Social Security Tax

The Threshold of Change

So as 1934 dawned the nation was deep in the throes of the Depression. Confidence in the old institutions was shaken. Social changes that started with the Industrial Revolution had long ago passed the point of no return. The traditional sources of economic security: assets; labor; family; and charity, had all failed in one degree or another. Radical proposals for action were springing like weeds from the soil of the nation’s discontent. President Franklin Roosevelt would choose the social insurance approach as the “cornerstone” of his attempts to deal with the problem of economic security.

The Social Security Act was signed into law by President Roosevelt on August 14, 1935. In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement.  (From: the Social Security website.)

SOCIAL SECURITY

is not part of the Federal Budget. It is a separate account and has its own source of income (“Payroll Taxes”). Social Security payments go in the Social Security trust fund, and should NOT be counted as general revenue. The trust fund is supposed to be used to pay future benefits. But, 

As of August 2010, there is less being paid into the Social Security Trust Fund than is being paid out to beneficiaries. Social Security is now using its “surplus”. Government agencies that borrowed from the trust fund, now have to pay the money back. But they’ve spent it. Where will they get it?   (Wikipedia)

With the upcoming elections, candidates talk about the Federal Budget, where cuts should be made, etc. but they cannot touch Social Security which has its own form of financing through income withholdings and matches by the employer into its own trust fund.

Even though Social Security forms a big portion of government expenses, it has a money stream of its own, separate from any national debt debates and discussions.

The national debt is not paid for with Social Security taxes but with money from the general fund of the U.S. Treasury, which comes from income taxes (94%), corporate income taxes (20%), excise taxes (2%), and other miscellaneous receipts (7%) [ % current as of 2014].     (just facts.com)

By all rights, we should ask: Who among the elderly need benefits? How much? At what age? If Social Security and Medicare were considered “welfare” — something the nation does for its collective good — these questions would be easier. We would tailor programs to meet national needs. But entitlements are viewed as a higher-order moral claim, owed individuals based on past performance. So a huge part of government spending moves off-limits to intelligent discussion.

We can only imagine how Roosevelt would view this. He consistently advocated a fully funded Social Security and used his second veto on a 1942 tax bill that delayed higher payroll taxes. But Congress overrode the veto, and Roosevelt was preoccupied by World War II. (Washington Post)

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