We all know that the internet can be a force for good — spreading knowledge and education to people around the world. But sadly, it also can be an instrument of insanity — a tool that can be corrupted by con artists to spread lies and half-truths to an easy-to-fool public.
I am reminded of this almost daily when people send me emails with links to misleading diatribes about Social Security. There have been many over the years. They are passed around from one naive and uninformed email recipient to the next.
I can’t believe how gullible some people can be. But if you are predisposed to think that Social Security is the biggest fraud ever perpetrated on the American public, then you will believe anything you read on the internet that supposedly proves it.
I’ve addressed similar email scams before. I keep thinking they will go away. But they continue to get tweaked, reworked and rereleased to more and more people. The latest bit of puffery starts out by pointing out that some people die before they ever have a chance to collect Social Security benefits. And the misleading missive then says this proves that the government has mishandled the Social Security program because it wonders what happened to all the money these folks put into the system.
Of course it’s true that over the 80-year history of the Social Security program, millions of people died before they ever had a chance to collect Social Security checks. So where did their Social Security contributions go? Well, the email’s author failed to take into account that the vast majority of those deceased taxpayers left behind widows or widowers who received Social Security benefits on their accounts. Or in the case of deceased younger workers, they left behind tens of millions of minor children who got billions of dollars over the years in monthly survivor’s benefits. (I was one of those kids about 55 years ago — although my share of the billion-dollar pot was all of $22 per month!)
And for every deceased worker who dies with no eligible dependents, there are hundreds of Social Security recipients who live well into their 80s, 90s, or even beyond and who receive far more in benefit payouts then they ever paid in Social Security taxes.
If you want more precise data about where all the Social Security money went, it’s available. The Social Security Administration’s actuaries can account for every nickel ever collected in Social Security taxes — from 1937 to present. You can go to www.socialsecurity.gov. Under “Menu” at the top of the homepage, click on “Actuarial Resources” in the “Research, Policy, and Planning” section, and then select “Trust Funds,” and you’ll find all the information you need to know about all those nickels.
Just as an example, here is a snapshot of Social Security’s balance sheet for 2016 (the most recent complete data I could find).
Total income: $957.5 billion; 87.3 percent of that came from payroll and self-employment taxes; 9.2 percent came from interest earned on trust fund assets; and 3.5 percent came from taxation of Social Security benefits.
Total outgo: $957.5 billion; 95.2 percent of that went to pay monthly checks to Social Security beneficiaries; 0.7 percent went to administrative expenses; 0.4 percent went to the Railroad Retirement Board to cover Social Security benefits paid to RRB beneficiaries; and 3.7 percent remained as assets in the Social Security trust funds.
The silly email then goes on to try to make the point that Social Security is a rotten deal for all Americans. Using some cockamamie math, it determines that had the big bad government not stolen your money from you (in the form of Social Security payroll taxes), you would have been a millionaire living on top of the world.
Historians reading this column will tell you how wonderful things were before the Social Security program was enacted. Everyone was living the good life and all senior citizens retired with Donald Trump-sized nest eggs. Those sure were the good old days!
Actually, more than half of all senior citizens were living below the poverty level before Social Security came along. After 80 years of Social Security, that rate is well below 10 percent.
Then the email trots out the timeworn Ponzi scheme argument, claiming that Social Security is the biggest investment scam in history.
As I have pointed out many times in this column, Social Security is not an investment scheme. It is what its name clearly implies: a “social” insurance system. Because Social Security’s potential beneficiary pool includes almost every man, woman and child in this country, you simply cannot set aside enough capital to fund all future benefits. Like ours, almost every Social Security system on earth (and there are about 165 Social Security programs around the world) runs on a pay-as-you-go basis — with the taxes collected from today’s workers funding benefits payable to today’s Social Security recipients.
If you want to call that a Ponzi scheme, go ahead. But it’s worked in this country for 80 years, and it’s worked in other countries for more than 100 years. It’s simply the only viable way to run a large nationwide social insurance program.
Finally, the viral email goes off on a big rant about politicians who call Social Security an “entitlement.” It’s too bad that word has taken on such a negative connotation. Because you see, Social Security is an “entitlement” in the truest sense of the term. Social Security benefits make up “Title II” of the Social Security Act. So when you become eligible for Social Security benefits, and sign an application for such benefits and your claim is approved, then you are legally “entitled” to those monthly checks. Social Security is just one of many government “entitlements.” It’s simply a legal term. But so many people, including the author of this goofy email, get so darn worked up about it.
