.