I've still had the opinions. I just wasn't writing about them. So, this post is a return to action prompted by all the campaign fervor and rhetoric being thrown around in the media by candidates, campaigns and other supporters, hangers-on or reporters claiming to be unbiased journalists. (Here's a tip. They aren't unbiased.)
Today a new billboard/photo plaque began floating around the internet via FaceBook and e-mail messages.
This proclaims itself as Social Security Facts and directs us where to look on the internet for more facts. The only problem is that they aren't facts. I don't know who these people are but the facts they offer are either half truths or outright incorrect. Imagine that.
Social Security and Medicare are not part of the Federal budget because they have their own funding from Social Security and Medicare taxes. That is absolutely correct. Further, today, they are not broke and they are in fact still running a surplus. That, too, is absolutely correct. So far, so good.
However, neither program will remain solvent through this century as claimed. That is absolutely incorrect. According to the following article offered in the Los Angeles Times, a liberal publication, Social Security is projected to go into the red in 2033 and Medicare will hit the red even sooner in 2024, only 12 years from now. http://articles.latimes.com/2012/apr/24/nation/la-na-medicare-report-20120424
When these two programs begin running deficits in 2024 and 2033, respectively, the Federal Government will have limited choices: Raise Social Security and Medicare taxes even higher; reduce benefits; make payments from general Treasury funds, which will increase the deficit and require borrowing even more money.
The bottom line is the Federal Government issues Social Security checks and Medicare payments from the U.S. Treasury. If the government can't get the money from Social Security and Medicare tax receipts, they have to get it from somewhere and the somewhere will be from general funds.
So, the claim that Social Security and Medicare will remain solvent throughout the century are outright incorrect and the claim that these payments cannot add to the deficit are disingenuous. So far, not so good.
Another claim is that Social Security and Medicare are not entitlements--that every dime has been earned, rather than given by government. In truth, every dime of Social Security and Medicare payments are part of entitlement programs. We, as current or former taxpayers, are not paying into retirement or medical accounts for our own use at a future time. We make transfer payments, a form of tax in which today's payers support today's recipients. We do so with the hope and belief that we'll be supported in turn by future taxpayers when we're entitled to receive benefits. Hence the name, Entitlement Programs. If you don't like it, call it something else but entitlement is what it is.
The last item claimed to be fact is about privatization of Social Security. If Social Security had been privatized during the Bush Administration, would people within 15 years of retirement have lost 50% of their retirement accounts? Yes and no.
If Social Security had been privatized (not something I advocate) and if participants had 100% of their retirements assets invested in S&P 500 stocks or mutual funds (not something I recommend) on October 10, 2007, they would have lost 57% of those retirement assets by March 9, 2009. The facts are actually worse than the claim, although it wouldn't have mattered at all how close a participant was to retirement. Unfortunately, the statement about eight years is not so accurate.
Looking specifically at the eight-year period claimed in the statement, investors in the S&P 500 would actually have had a positive return of 27%. That's relatively modest for eight years but it is a gain and not the claimed loss. Between September 2002 and September 2012, even counting the crash years of 2007-2009, the value of the S&P 500 is up 77%. That's an annual average return of 7.7%, which is not a bad return by most standards.
These are the facts. If there is anything to be gained, here, besides knowledge and truth, it's that none of us should accept these politically motivated claims without checking them. Since your vote counts as much as mine, I hope you will.
