Since Joe Biden’s State of the Union, Lying-Joe, the Democrats, and the mainstream media have accused the Republicans of wanting to reform and cut Social Security and Medicare. Senator Rick Scott (R-FL) is on the record of wanting ALL federal legislation and programs to sunset after 5-years, which quite honestly, could be a good thing for American Taxpayers.
Kevin McCarthy, Speaker of the House, — who has taken President Trump’s advice — is on the record stating that Social Security and Medicare will NOT be touched by the Republicans, BUT all other entitlement programs are fair game. Entitlement programs should be fair game, including the social-welfare benefits within the Social Security Program unrelated to Employer/Employee and Self-Employed Taxable Contributions!
The hypocrite, Biden, despite his recent concern for Social Security, has been advocating for cuts in Social Security as early as 1984 and as recently as 2018, in the name of saving the Social Security Program and balancing the federal budget. In 1995, on the floor of the Senate, Biden stated, “When I argued that we should freeze federal spending, I meant Social Security as well. I meant Medicare and Medicaid. I meant veteran’s benefits. I meant every single solitary thing in government. And I not only tried it once, I tried it twice, I tried it a third time, and I tried it a fourth time.” If Biden had succeeded, the freeze would have cut or reduced the benefits paid out to Social Security and Medicare recipients.
As stated by Ryan Grim, The Intercept (Jan. 13, 2020), “Joe Biden has advocated cutting Social Security for 40 Years.” On the other hand, despite what Lying-Joe Biden keeps insinuating, Senator Rick Scott did not recommend cutting Social Security; Scott wants all federal programs to sunset after 5 years for re-evaluation, modification, or termination. Sunsetting ALL federal programs could be a good thing for ALL American Taxpayers. Because, once a program is started, it never ends! The solution has always been to continue to pour more money into the failing program, resulting in waste, fraud, and the destruction of real wealth creation in the United States. When the Social Security program sunsets, a better program could be implemented, e.g., requiring a real trust fund, independent trustees, investment in securities (DRIPs) rather than fictitious bonds/IOUs, and letting younger taxpayers to be able to opt out and do their own thing. It’s possible, assuming other wasteful programs and fraud are eliminated…
Senator Scott, like President Trump, are successful business executives that want to dismantle the deep state and get rid of the political corruption and waste. Sunsetting ALL federal programs every 5 years or so, rather than wasting more Taxpayer Dollars, might just be a great first step.
Regarding Social Security, reform means tax increases and benefit reductions; and therefore, has become known as the “Third Rail of American Politics,” i.e., touching it means political death, especially from the workers, and the self-employed, who have paid into this two-part scheme for decades and are getting close to collecting payments from the Social Security program, along with those currently receiving Social Security and Medicare benefits, who are looking for increasing benefits, NOT a freeze, reduction, or increased taxation of existing benefits.
Therefore, it is highly unlikely that there will be any significant changes to Social Security and Medicare over the next six years, especially for those currently collecting benefits and those nearing normal retirement age.
A Short History of the Social Security Program
The Social Security Act was signed by President Franklin D. Roosevelt on August 14, 1935, as part of the New Deal passed by Congress, which took effect in 1937. The tax rate was 1% on the Employer and 1% on the Employee with a Maximum Tax Base of $3,000. The self-employed were excluded until January 1, 1951, along with many other groups to include farmers, housekeepers & maids, and nonprofit groups; and for constitutional reasons, State and Federal employees were also excluded.
Medicare and Medicaid did not start until 1966 which was added by the Social Security Act of 1965 as part of President Lyndon B. Johnson’s “Great Society” program.
Until 1994, the Maximum Tax Base for Medicare was the same as Social Security. Since 1994, ALL earnings are subject to Medicare Taxes. In 1966, the combined Social Security and Medicare Rate was 4.2% on $6,600 or 8.4% for both the Employer and Employee. Today, the combined rate on the first $160,200 for both the Employer and Employee is 15.3%. In addition, both the Employer and Employee each pays 1.45% or a combined rate of 2.9% on ALL earnings above $160,200; and, for individuals and self-employment income over $200,000 for singles and $250,000 for couples, an additional 0.9% Medicare surtax is assessed.
Congress has continued to either increase the tax rates or the maximum wage base subject to Social Security and Medicare taxes, or both, in almost every year since 1950. In addition, beginning in 1984, a portion of Social Security benefits became taxable based upon household income, generally $25,000 for singles and $32,000 for couples. The purpose of these changes was to generate more revenue for the U.S. Treasury in the short-term.
Today, with very few exceptions, almost everyone is subject to Social Security and Medicare Taxes. However, unlike most Americans receiving a pittance from Social Security once they retire, Congressional Members and certain Federal Employees participate in the Federal Employees Retirement System (FERS) whereby they can retire on up to 80% of their final annual compensation.
We failed to heed Ben Franklin’s warning about the corruption and growth of government that would result if it became profitable to seek public office. Our Founders received extremely low salaries when necessary, and much of “public business was done gratis” with no retirement benefits paid by American Taxpayers. As Ben Franklin explained to a friend in Europe, “The honor of serving the public ably and faithfully is deemed sufficient.” How things have changed…sad…
The Social Security program is Not the problem. It brings in $1.10 trillion in taxes or 23.35% of the $4.71 trillion of federal revenue estimated for 2023; this does not count the additional $342 billion of Medicare Taxes.
Here’s the Real Problem
The real problems are the power-elites that control government, the Deep State, the political Aristocrats in Congress, and the Executive Branch that believe they have been granted a “Title of Nobility” strictly forbidden by the Constitution (Article I). Also, most political leaders, including many on the Supreme Court, violate their oaths to support the Constitution. This is a big problem that will ultimately ruin our formerly free Republic.
In addition, we have a National Debt of $31.42 trillion and growing, with a move by many of our enemies (e.g., China, Russia, ad infinitum) to remove the U.S. Dollar as the Reserve Currency of the World, putting the United States government on the same path towards destruction as ALL previous Empires throughout history.
As a more recent example, with the collapse of the Berlin Wall in 1989 and the Soviet Union in 1992, bringing a dramatic end to a seventy-year experiment between two alternative ways of organizing an economy; central planning and control by government, i.e., socialism versus private markets or free-market capitalism, which no longer exists in the United States. Unfortunately, history has proven that we do not learn from history. As Americans, we need to be prepared for the ultimate demise of the U.S. Government.
With an enraged American population against an ever-increasing government that has become a leviathan, whose taxing, spending, and regulatory powers are out of control, there is a strong possibility that we can abolish the current federal government. We did it in 1776 and our Founding documents command us to do it again, “. . . whenever any Form of Government becomes destructive . . . it is the Right of the People to alter or abolish it. . .”
However, maybe this time around, we can dissolve the federal government the same way it happened to the former U.S.S.R. in 1992, thereby avoiding a full-blown revolution; and reinstate the limited Republic our Founders gave us. The Government and the American people are not the same. As Americans, we would still have our families, friends, communities, our integrity &; perseverance, and our State and local governments under our control.
The Real Scam or Scheme – The Social Security Trust Fund or Lock Box Does Not Exist
The Social Security Act was part of Franklin Roosevelt’s New Deal legislation, which was successfully challenged by the Supreme Court until the Court’s 1936 term, when the Court capitulated (e.g., a 5-to-4 decision in favor of expansive government powers) “after Roosevelt unveiled his infamous Court-packing scheme–his threat to pack a recalcitrant Court with six new members. Widely touted as ‘the switch in time that saved nine’.” The New Deal Court sided with expansive powers for the federal government and “limited protection of individual rights of liberty and property against both federal and state regulation,” which continues to this day.
The Supreme Court affirmed the constitutionality of the Social Security Act with two decisions on the same day in 1937: (1) Stewart Machine Co. v. Davis, 301 U.S. 548 (1937), 5-to-4 decision; and (2) Helvering v. Davis, 301 U.S. 619 (1937), 7-to-2 decision. According to the dissent, “To provide old age benefits . . . is not a purpose for which the Congress has power to tax. Such a purpose is not for the common defense, or to pay the debts of or to provide for the general welfare of the Government.” As stated by Justices McReynolds and Butler, “the provisions of the [Social Security] act here challenged are repugnant to the Tenth Amendment . . .”
In Helvering, Justice Cardozo delivered the majority opinion supporting the Social Security Act, ignoring the 10 th Amendment and supporting the Act under the broad taxing powers of Congress, i.e., an income tax on employees and an excise tax on employers, conveniently ignoring the requirements of a direct tax on wages, and, failing to make any reasonable argument that the excise taxes met the uniformity requirement under Article I, Section 8 of the Constitution. More importantly – contrary to the belief of the existence of a Trust Fund to pay future benefits – the Court stated, “The proceeds are paid unrestricted into the Treasury as internal revenue collections, available for the general support of Government.”
In a much later case, Flemming v. Nestor, 363 U.S. 603 (1960), the Supreme Court reconfirmed that no one has any legal right to social security benefits, i.e., “a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands. . . Congress included in the original Act, and has since retained, a clause expressly reserving to it ‘the right to alter, amend, or repeal any provision’ of the Act. . . We must conclude that a person covered by the Act has not such a right in benefit payments.” As American’s forced to pay into the Social Security scheme, we should be livid!
Despite the use of the term Trust, as stated by Professor Charles Rounds, “the Social Security system contains nothing that remotely resembles the common law trust. There is no segregation of assets, no equitable property rights, no private right of enforcement. It is merely a system of taxation and appropriation sprinkled with trust terms to hide its true nature.” In addition, there are no beneficial accounts set up for individual employees and the self-employed who have paid the income taxes.
Furthermore, in this fictitious social security trust fund, which is just an account within the Treasury Department like many other such accounts, it has been said that it contains government bonds that have value, which would be used to pay future benefits. A bond is a contract between two or more parties, for example, to pay interest at a certain rate over time. An individual or party to a contract, i.e., the U.S. Government, cannot enter into an enforceable agreement with itself, which is exactly what it has purported to do with the so-called social security bonds, which are NOT real bonds. These fictitious bonds are merely IOU’s which can only be paid by additional taxes.
The purpose of this whole scam, I mean scheme, is to make an increase in income taxes more acceptable by providing a benefit 50 or more years in the future. This is another fraud perpetrated against the American public!
Since Social Security is currently untouchable because it is political suicide to do so, it will be around until the federal government ultimately implodes. As Professor Rufus Fears stated, “The United States shares the destinies of the great democracies, the republics, and the superpowers of the past.”
Prepare NOW for the inevitable, BUY a DRIP a week, using Einstein’s Theory of Compound Interest. In 10-to-15 years, financial independence for life is obtainable!
Dum Spiro Spero—While I breathe, I hope.
Slainte mhath,
Robert G. Beard Jr., C.P.A., C.G.M.A., J.D., LL.M.