Intelwars retirement Social Security

The True Nature of Social Security Revealed

A friend who opted to take early Social Security benefits at age 62 last late last year was aghast when he recently found out that half of his benefits might be withheld and 85 percent of his benefits might be subject to taxation. An exploration of why these things are true reveals the true nature of Social Security.

Although Social Security was instituted in 1935 as part of Franklin Roosevelt’s New Deal, most Americans are ignorant of its basic operation and true nature.

There are two parts to Social Security, which is technically the Old-Age, Survivors, and Disability Insurance (OASDI) Program. The Old-Age and Survivors Insurance (OASI) program provides monthly benefits to retired workers, families of retired workers, and survivors of deceased workers. The Disability Insurance (DI) program provides monthly benefits to disabled workers and families of disabled workers.

Social Security is supposedly funded by a 12.4 percent payroll tax (split equally between employers and employees) on the first $142,800 of employee income. Self-employed individuals pay the full 12.4 percent, but receive both a reduction in their net earnings from self-employment and a tax deduction equal to 50 percent of the amount of the Social Security tax they paid. One must pay Social Security taxes for a minimum of 40 quarters, or 10 years, to be eligible for benefits, which are figured on the basis of one’s Primary Insurance Amount (PIA) — the average of a worker’s 35 highest years of earnings (up to a particular year’s wage base), adjusted for inflation.

For those born in 1960 or later, the retirement age to receive full benefits is 67. Reduced benefits are available for those who have reached the age of 62. According to the Social Security Administration (SSA),

In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.

For example, if the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent. This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent.

In plain English, if your retirement age is 67, then you will receive 70 percent of your benefit if you retire early at age 62, 75 percent at 63, 80 percent at 64, 86 ? percent at 65, and 93 ? percent at 66. My friend knew this. Most Americans realize this. As recently as 2005, 54 percent of women and 50 percent of men opted to sign up for Social Security at age 62. Now it is down to about 31 percent of women and 27 percent of men.

But what many Americans don’t realize is that half of their Social Security benefits might be withheld and a maximum of 85 percent of their benefits might be subject to taxation.

According to the SSA, “If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2021, that limit is $18,960.” And regarding the taxation of benefits,

  • Up to 50% of Social Security benefits are taxed on income from $25,000 to $34,000 for individuals or $32,000 to $44,000 for married couples filing jointly.
  • Up to 85% of benefits are taxable if the income level is over $34,000 for individuals or $44,000 for couples.

(Income is defined as adjusted gross income + nontaxable interest + half of Social Security benefits.)

For those who retire at their full retirement age, there is no limit on how much they can make. Nothing is deducted from Social Security benefits. However, their benefits are still subject to the same rates of taxation.

And then on top of that, thirteen states — Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, West Virginia) — tax Social Security benefits.

Everyone understands that there are reduced benefits for early retirement. If you want the full benefit, then you have to wait until your full retirement age. But what my friend, and no doubt many other Americans, didn’t realize is that the government would also withhold half of his benefits and tax the rest up to 85 percent. Many other Americans do realize this since, according to the SSA, “More than 40 percent of current beneficiaries pay income taxes on part of their benefits.”

Yet the vast majority of Americans still believe that retirees are entitled to Social Security benefits because they paid into the system their entire working lives.

But that couldn’t possibly be true. Not if the government can withhold half of your benefits and tax you up to 85 percent on the rest of them. If Americans are entitled to Social Security benefits because it is “their money,” then it shouldn’t matter how much money they make after retirement. Their income shouldn’t trigger the taxation of their Social Security benefits.

There is, in fact, no connection between Social Security taxes paid and Social Security benefits received. Benefits are calculated by an arbitrary formula that Congress can change at any time. Even worse, there is no contractual right to receive benefits. When Congress passed the Social Security Act of 1935 (H.R.7260), which was signed into law by Roosevelt on August 14, 1935, it put Social Security benefits in Title II and Social Security taxes in Title VIII with no reference in either title to the other.

So if Social Security is not a retirement plan, a trust fund, an annuity, an insurance program, a savings account, or a pension fund, then what is it? The true nature of Social Security is that it is an intergenerational, income-transfer, wealth-redistribution welfare program that takes money from those who work and gives it to those who don’t. And if that is the case, then Social Security — as much as food stamps, Section 8 housing vouchers, cash payments, and every other form of welfare — should be eliminated.

The post The True Nature of Social Security Revealed first appeared on Tenth Amendment Center.

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Stimulus Addiction Disorder: The Debt-Disposable Earnings Pyramid

This article was originally published by Charles Hugh Smith at Of Two Minds Blog. 

One glance at this chart explains why the status quo is locked on “run to fail” and will implode in a spectacular collapse of the unsustainable debt super-nova.

For those who suspect the status quo is unsustainable but aren’t quite sure why I’ve prepared a simple chart that explains the financial precariousness many sense. The chart depicts the two core elements of a debt-based, consumerist economy: disposable earnings, defined as the earnings left after paying for essentials which can then be used to service debt and debt.

In other words, if all the household earnings are spent on non-discretionary expenses (rent or mortgage, taxes, food, utilities, healthcare, etc.) then there is no money left to pay the interest and principal on a loan. Lenders consider this household uncreditworthy for the simple reason that their earnings cannot support the monthly nut of debt service (interest and principal).

Note the word earnings as opposed to income. Social entitlements such as Social Security are income but they are funded by taxes paid by those with earnings. (All of America’s social entitlements are pay as you go–the trust funds are PR fiction.) The investment income (interest) paid to owners of Treasury bonds is also paid by taxes on earnings.

All the interest and principal of the debt is ultimately paid out of earnings, either private-sector debt paid directly out of wages or public-sector debt paid out of taxes which are paid out of earnings.

The problem with servicing debt out of income is two-fold: one, earnings of the bottom 95% have been stagnant for decades, which means earnings aren’t actually rising in terms of the goods and services they can buy, and two, the cost of non-discretionary expenses (essentials) has been rising, especially the big-ticket costs such as housing, healthcare and higher education.

You see the problem: since earnings are flat and the cost of essentials is steadily rising, there are fewer disposable earnings left every month to service debt. This is a problem in an economy like America’s that depends on debt-funded consumption to fuel “growth.” No increase in debt means no increase in consumption which means no “growth.”

In response, the status quo–the Federal Reserve and the federal government–have played two financial tricks to maintain the illusion that earnings can support more debt: one, the Fed has lowered interest rates to near-zero, reducing the costs of mortgages (but not the sky-high interest rates charged on student loans or credit cards, of course) so the same stagnant earnings can support a much larger mortgage, and two, the federal government has increased its own borrowing to fund various stimulus programs, most of which are corporate welfare to monopolies and cartels in the form of subsidies, tax breaks, government contracts, etc. But as the consumerist economy weakens, the government is increasing its stimulus to households as well–all with borrowed money that is theoretically serviced by taxes on earnings.

Alas, these tricks are not sustainable. Interest rates can’t go lower than zero without bankrupting the banking sector, and federal spending is completely untethered from tax revenues.

The “solution” is obvious: borrow the money needed to service new and existing debt. This is the definition of a zombie economy comprised of zombie companies and zombie consumers that need to borrow more to sustain the illusion of solvency, i.e. that their disposable earnings are sufficient to service all their debts.

Notice that the debt-disposable pyramid is inverted: an ever-larger amount of debt is being piled on an ever-shrinking amount of disposable earnings. The trick of borrowing more to make the payments on the existing debt and fund new consumption results in a compounding of debt, not an arithmetic (linear) increase in debt: debt grows geometrically while the disposable earnings needed to service the debt remain stagnant.

The only “solution” left is Stimulus Addiction Disorder (SAD): the Fed must create trillions of dollars out of thin air to buy the Treasury bonds that are sold to fund trillions of dollars in stimulus–not once or twice, but from now on until the entire travesty of a mockery of a sham collapses under its own weight of flimflammery and fraud.

Artifice, illusion and simulacra are not real, and what’s not real vanishes back into the air whence it came. One glance at this chart explains why the status quo is locked on run to fail and will implode in a spectacular collapse of the unsustainable debt super-nova. SAD, to be sure.

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Goodbye Middle Class: Half Of All American Workers Made Less Than $34,248.45 Last Year

This article was originally published by Michael Snyder at The Economic Collapse Blog. 

If you are making less than $3,000 a month, you have plenty of company, because about half of the country is in the exact same boat.  The Social Security Administration just released new wage statistics for 2019, and they are pretty startling.

To me, the most alarming thing in the entire report is the fact that the median yearly wage was just $34,248.45 last year.  In other words, half of all American workers made less than $34,248.45 in 2019, and half of all American workers made more than $34,248.45.  That isn’t a whole lot of money.  In fact, when you divide $34,248.45 by 12 you get just $2,854.05.  Needless to say, it is not easy to survive in America today on just $2,854.05 a month, and this may help to explain why we have been seeing so many people fall out of the middle class in recent years.

And of course, all of the figures that I am sharing with you in this article are just for 2019.  This year, we have seen more than 63 million Americans file new claims for unemployment benefits as the U.S. economy has imploded during this pandemic, and so the final wage numbers for 2020 could be quite a bit worse than the numbers for 2019 were.  Please keep that in mind as you go through the rest of this article.

Once upon a time in America, a single income could easily support a middle-class household in most cases, but those days are long gone.

The cost of living has been rising far faster than our paychecks have, and as a result, many Americans have been working themselves to the bone just to survive financially from month to month.

To give you an idea of just how bad things have gotten, I would like to share with you some key numbers from the report that the Social Security Administration just released

-32.26 percent of American workers made less than $20,000 last year.

-44.79 percent of American workers made less than $30,000 last year.

-56.46 percent of American workers made less than $40,000 last year.

-65.91 percent of American workers made less than $50,000 last year.

Today, the poverty level for a household of five in the United States is $30,680.

That means that close to half of all workers in this country do not even make enough to get a family of five above the poverty level.


There are tens of millions of Americans that are referred to as “the working poor” because they are living in poverty even though they are employed and are working extremely hard.  Many of you that are reading this article know exactly what I am talking about.  Some of you are working way more than 40 hours a week, and yet there never seems to be enough money at the end of the month.

Sadly, the truth is that our system has evolved in a manner that makes it almost impossible for most Americans to ever build up much wealth.

If you are making the median monthly wage of just $2,854.05, there simply is not going to be much leftover after all of the bills are paid.  First of all, you are going to need someplace to live.  In the middle of the country, you may be able to find something habitable for under $1,000 a month but in most of our major metropolitan areas that simply is not going to be realistic.

Secondly, you are going to need to pay your utility bills.   If you can keep the combined cost of your power, water, phone, television, and Internet bills to about $250 a month, you are doing quite well.

Thirdly, you will need a vehicle in order to get around, and these days it is hard to buy or lease a vehicle for less than $300 a month.  In addition, you will also need insurance, and that will set you back even more.

Fourthly, you will need health insurance.  If you are young and single, maybe you can find a plan for just a few hundred dollars a month, but most Americans pay far more.

Fifthly, you will probably want to eat, and that will cost you several hundred dollars a month as well.

At this point, almost all of your money is already gone, and there are so many expenses that I haven’t even mentioned yet.

And of course you never even started with $2,854.05 in the first place, because all sorts of taxes were taken out of your paycheck before you even got it.

Are you starting to understand why so many families in America are deeply, deeply struggling today?

We have an economy that works for those at the very top of the food chain, but pretty much everyone else is desperately trying to stay afloat.

And now we have entered an economic downturn during which tens of millions of Americans have lost their jobs.  According to John Williams of, if honest numbers were being used the real unemployment rate in the U.S. would be 26.9 percent right now, and that would rival the worst levels that we witnessed during the Great Depression of the 1930s.

Others have come up with similar numbers.  For example, Axios is reporting that the “true unemployment rate” in the United States is currently 26.1 percent

A person who is looking for a full-time job that pays a living wage — but who can’t find one — is unemployed. If you accept that definition, the true unemployment rate in the U.S. is a stunning 26.1%, according to an important new dataset shared exclusively with “Axios on HBO.”

No matter how you want to crunch the numbers, everyone should be able to agree that millions upon millions of Americans are really hurting financially and are deeply concerned about the future.

And they have good reason to be concerned about the future because our economic system is in the process of imploding.

For decades, the greatest debt bubble in the history of the world allowed us to enjoy a level of debt-fueled prosperity that was far greater than we actually deserved.

Now the party is ending, and our society is going to experience an enormous amount of pain as everything changes.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on  In addition to my new book, I have written four others that are available on including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse BlogEnd Of The American Dream, and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial, or health decisions.  I encourage you to follow me on social media on Facebook and Twitter, and anyway that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

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CURRENT EVENTS Intelwars Social Security

Should Social Security Be Expanded?

Time is running out for Rep. John Larson (D-Conn.), the chairman of the House Ways and Means Subcommittee on Social Security.

The Constitution, in Article I, Section 4, mandates that Congress assemble “at least once in every Year.” Each Congress is numbered and lasts two years, with two legislative sessions. The current Congress is the 116th to assemble since the first in 1789. Although congressional elections are held in November of even-numbered years, a new Congress does not begin until noon on January 3 of the following odd-numbered year. The first session convenes on or soon after that date. The second session convenes on or soon after January 3 of even-numbered years. Sessions typically adjourn before the end of the year, although they sometimes run all the way to January 3. All bills introduced during the first or second session that are not enacted by the end of the second session die, although they can be reintroduced in the next Congress.

The Social Security 2100 Act

Reintroducing a bill is exactly what Larson did last year and may have to do again if time runs out on him. On April 5, 2017, in the 115th Congress, Larson introduced the Social Security 2100 Act (H.R.1902) “to protect our Social Security system and improve benefits for current and future generations.” A companion bill (S.2671) was introduced in the Senate the next day by Sen. Richard Blumenthal (D-Conn.).

In a press release accompanying the bill’s introduction, Larson stated,

Social Security is not an entitlement — it’s the insurance Americans have paid for to fund retirement, disability, and survivor benefits through a lifetime of work. Seniors depend on Social Security and no one should be able to retire into poverty. I am committed to taking common sense steps to expand benefits and to make the system solvent for the next 75 years and beyond. The Social Security 2100 Act, will do just that, without adding to the national debt. Social Security is the most successful program in American history, it is time to expand it for the future. This bill will secure your future, your family, and our nation.

A year later, during a House Ways and Means Tax Subcommittee hearing, Larson defended Social Security and promoted his bill to expand Social Security:

Social Security is not an entitlement, it is the insurance that Americans pay for through the Federal Insurance Contribution Act (FICA) with every paycheck. It is exactly what it says, an insurance contribution that we pay into. My bill, the Social Security 2100 Act, would enhance the program, give current beneficiaries a benefit bump, and make the program solvent beyond the 75 year window. We need to come together and work on solutions, not cuts.

Although the bill eventually garnered 174 cosponsors (all Democrats), and was referred to several committees and subcommittees, including the subcommittee on Social Security, it died, as did the companion Senate bill.

Soon after the beginning of the 116th Congress, on January 30, 2019, Larson reintroduced the Social Security 2100 Act (H.R.860) in the House, with 201 cosponsors, while Blumenthal reintroduced his companion bill (S.269) in the Senate. In a press release accompanying the bill’s introduction, Larson stated,

Today, over 200 Members of Congress came together on the anniversary of President Franklin Delano Roosevelt’s birth to honor his legacy, and to enhance and expand the nation’s most successful insurance program, Social Security, which touches the lives of every American. With 10,000 baby boomers becoming eligible for Social Security every day, the time to act is now. The Social Security 2100 Act will provide economic security not just for today’s seniors but for future generations too.

A brochure put out by Larson’s office summarizing the Social Security 2100 Act says about Social Security,

You’ve paid for it.

It’s not an entitlement.

It’s an earned benefit.

Now, we have to protect it …

The brochure also echoes what Larson said in one of his press releases: “Social Security is not an entitlement. It is the insurance that you contribute to with every paycheck. That is what FICA stands for: Federal Insurance Contributions Act.”

A “fact sheet” that accompanies the Social Security 2100 Act touts that the bill increases Social Security benefits while strengthening the Social Security trust fund. It increases benefits by raising the amount paid out by about 2 percent of the average benefit (currently $16,848 a year), improving the annual cost-of-living adjustment (COLA) formula by switching to a consumer price index (CPI) for the elderly (CPI-E), establishing a new minimum benefit at 25 percent above the poverty line tied to wage levels, raising the income threshold to $50,000 ($100,000 for married couples) before Social Security benefits are taxed, and ensuring that any increases in benefits from the bill do not result in a reduction in, or loss of eligibility for, other welfare benefits such as Supplemental Security Income (SSI) or Medi-caid. It strengthens the trust fund by gradually phasing in an increase in the Social Security tax rate to 14.8 percent by 2043, applying the payroll tax to wages above $400,000, and combining the two parts of the Social Security trust fund.

The Social Security 2100 Act has been endorsed by the AFL-CIO, the NAACP, the National Organization for Women (NOW), the Congressional Progressive Caucus (CPC), the Paralyzed Veterans of America (PVA), the American Federation of Government Employees (AFGE), the Daily Kos, MoveOn, and many other progressive groups. But time is running out. When the second session of the 116th Congress comes to a close at the end of this year, the opportunity for Congress to pass Larson’s Social Security 2011 Act will end with it.

Social Security

Social Security is officially the Old-Age, Survivors, and Disability Insurance (OASDI) Program, and consists of two parts. The Old-Age and Survivors Insurance (OASI) program provides monthly benefits to retired workers, families of retired workers, and survivors of deceased workers. The Disability Insurance (DI) program provides monthly benefits to disabled workers and families of disabled workers.

Social Security is funded by a 12.4 percent (10.03 percent OASI and 2.37 percent DI) payroll tax (split equally between employers and employees) on the first $137,700 of employee income. Self-employed individuals pay the full 12.4 percent, but receive a tax deduction equal to 50 percent of the amount of the Social Security tax they paid. One must pay Social Security taxes for a minimum of 40 quarters, or 10 years, to be eligible for benefits. Social Security benefits are figured on the basis of one’s Primary Insurance Amount (PIA), the average of a worker’s 35 highest years of earnings (up to a particular year’s wage base), adjusted for inflation. For those born after 1959, the retirement age to receive full benefits is 67. Reduced benefits are available for those who have reached the age of 62; increased benefits are available for those who wait until age 70 to retire.

According to the latest annual report by the Social Security Board of Trustees (“The 2019 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds”),

At the end of 2018, the OASDI program was providing benefit payments to about 63 million people: 47 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 10 million disabled workers and dependents of disabled workers. During the year, an estimated 176 million people had earnings covered by Social Security and paid payroll taxes on those earnings. The total cost of the program in 2018 was $1,000 billion.

Social Security is the largest expenditure in the federal budget. According to Donald Trump’s fiscal year 2021 budget proposal, annual outlays are expected to increase from $1.15 trillion in 2021 to $1.91 trillion by 2030.

Expanding Social Security

What is unusual about Larson’s Social Security 2100 Act is that it is an expansion of Social Security. What we usually hear are calls to save or protect Social Security for future generations by doing one or more of the following: raising the retirement age, raising the tax rate, reducing or eliminating COLAs, increasing or eliminating the payroll tax cap, reducing benefits, or means-testing recipients.

As even Larson says, “For 75 years, Social Security has been a promise to all Americans that they would have a chance to retire with dignity after a lifetime of hard work. We have an obligation to keep that promise; to safeguard Social Security for our seniors, people with disabilities, and all Americans — today, tomorrow, and forever.” Although Democrats sometimes accuse Republicans of wanting to cut Social Security, Republicans are just as committed to the program as Democrats. According to the latest Republican Party platform, “Saving Social Security is more than a challenge. It is our moral obligation to those who trusted in the government’s word.” And as Trump said earlier this year, “Democrats are going to destroy your Social Security. I have totally left it alone, as promised, and will save it!”

Larson is not alone in his desire to expand Social Security. Sen. Elizabeth Warren (D-Mass.), one of the many Democrats who ran for president, had an ambitious expansion plan. She proposed increasing Social Security benefits immediately by $200 a month; further increasing benefits for “lower-income families, women, people with disabilities, public-sector workers, and people of color”; and increasing the Social Security “contribution” requirement by raising the tax rate to 14.8 percent on wages above $250,000 and implementing a new 14.8 percent tax on net investment income on persons making more than $250,000 ($400,000 for married filing jointly). Other Democratic presidential candidates were content to tax, at the existing rate, wages above $250,000 or $400,000 in the case of Joe Biden.

The problem with Social Security

Social Security is underfunded, unstable, and unsustainable. Since 2010, total expenditures of Social Security have exceeded the non-interest income of its combined trust funds. The trust funds are projected to be depleted in the early to mid 2030s. Once they are depleted, the Social Security trustees project that current revenue will be sufficient to cover only 80 percent of promised benefits. The ratio of those paying into the Social Security system to those collecting Social Security has declined from more than forty to one down to about three to one. Although Ida Mae Fuller, the first recipient of Social Security, paid in only $24.75 and received $22,888.92 in benefits (she lived to be 100), for many years now Social Security has been a bad investment.

A recent report by the Heritage Foundation, a conservative think tank, found that “Americans would be better off keeping their payroll tax contributions and putting them into private retirement accounts than having to sacrifice them to the government’s broken Social Security system.” Many workers who “pay into the program” end up with a negative annual rate of return. But there is a deeper problem with Social Security, and it has nothing to do with how solvent or insolvent or how good or bad an investment the program is.

Surely John Larson speaks for a majority of Americans when he maintains that “Social Security is not an entitlement,” but is “the insurance that you contribute to with every paycheck.” Yet nothing could be further from the truth.

Not insurance

First of all, the federal government doesn’t have a Social Security account with every American’s name on it. The Social Security trust funds are government accounting fictions. Unlike a real insurance company, which is required to carry huge reserves, there is no money in an account for people to withdraw from. All Social Security benefits are paid from current taxes collected. As the Social Security Administration acknowledges, “The money you pay in taxes is not held in a personal account for you to use when you get benefits. Today’s workers help pay for current retirees’ and other beneficiaries’ benefits. Any unused money goes to the Social Security trust funds to help secure today and tomorrow for you and your family.” The whole system is one gigantic fraud. Payroll taxes collected are deposited in the government’s general fund and immediately spent, not only on current Social Security benefits, but also on foreign aid, welfare, the drug war, the TSA, and countless other unconstitutional sinkholes.

Second, those who die before signing up for Social Security forfeit every penny they “contributed” to the system. Americans with lower life expectancies have the most to lose because they receive little or nothing in benefits and cannot pass along their years of “contributions” to their surviving relatives. In Flemming v. Nestor (1960), the Supreme Court held that the widow of someone who had paid into Social Security for years and then lost his citizenship was not entitled to any benefits. The majority opinion stated, “To engraft upon the Social Security System a concept of accrued property rights would deprive it of the flexibility and boldness in adjustment to the ever-changing conditions which it demands.” And even Justice Hugo Black, in a minority opinion, stated that “no private insurance company in America would be permitted to repudiate its matured contracts with its policyholders who have regularly paid all their premiums in reliance upon the good faith of the company.”

Third, there is no connection between the taxes one pays to fund the Social Security system and the benefits that one receives from the Social Security system. Although most Americans think the opposite, Social Security benefits have never been based on the amount of Social Security taxes paid. They have always been based on the 35 highest years of one’s income earned from wages during his life. The benefits are calculated with an arbitrary formula that Congress can change at any time. The additional Social Security taxes that the Democratic presidential candidates wanted “the rich” to pay would not have resulted in any increase in their benefits. Under the Social Security expansion plans of Larson and Warren, benefits would be increased for those who didn’t pay more in taxes. And even though Social Security taxes were cut by 2 percentage points in 2011 and 2012, no one will see their future benefits cut.

Fourth, Americans have no contractual right to receive Social Security benefits. In Helvering v. Davis (1937), the U.S. Supreme Court ruled that “the proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way.”

There is contractual right to receive Social Security benefits.

According to Title XI, section 1104, of the Social Security Act, “The right to alter, amend, or repeal any provision of this Act is hereby reserved to Congress.” This means that Congress can raise Social Security taxes, raise or eliminate the wage base upon which taxes are figured, cut benefits, raise the retirement age again, means-test recipients, eliminate yearly cost of living increases, or make all those changes at the same time. Section 1104 was affirmed in the aforementioned Flemming v. Nestor decision. There the Court ruled that “the noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are [sic] based on his contractual premium payments.”

And fifth, although insurance proceeds aren’t generally taxable, Social Security benefits can be taxed almost in their entirety. According to the Social Security Administration,

Some people who get Social Security must pay federal income taxes on their benefits. But, no one pays taxes on more than 85 percent of their Social Security benefits.

You must pay taxes on your benefits if you file a federal tax return as an “individual” and your “combined income” exceeds $25,000. If you file a joint return, you must pay taxes if you and your spouse have “combined income” of more than $32,000. If you are married and file a separate return, you probably will have to pay taxes on your benefits.

The Social Security Administration (SSA) defines “combined income” as adjusted gross income, tax-exempt interest income, and half of Social Security benefits. According to the annual report of the Social Security Board of Trustees, in 2018 the Social Security trust funds received $35 billion from the taxation of benefits — 4 percent of the trust funds’ non-interest income. And “more than 40 percent of current beneficiaries pay income taxes on part of their benefits.”

Social Security benefits were exempt from income taxation through 1983. Section 86 of the Social Security Amendments of 1983 provided that up to 50 percent of benefits could be taxed if “combined income” exceeded $25,000 for individuals or $32,000 for married couples. In 1993, Congress amended section 86 to allow for an additional taxation of up to 85 percent of benefits if “combined income” exceeded $34,000 for individuals or $44,000 for married couples. Those numbers have never been indexed for inflation. In addition, there are also thirteen states that tax Social Security benefits. Social Security couldn’t possibly be an earned benefit that workers have paid for — not if the government can tax you on 85 percent of your benefits. If Social Security was really “the insurance that you contribute to with every paycheck,” then it wouldn’t matter how much money you made after retirement. Your income shouldn’t affect your Social Security at all.

So then, if Social Security is not a retirement plan, a trust fund, an annuity, an insurance program, a savings account, a 401(k)-type account, an investment vehicle, or a pension fund; if it is not “earned,” “paid for,” or “the insurance that you contribute to with every paycheck,” then what is it? It is simply an intergenerational wealth-redistribution scheme that has been an entitlement program for the elderly from the very beginning. Social Security doesn’t need to be expanded, and neither does it need to be reformed, privatized, fixed, or saved. Because Social Security is based on coercion, fraud, and theft; and because it is immoral for the government to take money from those who work and give it to those who don’t, the Social Security program should be eliminated, not expanded.

This article was originally published in the July 2020 edition of Future of Freedom.

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Since 9/11, the Government’s Answer to Every Problem Has Been More Government

This article was originally published by John W. Whitehead at The Rutherford Institute.

“A government big enough to give you everything you want is a government big enough to take away everything that you have.”—Anonymous

Have you noticed that the government’s answer to every problem is more government—at taxpayer expense—and less individual liberty?

The Great Depression. The World Wars. The 9/11 terror attacks. The COVID-19 pandemic.

Every crisis—manufactured or otherwise—since the nation’s early beginnings has become a make-work opportunity for the government to expand its reach and its power at taxpayer expense while limiting our freedoms at every turn.

Indeed, the history of the United States is a testament to the old adage that liberty decreases as government (and government bureaucracy) grows. To put it another way, as government expands, liberty contracts.

To the police state, this COVID-19 pandemic has been a huge boon, like winning the biggest jackpot in the lottery. Certainly, it will prove to be a windfall for those who profit from government expenditures and expansions.

Given the rate at which the government has been devising new ways to spend our money and establish itself as the “solution” to all of our worldly problems, this current crisis will most likely end up ushering in the largest expansion of government power since the 9/11 terrorist attacks.

This is how the emergency state operates, after all.

From 9/11 to COVID-19, “we the people” have acted the part of the helpless, gullible victims desperately in need of the government to save us from whatever danger threatens. In turn, the government has been all too accommodating and eager while also expanding its power and authority in the so-called name of national security.

As chief correspondent Dan Balz asks for The Washington Post, “Government is everywhere now. Where does it go next?

When it comes to the power players that call the shots, there is no end to their voracious appetite for more: more money, more power, more control.

This expansion of government power is also increasing our federal debt in unprecedented leaps and bounds. Yet the government isn’t just borrowing outrageous amounts of money to keep the country afloat. It’s also borrowing indecent sums to pay for programs it can’t afford.

The government’s primary response to this COVID-19 pandemic—flooding the market with borrowed money in the amount of trillions of dollars for stimulus payments, unemployment insurance expansions, and loans to prop up small businesses and to keep big companies afloat—has pushed the country even deeper in debt.

By “the country,” I really mean the taxpayers. And by “the taxpayers,” it’s really future generations who will be shackled to debt loads they may never be able to pay back.

This is how you impoverish the future.

Democrats and Republicans alike have done this.

Without fail, every president within the last 50 years has expanded the nation’s debt. When President Trump took office on January 20, 2017, the national debt—the amount the federal government has borrowed over the years and must pay back—was a whopping $19.9 trillion. Despite Trump’s pledge to drain the swamp and eliminate the debt, the federal debt is now approaching $27 trillion and is on track to surpass $78 trillion by 2028.

For many years now, economists have warned that economic collapse would be inevitable if the national debt ever surpassed the size of the U.S. economy. The government passed that point in June 2020 and has yet to put the brakes on its spending.

In fact, the Federal Reserve just keeps printing more money in order to prop up the economy and float the debt.

At some point, something’s got to give.

As it now stands, the U.S. is among the most indebted countries in the world.

Almost a third of the $27 trillion national debt is owed to foreign entities such as Japan and China.

Most of the debt, however, is owed to the public.

How is this even possible? Essentially, it’s a case of robbing Peter to pay Paul.

First, the government requires taxpayers to pay a portion of their salaries to the Social Security Trust Fund. The government then turns around and borrows from Social Security to cover its spending needs. Then the government raises taxes or prints more money in order to pay out whatever is needed to the retirees.

It’s a form of convoluted economics that only makes sense to government bureaucrats looking to make a profit off the backs of the taxpayers.

According to the U.S. Debt Clock, each taxpayer’s share of the national debt is $214,000 and growing.

That’s almost five times more than the median income for what Americans earn in a year. That’s also almost five times more than the average American has in savings, across savings accounts, checking accounts, money market accounts, call deposit accounts, and prepaid cards. Almost 60% of Americans are so financially strapped that they don’t have even $500 in savings and nothing whatsoever put away for retirement.

Just the interest that must be paid on the national debt every year is $338 billion and growing. According to the Congressional Budget Office, the fastest-growing item in the budget over the next decade will be interest on the debt.

As the Committee for a Responsible Federal Budget reported in 2019, before COVID spending pushed the country over the fiscal cliff, “Interest payments will rise from $325 billion last year to $928 billion by 2029, a nearly threefold increase. If tax cuts and spending increases are extended, interest will exceed $1 trillion and set a new record as a share of the economy. The federal government will spend more on interest than on Medicaid or children by 2020. By 2024, interest will match defense spending.

Bottom line: The U.S. government—and that includes the current administration—is spending money it doesn’t have on programs it can’t afford, and “we the taxpayers” are the ones who will have to pay for it.

As financial analyst Kristin Tate explains, “When the government has its debt bill come due, all of us will be on the hook.”

Despite the tax burden “we the people” are made to bear, we have no real say in how the government runs, or how our taxpayer funds are used, but we’re being forced to pay through the nose, anyhow.

We have no real say, but that doesn’t prevent the government from fleecing us at every turn and forcing us to pay for endless wars that do more to fund the military-industrial complex than protect us, pork-barrel projects that produce little to nothing, and a police state that serves only to imprison us within its walls.

All the while the government continues to do whatever it wants—levy taxes, rack up debt, spend outrageously and irresponsibly—with little thought for the plight of its citizens.

This brings me to a curious point: what the future will look like ten years from now when the federal debt is expected to surpass $78 trillion, an unsustainable level of debt that will result in unprecedented economic hardship for anyone that does not belong to the wealthy elite.

Interestingly enough, that timeline coincides with the government’s vision of the future as depicted in a Pentagon training video created by the Army for U.S. Special Operations Command.

According to the video, the government is anticipating trouble (read: civil unrest), which is code for anything that challenges the government’s authority, wealth, and power, and is grooming its armed forces (including its heavily armed federal agents) accordingly to solve future domestic political and social problems.

The training video, titled “Megacities: Urban Future, the Emerging Complexity,” is only five minutes long, but it provides a chilling glimpse of what the government expects the world to look like in 2030, a world bedeviled by “criminal networks,” “substandard infrastructure,” “religious and ethnic tensions,” “impoverishment, slums,” “open landfills, over-burdened sewers,” a “growing mass of unemployed,” and an urban landscape in which the prosperous economic elite must be protected from the impoverishment of the have nots.

And then comes the kicker.

Three-and-a-half minutes into the Pentagon’s dystopian vision of “a world of Robert Kaplan-esque urban hellscapes — brutal and anarchic supercities filled with gangs of youth-gone-wild, a restive underclass, criminal syndicates, and bands of malicious hackers,” the ominous voice of the narrator speaks of a need to “drain the swamps.”

Drain the swamps.

Surely, we’ve heard that phrase before?

Ah yes.

Emblazoned on t-shirts and signs, shouted at rallies, and used as a rallying cry among Trump supporters, “drain the swamp” became one of Donald Trump’s most-used campaign slogans.

Far from draining the politically corrupt swamps of Washington DC of lobbyists and special interest groups, however, the Trump Administration has further mired us in a sweltering bog of corruption and self-serving tactics.

Funny how the more things change, the more they stay the same.

Now the government has adopted its own plans for swamp-draining, only it wants to use the military to drain the swamps of futuristic urban American cities of “noncombatants and engage the remaining adversaries in high-intensity conflict within.”

And who are these noncombatants, a military term that refers to civilians who are not engaged in fighting during a war?

They are, according to the Pentagon, “adversaries.”

They are “threats.”

They are the “enemy.”

They are people who don’t support the government, people who live in fast-growing urban communities, people who may be less well-off economically than the government and corporate elite, people who engage in protests, people who are unemployed, people who engage in crime (in keeping with the government’s fast-growing, overly broad definition of what constitutes a crime).

In other words, in the eyes of the U.S. military, noncombatants are American citizens a.k.a. domestic extremists a.k.a. enemy combatants who must be identified, targeted, detained, contained and, if necessary, eliminated.

Funny how closely fact tracks fiction these days.

Just recently, in fact, I re-watched Escape from L.A.John Carpenter’s 1996 post-apocalyptic action film that imagines a future (2013, in fact) in which the United States has elected a president for life who runs the country according to his own theocratic moral law. Anyone who runs afoul of the president’s moral laws is stripped of their citizenship and either electrocuted or deported to the island of Los Angeles, a penal colony where lawlessness reigns supreme.

As the film’s opening narrator recounts:

In the late 20th century, hostile forces inside the United States grow strong. The city of Los Angeles is ravaged by crime and immorality. To protect and defend its citizens, the United States Police Force is formed. A presidential candidate predicts a millennium earthquake will destroy L.A. in divine retribution. The earthquake measuring 9.6 on the Richter scale hits at 12:59 P.M. August 23rd in the year 2000. After the devastation, the Constitution is amended, and the newly elected president accepts a lifetime term of office. The country’s capital is moved from Washington, D.C., to the president’s hometown of Lynchburg, Virginia. Los Angeles Island is declared no longer part of the United States and becomes the deportation point for all people found undesirable or unfit to live in the new, moral America. The United States Police Force, like an army, is encamped among the shorelines, making any escape from L.A. impossible. From the southeastern hills of Orange County to the northwestern shore of Malibu, the great wall excludes L.A. from the mainland. The president’s first act as permanent Commander in Chief is Directive 17: once an American loses his or her citizenship, they are deported to this island of the damned, and they never come back.

Carpenter is a brilliant filmmaker whose dystopian visions of the future are eerily prescient, but this film is particularly unnerving: environmental disasters; engineered viruses used like weapons to control the masses; riots and looting that leave the populace longing for law and order; religion used as a weapon; martial law; surveillance that keeps every citizen under the government’s watchful eye; and a growing awareness that the only path to freedom left for humanity is to shut down the government and start over again.

We’re almost there now.

As I make clear in my book Battlefield America: The War on the American People, unless we make some effort to reject the sorry excuse for a representative government that we have been saddled with, the future that awaits us—whether it’s the future envisioned by the Pentagon in its training video or the future imagined by Carpenter—will be a living nightmare from which there is no escape.

The post Since 9/11, the Government’s Answer to Every Problem Has Been More Government first appeared on SHTF Plan – When It Hits The Fan, Don't Say We Didn't Warn You.

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Pelosi says the House has to return to vote on USPS funding in order to protect Social Security checks. There’s just one small problem.​

As part of her push to get House members on board with her plan to force members to return from recess to vote on a funding package for the United States Postal Service, House Speaker Nancy Pelosi (D-Calif.) sent a letter on Sunday to her colleagues in the House explaining the reason they are being recalled. In that letter, Pelosi argued that it is vital for Congress to immediately pass her funding request because Americans rely on the Postal Service to deliver, among other things, “Social Security benefits” and “tax returns.”

There’s just one problem: the government hasn’t been sending those items via mail for over a decade. In fact, the government announced in June 2010 that all Social Security “checks” would be sent via direct deposit and that people who were scheduled to receive these checks but did not have a bank account would be issued a Treasury Department Direct Express Debit MasterCard, onto which funds would be loaded electronically.

The issue of funding for the USPS has unexpectedly become a hot-button political issue after Democrats accused Republicans of sabotaging the USPS in order to prevent increased voting by mail. Democrats have even accused current Postmaster General Louis DeJoy of sabotaging the mail system, claiming without proof that DeJoy ordered the removal of numerous mail collection boxes in order to prevent people from sending out mail-in ballots.

In response, a USPS spokesperson pointed out that collection boxes have been dwindling for years per a long-standing policy that calls for their removal when usage falls below a certain level. In fact, the Washington Post noted in 2009 that approximately half of all collection boxes in the United States had been removed in the preceding 20 years, a natural consequence of the shift away from paper mail and toward electronic mail, as well as increased competition from private carriers.

Additionally, it has been noted that the Postal Service is fully funded through the end of 2021, which means that, if Postal Service failures play a role in the upcoming election, it will not be due to any reduction in funding.

Still, Democrats — who have been unable to come to an agreement on an overall stimulus package to combat the coronavirus-induced recession — have made a USPS funding package such a priority that they have ostentatiously recalled all House members across the country to vote on one.

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Study finds COVID-19 could drain Social Security reserves this decade

A new study is estimating that the coronavirus pandemic may deplete Social Security trust funds by the end of this decade.

The Bipartisan Policy Center found that, if the current economic downturn were to continue, “the Disability Insurance (DI) trust fund’s reserves may be depleted during the next presidential term, and the Old-Age and Survivors Insurance (OASI) trust fund’s reserves may be depleted right around the time of the 2028 presidential election.”

The report noted that since Social Security relies on the health of the economy, recessions significantly impact the well-being of the program.

Specifically, the program collects the bulk of its resources through payroll taxes and, as the report notes, “a laid-off worker doesn’t pay payroll taxes.” As such, at least 26 million Americans have lost their jobs since the start of the pandemic. Moreover, many of those who have kept their jobs have experienced a reduction in hours, which further depresses the payroll tax revenue.

Add this to the fact that a recession usually means more program payouts, as well. When workers lose their jobs, DI claims typically go up as do OASI claims from older workers forced to retire early.

What does it mean?

After the Great Recession of 2008, Social Security trustees projected that the program’s reserves were on course to be depleted by 2033, moving up from 2041 pre-recession estimates.

Now, the new study projects that the depletion date will move up again, this time to 2029, if another recession were to result from the pandemic.

“The closer those dates come, the more difficult it will be to find policy solutions that maintain the traditional financing structure of the program,” the study concludes. “If policymakers fail to address Social Security’s financial imbalance soon, they will have to pursue some combination of sharply increasing taxes, drastically cutting benefits, or financing promised benefits through general revenues.”

Are the reserves are a fiction, anyway?

The dirty little secret is that the Social Security reserves don’t really exist. Well, not in the way most Americans think of them, anyway. The Social Security trust fund does not contain genuine assets, only government bonds, or IOUs.

The Office of Management and Budget under the Clinton administration previously acknowledged that the trust fund “balances” only exist in a “bookkeeping” sense: “They do not consist of real economic assets that can be drawn down in the future to fund benefits.”

Read what the late Charles Krauthammer had to say on the matter in 2011:

When your FICA tax is taken out of your paycheck, it does not get squirreled away in some lockbox in West Virginia where it’s kept until you and your contemporaries retire. Most goes out immediately to pay current retirees, and the rest (say, $100) goes to the U.S. Treasury — and is spent. On roads, bridges, national defense, public television, whatever — spent, gone.

In return for that $100, the Treasury sends the Social Security Administration a piece of paper that says: IOU $100. There are countless such pieces of paper in the lockbox. They are called “special issue” bonds.

Special they are: They are worthless.

Since the reserves don’t exist in a concrete sense, but are loaned to the government by purchasing securities, the threat to the so-called “reserves” is greater as the economy worsens.

In its report, the Washington Examiner explains that the coming depletion “does not mean Social Security won’t be around but that the system will exhaust its cash reserves and will only be able to pay out what it takes in year-to-year in taxes.”