Ron Paul: Why the Government Lies About Social Security




Why the Government Lies About Social Security

by Ron Paul

Perhaps the biggest media story of 2010 was the influence of Tea Party voters on the Congressional landscape. The new Congress comes to Capitol Hill with a mandate to end profligate spending and restore fiscal sanity in Washington, we are told. But when the House and Senate convene in January the newly elected members will face tremendous pressure to maintain spending levels for entitlement programs. Even the most modest proposals to trim Social Security or Medicare spending will be met with howls of indignation and threats of voter revolt. Legislators who propose any kind of means testing or increased retirement ages can expect angry visits from senior citizens and lobbyists ready to fund a candidate back home who supports the status quo.

But millions of Americans now realize that the status quo is an illusion that will not last even another 10 or 20 years. The federal government cannot continue to spend a trillion dollars more than it collects in revenue each year because we are running out of creditors. Fiscal reality is setting in and the consequences may be grim, even if Congress finds the courage to take decisive action now.

Courage begins with a commitment to see things as they are, rather than how we wish they were. When it comes to Social Security we must understand that the system does not represent an old age pension, an insurance program or even a forced savings program. It simply represents an enormous transfer of payment with younger workers paying taxes to benefit the other beneficiaries. There is no Social Security trust fund and you don’t have an account. Whether you win or lose the Social Security lottery is a function of when you happen to be born and how long you live to collect benefits. Of course young people today have every reason to believe they will never collect those benefits.

Notice that neither political party proposes letting people opt out of Social Security, which exposes the lie that your contributions are set aside and saved. After all, if your contributions are really set aside for your retirement, the money is there earning interest, right? If your money is in your account, what difference would it make if your neighbor chooses not to participate in the program?

The truth of course is that your contributions are not put aside. Social Security is a simple tax. Like all taxes, the money collected is spent immediately as general revenue to fund the federal government. But no administration will admit that Social Security is nothing more than an accounting ledger with no money. You will collect benefits only if future tax revenues remain high. The money you paid into the system is long gone.

My hope is that at least some members of the new Congress will cut through the distortions to see Social Security as it really is. The best way to fix the impending Social Security crisis is also the simplest: Allow younger individuals to opt out of the program and use their tax savings to invest privately as they see fit. This is the true private solution. Your money has never been safe in the government’s hands and it never will be.



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289 Comments:

  1. Tom and Others,
    Back in 1982 I read Irwin Schiff's book "The Big Con" which was essentially an expose' of our Government's SSN ponzi scheme and other fraudulent taxations.
    Irwin has spent several years in prison for his tax rebellion, something few American's are willing to do. Peter Schiff is Irwin's son and has his own respectable investment business Euro Pacific Capital http://www.europac.net/
    He specializes in inflation hedges to protect your savings, that's if you still have any.

    I blog on this site because I've been following Ron Paul since the early 80's when everyone dismissed him as a fringe Libertarian kook. But all of a sudden there is a great awakening in the college campuses and Paul has seen a serious resurgence in followers. Several, including Judge Napolitano, Glen Beck, John Stossel, Rush L. and many others defending our Constitution as Ron Paul is doing.

    SSN is only the tip of the entitlement iceberg, that we've hit, we're sinking fast and now were arguing over the arrangements of the deck chairs. Short of drastic cuts (1/2 or more) of the entitlement budgets must go, there is little chance the system will recover.

    MY HOPE is that the Tea Party will build its momentum and that Congress will grow a spine and reverse the trend of the Executive branch take-0ver via Czars and Executive Order etc.

    Ron Paul is a heroic true patriot but he's not likely to gain any traction in the Republican party. Both the Republicans and Democrats are hell bent on maintaining the Tyranny against the Citizens of this great nation.

    Keep up your efforts, people are listening

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    • I share your admiration for Dr. Paul. Perhaps the wiser elements of the tea Party will recognize his limited government crusade as central to their beliefs. Certainly they would share his aversion to special interest spending. And, in time, those among them who value individual responsibility will rally behind his quest for a Fed-free stable currency. Speak to them, as have I, to rally them to Dr. Paul's quest.

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  2. The government and so called main stream media not only lied about security, Federal Reserver but also about science.

    Einstein postulates have been tested as complete false by numerous experiments and observations. However, publics and scientists have to accpet Einsteit as a God just like the Federal Reserve System no matter how worse they are.

    I would like Ron Paul to set up a commitee to hear Top scientists and Top editors about their treatment on scientific theories and experiemnts that disappove Einsteint's Postulates.

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  3. He pretty much nailed it.

    Ron paul 2012!!

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  4. vote in my poll please: http://www.sodahead.com/united-states/if-the-2012-republican-presidential-primaries-were-held-today-who-would-you-vote-for/question-1415965/

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  5. This title an one statement in the article imply the government lies about Social Security. Who, representing the government, has ever said Social Security works by setting aside your money in an account for just for you? Or are these allegations simply intended to be provocative?

    I have at least two concerns about allowing young workers to opt out of Social Security:

    1.) As Rep Paul states, the money from young workers is being paid to benefit recipients. If young workers stop contributing, from where will the money come to pay the benefit recipients?
    2.) Some of these people will end up old and destitute and then what? Are these people are on their own? Are we hoping they die quickly and quietly without becoming a nuisance? Will charitable organizations help?

    I propose the following social security reform:
    a.) Raise the retirement age one year every three years until the retirement age equals the average life expectancy.
    b.) Apply means testing for benefits.

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    • 1. Do away with Social Security.
      2. Save a minimum of 10% of your gross pay every payday (and don't touch it for years and years; let it build up).
      3. When you save enough to retire, then retire on your own.
      4. Don't have enough to retire? Then work until you die.

      A simple solution. Not complicated. Get some backbone and take care of yourself. "There's no free lunch".

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      • Dry Creek, I strongly endorse items 2 and 3. However, there will be a number of people who for a variety of reasons are unable to support themselves in retirement. How shall we handle this? Item 4 suggests people should simply work until they die, but this implies all people have sufficient skill and opportunity to earn enough money to support themselves. I seriously doubt this is the case.

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      • DryCreek,

        That's why we should allow savings in gold or silver competing currencies "Legal Tender" to escape the government's incessant thievery via currency dilution.
        I can imagine having saved 10 ounces of gold a year since the mid seventies and now having 350 ounces or about $490,000 in retirement savings!

        But we keep paying the 15% into the Government "Black Hole" and we'll get nothing in return....

        Happy New Year

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      • Would you consider adding another item...Contribute 10% of your gross pay to charity?

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        • Did Jesus (to name one well-known advocate of charity) say that Rome (government) should give to the poor? Did he not say this was the path for a rich man to find his way to heaven?

          Or, from another prophet:

          There are eight levels of charity, each greater than the next.

          [1] The greatest level, above which there is no greater, is to support a fellow Person by endowing him with a gift or loan, or entering into a partnership with him, or finding employment for him, in order to strengthen his hand until he need no longer be dependent upon others...

          [2] A lesser level of charity than this is to give to the poor without knowing to whom one gives, and without the recipient knowing from whom he received the gift. For this is performing a good deed solely for the sake of Heaven. This is like the "anonymous fund" that was in the Holy Temple [in Jerusalem]. There the righteous gave in secret, and the good poor profited in secret. Giving to a charity fund is similar to this mode of charity, though one should not contribute to a charity fund unless one knows that the person appointed over the fund is trustworthy and wise and a proper administrator

          [3] A lesser level of charity than this is when one knows to whom one gives, but the recipient does not know his benefactor. The greatest sages used to walk about in secret and put coins in the doors of the poor. It is worthy and truly good to do this if those who are responsible for distributing charity are not trustworthy (like Gov Bureaucrats).

          [4] A lesser level of charity than this is when one does not know to whom one gives, but the poor person does know his benefactor. The greatest sages used to tie coins into their robes and throw them behind their backs, and the poor would come up and pick the coins out of their robes so that they would not be ashamed.

          [5] A lesser level than this is when one gives to the poor person directly into his hand, but gives before being asked.

          [6] A lesser level than this is when one gives to the poor person after being asked.

          [7] A lesser level than this is when one gives inadequately, but gives gladly and with a smile.

          [8] A lesser level than this is when one gives unwillingly. (like taxes which are not really charity at all)

          8 levels of Charity by Moses Maimonides

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  6. The age of Guns and Butter is over. It's time to tighten our belts, adhere to the limits of the Constitution, and get this country back on track to true prosperity and INDIVIDUAL freedom. Collectivism MUST end or we're headed for a dictatorship the likes of Hitler's Germany. All the signs point to more legislation to restrict individual freedoms and centralize all power in the executive branch. Freedom loving Americans MUST stand up and be counted or we will lose this fight.

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  7. It's almost hard to believe people slam Ron Paul for his views on Social Security, and yet if you actually LISTEN to the man, really listen, he's telling the unabashed truth about it; Social Security is NOT savings but another hidden tax, much like the inflation caused when the Federal Reserve creates new money. Americans need to collectively pull their heads out of the sand and revisit formerly 'taboo' topics like Social Security reform and Military Spending or we're in for worse times.

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  8. It is so sad that most politicians will not even remotely consider substantial Social Security reform to reduce spending deficits. Well done, Dr. Paul.

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  9. Our largest military weapon is the thread to defaulting on our loans from whatever nation we target.

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  10. Finally, get rid of that crap!

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  11. He's got my vote, again.

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  12. What does this have to do with the "super rich"? It's about government and disguised taxation.

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  13. I would be interested if all tax proposals were vetted before giving them any credance. For example - Tom Beebe, if you ran the numbers on your tax plan - what is the size of the deficit? And then of course we're back to "What Gets Cut?".

    I have a great tax plan. The Govt doesn't spend any more than it collects in taxes. Once that happens, Americans can decide if they want less tax and less services, or more tax and more services. Can Americans and Politicians face reality? I doubt it.

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    • See item 6, which requires the budget to equal the tax rates applied to the PREVIOUS year's reported income. This would create a surplus in times of economic expansion and a deficit in times of economic contraction. While I have a great distaste for Keynesian economics, I believe this limited dose would serve to stabilize the economy. It's also compatible with Dr. Paul's plan to eliminate the fed by putting the issue of spending vs. Revenues strictly under the congressional budget process where it belongs. Ok?

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  14. I sometimes feel that commenting on a blog is a form of mental masturbation, done in secret (behind aliases) and alone, with no exchange of views, only self gratification.

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  15. Here's a suggestion for replacing Social (In)security and making our tax code fair to all. Note the exemption for savings (in lieu of SS), for health care (in lieu of Obamacare), for education (in lieu of massive debt through the student loan program), and higher level of personal exemption (in lieu of multiple rates), and a negative tax (in lieu of welfare). This is a lot more than taxation, friends, it redefines our government. Send your comments to tbeebe6535@yahoo.com
    1. All persons residing in the U.S. shall come together in households for the purpose of reporting all income from any source, each item to be identified by payer's and payee's tax number. Members of a household need not be related, need not reside together, and a household may consist of as few as one person.
    2. Each year congress shall set by legislation a "minimum wage" and a "tax rate".
    3. The following income shall not be subject to taxation:
    • An amount equal to a year's earnings at the minimum wage rate, for each adult (age 20-65) member of the household, decreasing 10% per year to 50% at age 15 and increasing 10% per year to 150% at age 70. All payments for what is classified as necessary health care for all members of the household including medical care, any pharmaceuticals prescribed by a recognized health care professional, vision and hearing aids, and membership fees for health-enhancing entities such as gyms or other exercise facilities. Health care insurance premiums may be deducted but not health care expense paid for by such insurance.
    • All educational expenses including day care for young children or legally incompetent persons, that portion of state and local taxes identified as spent on education, that portion of parochial school tuition, fees and other expenses identified as going for non-sectarian education, tuition, fees and educational materials for private school education at any level, and a per-diem allowance for students traveling more than 50 miles from primary residence for education.
    • All income saved into an identified account from which investments may be made. Any withdrawels for the benefit of a member of the household shall be considered (taxable) income to the household.
    4. The "tax rate" shall be applied to any income over and above the deductions listed above, regardless of amount.
    5. There shall be no federal tax on corporations or other business entities.
    6. The Office of Management and Budget shall compute revenues to be expected using the newly set tax rate and minimum wage, applied to the previous year's reported incomes. No expenses in excess of that amount may be authorized or made by the federal government without approval by 75% of each house of Congress.
    7. At the request, by legislation duly enacted by a municipality having greater than 100,000 inhabitants or a state, a surtax may be imposed on citizens of that municipality or state which shall be applied in a manner exactly as applied for the Federal tax.
    8. For households whose deductions exceed total income, the Federal Government shall make payment equal to the tax rate multiplied by the shortfall in income, as shall municipalities and states.

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    • I do not think your plan is what I would want. Nice try though. Thanks for your input; at least you have a plan.

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      • Thanks for any comment, Dry Creek.

        May I ask for your thoughts on specific parts of the plan?

        One principle uopn which it is based is, to use a current buzzword, "transparency". For instance, only you, as a consumer, are the source of money to corporations. So guess who is really paying corporate taxes? Or, if you belueve in "Equal justice under law", shouldn't all be equal regardless of theri marital status, hence the "household" concept for free associations to pool incomes and exemptions for taxes. These are but a couple of the ideas upon which this plan is based, and why its about much more than taxes.

        What would you like to see included?

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        • Tom Beebe, you are intending on replacing a government plan with another government plan.

          The idea is to get rid of a centralised mandate who specifies what you may earn, what you may keep from what you earn, what you may or may not eat, how much health insurance you should buy, what you should study, what you should wear etc.

          Ideally taxation should be on the basis of 'use'. I.e. if I drive a car and use the road, tax me to pay for that road by how much I drive. Don't tax me to build a stadium in the middle of a forest because some sports team wants it. This way you can judge through the free market what the true demand and supply (cost) is (not one thing being subsidised by a tax on another).

          Some of the problems of your proposals still reflects the bureaucracy and arbitrariness of government. e.g. "7. At the request, by legislation duly enacted by a municipality having greater than 100,000 inhabitants ". So if they have 99,999 they are exempt from a surtax, but because 1 extra person is born, magically they are all now liable. It's like the current Congress saying $250,000 is 'rich'... but $249,999 isn't?

          At least under a 'use' basis you can calculate, e.g. 1mile of road costs $1m to construct, lasts for 10 years carrying 10,000 cars a day at an average tare of 3,000lb. You can then factor an actual 'cost' of using that road and apply such tax (so a 6,000lb SUV will pay more than a 3,000lb compact). It's not arbitrary, but arrived in a scientific statistical manner.

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    • Tom,

      I like your thinking, good comments and a reasonable solution to remedy the problem. Sadly the statuesque is not something they have the guts to change.

      I believe that our Government does NOT want a solution, they've been engaged in this ponzi-fraud for so long it's become a comfortable old hat, they'll keep wearing it until someone takes it forcibly away..

      The system is headed for total collapse, so the question becomes how do we personally protect ourselves from the calamity to come.

      Happy New Year and Good Luck

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      • "not something THEY have the guts to change? "True, now let's change who "they" are... throw the bums (both parties) out.

        We cannot personally protect ourselves. Long before the advent of man, the beasts of the wild came together to protect themselves, in packs, herds, coveys, prides, by whatever name we've given such associstions. Then man gathered in families, clans, tribes, all for the same purpose. But he crossed a line when he formed governments. The associastions were no longer voluntary; freedom had been compromised in the name of security. So let us form up in and strengthen voluntary associations for our common protection, our common security, to address our common needs, but without the sacrifice of our individual freedoms. This is why charities must replace welfare programs. Why a "well armed militia" is more compatible to liberty than endless increases in law enforcement spending (and the cost of housing the miscreants the law puts away). I do not advocate a complete rejection of government, as do anarchists, but a new line of thought that emphasizes the individual, and free associations of individuals, rather than government, as the means to address our ever evolving challenges. Agree anyone?

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        • Tom,

          I agree, but perhaps I've become too callous and no longer have faith in our government.

          We have come to a major fork in our political history in America. The progressives liberals "sincerely" believe that MORE government is the solution. They've promised redistribution of wealth and entitlements and now 1/3rd of the voting electorate BELIEVES they are entitled to your and my wealth. They vote to continue the transfers of wealth, thus the system perpetuates.

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          • We're not far apart. You express a loss of confidence in our government. I note the advantages of "a well armed militia". This is but one way to at least threaten an overbearing government.

            I also agree in principle with use taxes such as you propose for building highways. Toll roads are an example. Some would suggest a highway trust fund paid for by gasoline taxes. But in truth I don't hold much hope for elimination of an income tax. As you can see I pursue simplification, with elimination of all deductions which are a product of special interest favors. The four I retained, not including basic living (personal exemption), are education, health care and saving (investment) contribute to the creation if wealth. It is upon such creation, not it's distribution, that government economic policy must center. Some would call this "trickle down" economics. Perhaps. When tried before it was half-baked. The idea was that the wealthy would invest more if their taxes were moderated. I suggest that investment be directly exempted.

            As I hope is evident, I've put a lot of thought into the plan I suggested. It's been developed over years. But as you may note from my expression of dismay over lack of responses, I've searched too often in vain for comments like yours. Thank you. At least someone out theta cares enough to comment.

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  16. Today I can file for Social Security. Should I do it? Or should I keep on working? Let me know your thoughts. Thanks.

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    • I applied for SS at the age that provided full benefits, AND kept working (or intend to) as long as I can. When one is no longer able to contribute, the "market" will let him/her know. Beats sitting around.

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  17. Do we really no longer have common sense in America. We all want freebies and are not willing to sacrifice things knowing they will ruin our country.

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  18. info wars .com and ron paul

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  19. the right hand of government takes what the left hand says...
    hisholychurch DAHT org FORWARD SLASH sermon FORWARD SLASH ucc DAHT php
    If you (and I) had paid attention: it was all there 2000 years ago.
    NO KING BUT JESUS!

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  20. The indulgent hard-line extremist's "Right Turn" of relationships which will permit us to maintain this "Roll Back"position of human disparity in a Historical Perspective! Less we are hampered by idealistic Corporate Political campaign slogans and false prommisses.A system of state and private power that are idealistic will be the fall of what's left of our consitutional rights.

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