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Facts about Social Security and Medicare

Two of the best government programs ever paid for by your taxes and mine are Social Security and Medicare. All monies due and owing from them are paid on a continuing basis, and neither program has ever contributed one thin dime to budget deficits, to our public debt, or to any other debt. Quite the opposite is true : Both programs have been producing surpluses since the 1980s. So what is all the fuss about two programs that have proven themselves to be crown jewels year in and year out?

The answer is “hypocrisy.” Some politicians (mostly right wing Republicans) want to dismantle both programs, so they have come up with an argument for doing so that is chock full of lies and deceptions. It’s drivel, but drivel can fool far too many listeners. They say both programs are “Ponzi” schemes, both are going broke by their own flawed designs, and privately run programs would be much better.

In reality both programs are “pay as you go” type programs that are funded by payroll taxes. The Social Security tax is 12.4 percent of your pay up to the first $118,500. Above that level, there is no further tax. It is paid by you and your employer at 6.2 percent each. The percentage therefore falls as incomes rise above the cutoff level. Medicare is funded by a tax that is 2.9 percent of your pay. Both programs are paid by those who work, and benefits accrue to those who are retired.

Both of the revenue streams have also been producing surpluses. That means more money has been flowing in than has been flowing out. So far they have produced about $6.3 trillion dollars more than they have paid out. But instead of putting that money aside in Treasury bills to fund future payouts, the government has been spending all those surpluses on other programs. All administrations since Regan have simply taken all those excess dollars and used them for all the other programs in the federal budget. That kind of trickery is legal, although it is dishonest to not tell everyone about it.

The notion that there is a Social Security or a Medicare Trust Fund is fiction. Technically, each administration has been borrowing those extra dollars, spending them, and adding them to the “national debt.” And so we have two debt totals: The real one stands at $11.7 trillion dollars. It is the public debt. The phantom debt is called the national debt. It includes the public debt plus all those surplus dollars raised and spent from Social Security and Medicare. It now totals $18 trillion. This internal borrowing is called “intra governmental borrowing.” That money is gone and will never be repaid. So it is foolish to speak of a national debt that includes debts that the government owes to itself and never intends to repay. You and I owe $11.7 trillion of public debt. The national debt total is $6.3 trillion dollars of fiction.

At the same time the government has been spending all those surplus dollars, projections show that a growing population will be retiring over the coming 30 or 40 years, while fewer and fewer workers will be paying into both programs. That means the future income stream will not support the future outgo stream in 6 or 7 years for Medicare, and in about 15 or 20 years for Social Security. Neither program is forecast to go completely broke. Still, we have a problem.

The logical solution is to stop taking those surplus dollars and to put them into a Trust Fund. And more logic would argue to put that $6.3 trillion skimmed off over the years and put those dollars back into these Trusts. But politics is neither logical nor honest. It is a game run by propagandists who believe they can fool all the people all the time. Well, at least that’s what the extremists believe.

Unfortunately, extremists have high-jacked so much of government these days that thousands of petitions are now circulating in which someone or some segment warns us of impending doom unless we stop the extremists.

One of the best solutions is for every eligible person to automatically become a registered voter when he or she reaches age 18. The second part is to make all federal elections a national holiday so that everyone can vote. Alternatively, we could let everyone opt to vote by electronic means. Voting is too important to be ignored. But the most important part is for every young person to stay in school until they can demonstrate they have the ability to think for themselves, and they have cultivated enough intelligence to vote in their own interest. Only a completely brainwashed person would vote to elect those who are determined to make their own lives wonderful, while making voters' lives miserable. These minimum goals, in time, could correct many wrongs. They could also force the extremists to find another line of work that is more suitable to their talents. They have their place: Help them find it and encourage them to dig it—deep—very deep.