The Social Security and Medicare Board of Trustees just came out with their 2024 Annual Report stating that by the end of 2035 the so-called trust funds “will become depleted.” The Board of Trustees are recommending “a broad continuum of policy options that would close or reduce Social Security’s long-term financing shortfall.”
Since the implementation of the Social Security tax, life expectancy has increased by 16 years, and 42 people were paying into the system for every one person receiving benefits. Today only 3 people are paying the social security tax for every one person receiving benefits!
You may be interested in Carl Higbie’s take on this issue, available at Carl Higbie: We're stuck in a broke system that no one wants to fix - YouTube. Unfortunately, his recommendations will not happen unless we repeal the Sixteenth Amendment and for all practical purposes, we must abolish the IRS… please sign our petition, to Abolish the IRS. However, just like Carl Higbie, you ought to be extremely angry about the fraud perpetrated against you by the Government.
Social Security reform or “policy options” 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, raising the age of retirement or increased taxation of existing benefits.
For those who have paid social security taxes throughout most of their working lives, this is NOT a welfare program that should be curtailed no matter how wealthy one becomes.
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[1] 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. This is an example of the camel who got his nose in the tent and the rest of him followed!
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” which is strictly forbidden by the Constitution (Article I). Even many on the Supreme Court violate their oaths to support the Constitution… These are the big troublemakers that will ultimately destroy our fragile Republic unless they do what’s right.
Get a copy of my book, Freedom vs. Democracy, read it, hi-light it, and then send it to your favorite Supreme Court Justice. My book proposes three simple rule changes that can be made by the Supreme Court, which would get us back on track and reverse course so that private property rights and individual freedom takes priority over Government power and control of every aspect of our daily lives. It is available at Amazon.com. But, I digress…
Adding fuel to this “dumpster fire,” we have a National Debt of $34 trillion and growing—unfunded liabilities would easily put the real National Debt above $300 trillion[1]— along 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, all but ensures putting the United States government on the same scorched 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 in earlier periods led to our prosperity, but today, no longer exists in the United States. Proving once again that we do not learn from history.
As Americans, we need to be prepared for the ultimate demise of the U.S. Government, especially if the Democratic Socialists get re-elected and maintain control of the White House.
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, with the election of former President Donald J. Trump on November 5, 2024, we will be able to reduce the size and reach of the federal government. If not, we should abolish this tyrannical behemoth. 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 – The Social Security Trust Fund 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 10th 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 scheme is to make an increase in income taxes more acceptable to Taxpayers by providing a benefit 50 or more years in the future. This is another fraud perpetrated against the American people!
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.”
The average Empire lasted about 250 years. The United States of America reaches its 250-year mark in 2026. Eight years of Obama, with a brief reversal under Trump and a massive Obama third term under the Biden/Harris Administration has put us on track to implode by 2026 or sometime shortly thereafter.
HOWEVER, with the election of Donald J. Trump on November 5, 2024, especially with Republican control of both houses, we may be able to slow-down the inevitable… even reverse course and avoid another civil war. If your blood isn’t boiling, it should be! The United States Government has committed a fraud of epic proportion against all Taxpaying Citizens.
Prepare NOW for an uncertain future! We cannot count on social security. BUY a DRIP a week, using Einstein’s Theory of Compound Interest. In 10-to-15 years, financial independence for life is obtainable regardless of what is happening throughout the world.[2]
And, just as important, vote for former President Donald J. Trump on November 5, 2024, along with ALL Republicans… the Democratic Socialists must be destroyed if we want to save our Constitutional Republic!
Dum Spiro Spero—While I breathe, I hope.
Slainte mhath,
Robert (Mike) G. Beard Jr., C.P.A., C.G.M.A., J.D., LL.M.
[1] This Wage Base for the Social Security Tax is for 2023. In keeping with Government’s perpetual fraud on the American Taxpayer, the Wage Base for 2024 has been increased to $168,600, a stealthy tax increase that happens annually, that, unfortunately, has been accepted without question by American Taxpayers… sad… we need to wake-up!
[2] Dr. Veronique de Rugy, Mercatus Center at George Mason University, estimated the debt to be $222 trillion in 2012 when the National Debt reported was $16 trillion.