Way back when, before unions and labor laws, when people got too old to work, they moved in with their children or other relations, watched grandkids, cleaned house, did laundry and cooked meals for their “keep.” For those who didn’t have children or relatives or friends that would take them in, there were poorhouses or old-people homes. In 1935, the Social Security Act was passed. Taxing on Social Security began in 1937 and benefits commenced.
The original 1935 Act was designed primarily to pay retirement benefits to the primary worker, although it contained an unemployment compensation program and aid to states for health and welfare programs directed at mothers and children (the amounts permitted to be withdrawn for non-retiree programs were limited). In 1939, the Act was amended so that surviving spouses and children could collect based upon the primary worker’s income. It was not until 1958 that disability benefits were paid out from the Social Security FUnd.
Federal employees were not required to participate in Social Security until 1984. Prior to that, they were covered by CSRS, a civil service retirement program which did not have any welfare components. When Social Security became mandatory for federal employees hired after 1984, those who had been employed prior were given a one-time chance to either keep their CSRS program or move to Social Security. Many more kept the CSRS program rather than switch, because their money was safe from governmental raids on retirement funds.
By law, funds collected through FICA taxes are required to be invested in interest-bearing securities which have no risk to the principal. According to the government website, from 1937 through 2009, Social Security expended $11.3 trillion, and had an income of $13.8 trillion. The wording is important, particularly the use of the words income and expended. It is no secret (and remains undisputed) that the government — both the Democrats and Republicans — have authorized raiding the Social Security Fund to pay other government agendas, including wars.
According to financial experts and the government, in 2014, Social Security will begin paying out more than it is taking in. This has caused many politicians to cry for cutting benefits, raising retirement age or disbanding the program altogether. The blame has been squarely put on baby-boomers coming to retirement age.
Surprisingly, mainstream media and politicians have not discussed, in depth, several very important points. The first is that very little, if any, of the raided monies were paid back into the Fund (nevermind the interest lost). The second is that those baby-boomers who are retiring (and their employers) have been paying into the Fund since they were about 18. The third is that the performance of the Social Security administration has been dismal. Money has flown out the proverbial window because of huge overhead expenses, benefits paid to dead people, bogus claims and the addition of various syndromes, which have no proven method of diagnosis (such as fibromyalgia, ADD, ADHD) to the list of disabilities which render people eligible for public assistance.
It is curious to note that although many of these undiagnosable syndromes had been in existence for dozens of years (fibromyalgia, for example, was first diagnosed in the late 1800’s), there were very few disability claims filed until 1996, when President Clinton signed the Personal Responsibility and Work Opportunity Act. Under the Act, individual states were given tightened criteria for the use of federal funding, which forced states states to overhaul their welfare programs in such a way that collecting welfare (especially for the long haul) was much more difficult. Some states imposed time-limits on benefits, required recipients to attend work-training and prohibited people from indiscriminately breeding so they could add more children (and receive more benefits). In a very short time, disability claims for syndromes like fibromyalgia, ADHD and ADD rose dramatically. Yes, some sufferers of these syndromes really are unable to work or function. Far more were not.
That is why we need an overhaul of the system and how it pays, especially for disabilities which are not physical or able to be firmly diagnosed. For example, what defines an inability to work needs clarification. If a person is able to get regular haircuts, go grocery shopping, lunch with friends, take vacations, attend amusements, etc., should they be deemed unable to work because they’re sometimes tired, or depressed, or have some aches and pain? If a person’s bi-polar disorder is treatable with medication that they choose not to take, are they entitled to benefits for being willfully disabled?
Similarly, there are many children who are slow learners, disobedient, stubborn, and/or fidgeters — all complaints that are now tossed under the ADD/ADHD label. Those same children attend regular school, participate in team sports, attend play-dates and get invited to birthday parties. Should a parent be able to drain the disability system to the tune of a few hundred dollars every month because their children might just need extra parenting or teaching? No one is guaranteed a bright, behaved child and if parents have to put extra effort into raising their child, it shouldn’t entitle them to collect money for it.
In this day and technologically advanced age, it is inconceivable that the Social Security administration has paid out over $40 million in benefits to dead people. Someone isn’t watching the store – and that person (or those people) should be replaced with workers who will.
Perhaps the solution for the Social Security dilemma can be solved by Washington:
(a) repaying the monies taken over the years (with interest) and passing a law which prevents governmental raiding;
(b) demanding a more diligent and realistic yardstick by which disability benefits are granted (including a personal interview with the recipient),
(c) cutting a few mid-level layers of management and using that money to investigate disability recipients to ensure that they’re really disabled and
(d) hire a clerk to keep the database of death certificates updated.
Where do we get the money to pay it back? Well for starters, we can take up the offer by Warren Buffett and friends to pay more taxes earmarking that money for Social Security retirement benefits — or simply allow them to pay money into the overhauled system that can’t be diverted for special projects, like, I don’t know — Bridges to Nowhere.