The American Association of Retired Persons (AARP) is touting the changes to Social Security for 2014.
Instituted during the New Deal, Social Security, a federal Old-Age, Survivors, and Disability Insurance (OASDI) program, provides monthly benefits for retirement, disability, survivorship, and death to about 57 million Americans, including survivors and dependents.
Social Security is “funded” by a payroll tax deduction of 12.4 percent, split evenly between employers and employees, on wages up to $117,000. More than 160 million Americans have earnings covered by Social Security.
So how is the Social Security system changing?
For the third time since 2009, Social Security beneficiaries received a cost-of-living adjustment (COLA), this year of 1.5 percent because of an increase in the consumer price index (CPI). Average monthly benefits will rise from $1,275 to $1,294.
The amount of earnings subject to Social Security tax (the wage base or payroll tax cap) increased from $113,700 to $117,000. Thus, someone earning $117,000 or more in 2014 will pay $7,254 in Social Security taxes.
For those between 62 and the full retirement age of 66 who receive Social Security benefits and continue to work, the amount of annual earnings before benefits are reduced increased from $15,120 in 2013 to $15,480 in 2014. Social Security will withhold $1 in benefits for every $2 earned over the limit.
For those who met or exceeded the maximum taxable earnings level for 35 years and retired at full retirement age, the maximum Social Security monthly benefit payment will increase from $2,533 to $2,642.
Not mentioned by the AARP is the increase in the amount one must make in a quarter ($1,160 to $1,200) to earn one credit of coverage in the Social Security system. A worker generally needs 40 credits (10 years) to be eligible for benefits.
But has Social Security really changed?
Social Security is still unconstitutional. Although Franklin Roosevelt appealed to the “general welfare” clause of the Constitution when he made the case for Social Security in 1934 and Congress — by an overwhelming bipartisan majority — enacted legislation to that effect in 1935, the program is neither prescribed nor warranted by the Constitution. In fact, the federal government has no authority whatsoever under the Constitution to establish a retirement system or insurance plan of any kind.
Social Security is still illegitimate. It is simply not the function of government to operate a retirement and disability plan, provide a safety net, maintain a trust fund, help those who cannot help themselves, or keep widows, orphans, the elderly, and the disabled out of poverty.
Social Security is still a lie. It is not what most Americans think it is. Social Security is not a retirement plan, an insurance program, a savings account, a 401(k)-type account, an investment vehicle, or a pension fund. Social Security has no lock box, trust fund, or dedicated account. All taxes collected are immediately deposited in the federal treasury and spent by the government.
Social Security is still insolvent. Taxes collected no longer exceed benefits paid. According to the Social Security Board of Trustees’ Annual Report, “Social Security’s total expenditures have exceeded non-interest income of its combined trust funds since 2010.” The Social Security system had a deficit of almost $200 billion in 2012. In the future, the system will require even larger subsidies from the general fund.
Social Security is still coercive. It is not a voluntary program that one contributes to. And it is funded by theft. Employers who fail to properly withhold Social Security taxes face fines and imprisonment. Self-employed individuals who do likewise face the same thing. All of these things would be true even under a Social Security privatization scheme.
Social Security is still welfare. Just because it is not called welfare; just because it differs from SNAP, TANF, and WIC; just because Americans think it isn’t welfare; and just because there is generally no stigma attached to receiving it, it doesn’t follow that it isn’t a welfare program. Congress can revise the Social Security benefit schedule at any time with no input from recipients. Social Security taxes can be raised at any time. The wage base upon which the taxes are figured can be raised or eliminated at any time, thus effectively raising taxes. Benefits paid don’t correspond to taxes collected. There is no contractual right to receive benefits. The retirement age can be raised at any time.
Social Security is still immoral. It is simply a system where money is taken from those who work and given to those who don’t. But the taking of someone’s money in order to give it to someone else — whether by a thief or the government — is immoral, even if the recipient is disabled, poor, retired, a widow, or an orphan.
Social Security is still destructive. It is a program that fosters dependency on the government, crowds out real charity, shifts responsibility from the individual to society, shifts responsibility from families to the state, and contributes to class warfare.
Social Security is still not in need of reform. Various proposals have been put forth over the years to reform the Social Security system by reducing or means-testing benefits, COLAs, and early retirement; by raising the tax rate, the wage base, and the retirement age; or by expanding the participant base and broadening the tax base. But a system that is inherently immoral and destructive should be eliminated, not reformed.
Social Security is still not in need of saving. Democrats and Republicans alike talk about saving the system for our seniors and ensuring that the program will be there for future generations. But once again, a system that is inherently coercive and socialistic should be eliminated, not saved.
Social Security has not changed. It is still an intergenerational, social-engineering, income-transfer, wealth-redistribution program, as it has always been. Because it is still incompatible with a free society, the Social Security system should still be abolished.
