Social Security and the Budget

Thirdway.org shows a US taxpayer earning the 2009 median income of $34,140 paid $5,400 in federal income tax and Federal Insurance Contributions Act (FICA for SS & Medicare); this equals 15.8% or two months of their income. I’m guessing that this wage earner was most likely married and/or with children which reduces his/her debt when compared to a single person. (I don’t have the 2010 information.)

What I gathered from the web site is: 30.9% of the tax money went to Social Security (SS) and Medicare; 9.8% went to combat operations, military personnel, veteran benefits and military retirement; 7.1% went to Medicaid; 5.3% to interest on the national debt; 1.5% to education, including Head Start and Pell College grants; 1.2% to federal highways; .09% to health research (NIH), .09% to foreign aid and the remaining 42.4% went to various agencies (Congress, NASA, IRS, EPA, FBI, DEA, and National Parks) as well as subsidizing Amtrak, the Smithsonian Museum, the arts, etc.). Please remember that the website and I cannot give an accurate picture of how money is really spent because all expenses are intermingled just like the gyms for our elected officials are. In case you’ve forgotten we were told that for national security reasons we taxpayers were not privy to the complete cost of the 2 gyms and 1 pool. The House Appropriations Committee then came around and said the gyms’ costs are hidden: maintenance staff paid out of House Office Building fund, electricity/heating out of Power Plant Fund, membership fees pays for equipment, and the rest is funded by taxpayers but they were unable to determine the full cost as Congress has fought efforts at transparency.

When it came to passing the current budget the biggest problems were SS/Medicare and raising the debt limit. Ann Coulter and others said if the debt goes up taxes must go up. She also said that although Reagan made cuts and brought in more money, the government spent $3 for every $1 brought in. She says the $3 was spent on Medicare, social security and other benefits. Records show that the gross debt declined after WWII, declined from 28% to 26% during the 1970s, and it quadrupled during the Reagan and Bush era (1980 to 1992). Reagan raised the debt limit 18 times. George W. Bush raised the limit 7 times which is understandable with the wars against Al Qaeda.  

I don’t believe that when SS was implemented in 1935 that it was intended to be the Ponzi scheme that Rick Perry claimed. This temporary measure turned into a permanent expense because the government knew people wouldn’t save for retirement. The problem, as I see it, is that SS and Medicare money was not placed somewhere to gain interest, it was included in annual revenue and used for other things. The government continues to collect SS and Medicare money and this money is not subtracted from the cost. What I mean is: if the government is collecting $40 billion and paying out $45 billion the actual expense is $5 billion. Additionally, SS is being paid to people who have not complied with the 40 quarters requirement. In my opinion, such a payment, whether for disability or another reason, should come from welfare or some other subsidy, not SS. In looking at my SS statement and based on what I will soon receive ($18,000 a year), I would have to be on SS for over 8 years before breaking even with my contributions and those of my employer (almost $150,000). If my funds were placed somewhere to earn interest for the 38 years I did put into the system and on the balance as I collect, I would be able to support myself (based on $1000 over a 25 year period earning over $5000) for another 35 - 40 years. There are people who die before collecting 20 years of SS. If they have no spouse or dependents to collect their money and it earned interest, the pot would be bigger for the rest of us. This same logic would apply to the Medicare paid ($34,402) which I can’t use yet. It doesn’t help the budget when it’s said that Medicare overpaid nursing homes and hospice care rose 70%. I was happy to hear that a 3.5% cost of living raise (total $26 billion a year) is coming for SS recipients but rising health costs need to be looked at, especially since Medicare benefits are to be reduced.

Balancing the budget on the backs of people who worked and defended this country is ludicrous. A government not supporting its people (reducing SS and Medicare) because of poor bureaucratic decisions made years ago should be unacceptable; they need to work harder to find a way to avoid such an action.