Page 84 - Heavenly Signs III by Mel Gable

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Social Security
Social Security is primarily funded through dedicated payroll taxes called Federal Insurance Contributions Act tax
(FICA). Tax deposits are formally entrusted to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal
Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance
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Trust Fund which comprise the Social Security Trust Fund.

By law, Social Security may not spend money that it does not have in its trust funds. It is impossible for Social
Security to incur a deficit over the long term, since it can only spend money it already collected. Dean Baker, an
American economist, made the following statement.

“Social Security is prohibited from spending any money beyond what it has in its trust fund. This means that it cannot lawfully
contribute to the federal budget deficit, since every penny that it pays out must have come from taxes raised through the program or the
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interest garnered from the bonds held by the trust fund.”

Social Security taxes are paid into the Social Security Trust Fund maintained by the U.S. Treasury which is
technically, the “Federal Old-Age and Survivors Insurance Trust Fund” that was established by 42 U.S.C. § 401(a). The
current year expenses are paid from current Social Security tax revenues. When revenues exceed expenditures, as
they did between 1983 and 2009, the excess is invested in special series, non-marketable U.S. Government
bonds. Therefore, the Social Security Trust Fund indirectly finances the federal government's general purpose
deficit spending and budgets. In 2007, the cumulative excess of Social Security taxes and interest received over
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benefits paid out stood at 2.2 trillion dollars.
There is always the argument over whether the returns on Social Security contributions should be compared to
returns on private investment instruments. But, nonetheless, there is money in the current fund even though it
could have been more wisely invested than in U.S. Government bonds. Although Social Security is sometimes
compared to private pensions, the two systems are different in a number of respects. It has been argued that
Social Security is an insurance plan as opposed to a retirement plan. Unlike a pension, Social Security pays
disability benefits. A private pension fund accumulates the money paid into it, eventually using those reserves to
pay pensions to the workers who contributed to the fund. However, Social Security cannot “pre-fund” by
investing in marketable assets such as equities, because federal law prohibits it from investing in assets other than
those backed by the U.S. Government. As a result, its investments to date have been limited to “special” non-
negotiable securities issued by the U.S. Treasury.

It is easy to realize that this fund is being paid for by our children. It really is not a retirement pension as many of
us depend on it for during our elderly years. Is this truly sound financial investment of our paid in Social Security
taxes? In comparison, the country of Singapore invests every dollar of each individual into a separate retirement
fund, which is ultimately owned by the individual. The more money an individual contributes to the fund the
more money he will have to retire with during his elderly years. This seems to be just too fair for implementation
by the U.S. Government. We have borrowed on our future to pay today’s needs. That really doesn’t seem to be a
sound business practice. Again, this reflects not only on the national debt, but how we have decided to pay for
our elderly. What happens when our younger generation population declines? It is bound to occur were a nation
is no longer blessed by God, because of its wicked ways. We will take a look at these wicked ways in the next
chapter of how this can occur. Marriages of same-sex couples have not been recognized by Social Security for
spousal benefits because the federal Defense of Marriage Act (DOMA) September 21, 1996, (1 U.S.C. § 7 and 28
U.S.C. § 1738C) law excluded them from federal recognition. This law was appealed and over-turned by the
Supreme Court on June 2013 as being unconstitutional. The elderly population is growing older before they die.
This is backed by statistics as well. If only our government had wisdom before structuring Social Security and its
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fundamental foundation. It has worked up to now because God had richly blessed this country.

138 Historical Background and Development of Social Security, Social Security Administration

139 The Baseline Scenario, November 28, 2012, by James Kwak
140 The 2012 Long-Term Projections for Social Security Congressional Budget Office October 2012