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Opinion Letters Debunking the ‘myths’ of Social Security

This is in response to the letter from Sandi Dotherow in the Sept. 27 edition of MCN. Ms. Dotherow’s letter repeats several myths and falsehoods about Social Security that float around on the internet. Based on these myths, she then attacks several Democratic presidents for, among other things, “taking away our freedoms,” and suggests we “not vote blindly” in the upcoming election. I would like to set the record straight.

Social Security was never a voluntary program as Ms. Dotherow claims President Roosevelt “promised,” nor could it have been. While in its early days the law applied to the occupations of only about half of wage earners, everyone employed in those job categories was always legally obligated to pay into the system – participation was not voluntary. Today, with rare exceptions (mostly state and local government employees who come under an alternative system) nearly all occupations come under the law.

Money collected from Social Security taxes (FICA) is not generally put into the “trust fund.” It is used to pay benefits to current retirees, and always has been; that’s how the system has worked from day one. Only the excess of receipts over payouts, a comparatively small proportion of FICA taxes, is placed in the fund. That money is invested in treasury securities, and draws interest. At any time that receipts don’t cover payouts, the Treasury is obligated to pay off those securities, and that money will be used for payouts.

There was a period, from 1969 to 1990, when the trust fund was defined as being part of the “federal unified budget,” but that always was a budget definitional issue, and never affected the working of the trust fund.

Social Security contributions were never tax deductible. This idea was specifically rejected in the original 1935 legislation.

President Roosevelt never “promised” that Social Security annuities would never be taxed, nor could he have since no president can bind his successors, even through legislation let alone a simple declaration. It is true that originally they weren’t taxed. This was not in the original law, however, but resulted from a series of Treasury administrative rulings. In 1983, under President Ronald Reagan, those rulings were overridden and taxes were introduced on Social Security annuities. Last I heard, Reagan was a Republican, not a Democrat.

Ms. Dotherow claims illegal immigrants are now collecting Social Security, and voting for Democrats to show their appreciation. This is complete fiction, apparently based in part on confusion between legal and illegal immigrants. Allow me to clarify.

The U.S. has 40 million immigrants according to the Census Bureau. They generally fall into three categories: those who immigrated and have become citizens, those who are here legally with the proper visas but are not citizens, and those who are here illegally, without valid documentation.

Factoid: A recent study shows that 1/4 of tech startups in the U.S. were started by immigrants. Clearly they contribute to our economy.

Citizen immigrants have every right to participate fully in the Social Security system, and to vote. For example, immigrants from Cuba in Florida vote for Republicans in large numbers and conceivably could deliver the White House to Romney.

Legal but non-citizen immigrants in many cases do participate in Social Security by paying in and later receiving their payout, as they are entitled to do, but they don’t vote for Democrats or anybody else since they can’t vote. Note that recent claims about widespread “immigrant vote fraud” have found no factual support whatever, but we will have to leave that discussion for another day.

Illegal immigrants cannot and do not collect Social Security. Lots of them, in fact, return to their countries and are never heard from again. The irony here is that many of them do pay in, since the FICA deductions are taken straight from their paychecks. So the truth is that the Social Security system is to an extent being subsidized by illegal immigrants for the rest of us, not the other way around as suggested by Ms. Dotherow and other conservatives.

The bottom line here is that the Social Security system, due mostly to demographic changes, has been and will need to continue to be changed and fixed in order to keep it solvent. But this has nothing to do with “our freedoms” or with God as suggested by Ms. Dotherow. It has everything to do with arithmetic. Voters should indeed consider the proposals of the two parties in making their choices. There is little question in my mind that Romney and Ryan’s proposals are the ones that embody, by far, the most suspect arithmetic.

John Binkley — Franklin, N.C.





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