Why Is Social Security A Budget Issue In Washington?
Social Security is a self-supporting program supported through a separate payroll deduction. It is not part of the federal budget nor does it contribute to the deficit. Everyone pays a payroll tax called FICA, Federal Insurance Contributions Act. This payroll deduction goes toward Social Security and Medicare premiums. Only the first $113,700 of income is taxed.
The money collected goes into a pool and funds Social Security and Medicare payments for citizens. The excess money (after paying the citizens) is used to buy U.S. Treasury bonds. The program was created by the Social Security Act and was signed August 14, 1935. From the time of its creation until this year, FICA had a surplus. For 77 years FICA has been buying bonds.
Selling bonds is how Congress borrows money. Congress takes the money from selling bonds and uses it to finance their overspending.
Social Security bonds help pay for their special interest budgets. Due to more people drawing benefits (this year for the first time) FICA had to cash in some bonds, meaning Congress can’t borrow money from FICA. Rep. Paul Ryan and others would have you believe that Social Security is in trouble and try to convince you that your children and grandchildren will have to do with less support from the program. In reality, Congress needs FICA to buy bonds to keep Congressional special interests financed.
If Congress is concerned about making Social Security secure, why not just simply have FICA tax all income, not just the lower $113,700? That way Mr. Ryan would have enough money to save Social Security plus allow everyone (regardless of age) to apply for Medicare. He also could then get rid of his dreaded “Obamacare.”