From this morning:

Myth #1: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits—and again, that's without any changes. The program started preparing for the Baby Boomers' retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What's more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth #3: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth #5: Social Security adds to the deficit

Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.8


Textynnn's picture
Textynnn 8 years 35 weeks ago

Where are the other 5 myths??

Calperson's picture
Calperson 8 years 35 weeks ago

Unfortunately, according to the Congressional Budget Office, Social Security will officially go bankrupt this year, because it will be paying out $45 billion more in benefits than it takes in. Until now, Social Security defenders have assured us this would not happen for 20 or 30 years, but economists who ignored the liberal spin and looked at the actual numbers knew it was coming much sooner.

This is an important milestone in the total collapse of American socialism. The cold reality of Social Security insolvency discredits the premise of government assured prosperity for all, financed by “contributions” from taxpayers and businesses. No aspect of liberal economic philosophy can survive in the minds of those who understand the impact of this news.

American socialists have been raiding the Social Security “trust fund” for decades, to make the rest of the government look more solvent than it really is. The funds are stuffed to the brim with IOU's, which count as “assets” for Social Security, but are not counted as "liabilities" for the general Treasury fund.

This year, we reach the point where Social Security must pay substantially more in benefits than it takes in, and there’s no “cash reserve” to tap into, no “lockbox” full of money that can fund the program for a while longer. This excess is coming right out of general revenue. This is the year when Social Security transforms from a secret piggy bank that lets Big Government pretend it has lots of money to spend, into another massive expense it must cover.

One of the liberal canards that dies with Social Security bankruptcy is the notion we can “tax our way out of deficits.” We tried that a couple of times before with this particular Big Government albatross. Jimmy Carter tripled the FICA tax rates in 1977, and promised it would make Social Security solvent until 2030. Wrong. Badly.

Modern liberals are trying to float the idea of raising the employer contributions to Social Security this time, without increasing employee deductions – in other words, another hidden tax, added to the pile of glass bricks already carried by a private sector wrestling with double-digit unemployment. Just because you don’t see those taxes on your paycheck stub doesn’t mean they are not real. Employers would pass those extra costs along to employees and consumers, through reduced wages and increased prices… or they’d just cut back on the amount of increasingly expensive labor they purchase.

Social Security is the eternal proof that if you raise taxes to repair a deficit, liberals will just spend the money. That’s what happened to Jimmy Carter’s massive FICA hike. That money didn’t go into some kind of safety-deposit box. The government spent it to finance other programs, and here we are, bankrupt in 2010 instead of 2030.

This is why Social Security must be privatized. Seriously, would you yourself willingly invest in a private fund which subsidized all the stupid, wasteful, and morally abhorrent things Big Government has been spending your Social Security “contributions” on? A fund manager who gave the kind of speech Barack Obama delivered in the State of the Union would have been laughed out of the room before the speech was over. Solar shingles? High-speed rail? More billions for a failed education bureaucracy? He would have been crushed beneath the stampede of fleeing stockholders.

Look at it this way: Social Security is not and never was an investment made by the young, to be collected when they grow old. It’s a system of current workers paying the benefits for current retirees a Ponzi scheme. The ratio of workers to retirees has been falling rapidly. The last thing we can afford to do is accelerate that process by reducing the number of workers, and that’s exactly what tax increases do.

There is nothing politicians love to do more than buy political support with future commitments, which someone else will have to pay for. Taking back such a promise produces howls of outrage from its dependence, who are grimly determine to collect what they are owed. That’s why union pension plans are out of control, and that’s why Social Security is falling apart. Politicians will make all the unsustainable commitments we let them get away with. Social Security and Medicare, the worst ones they ever made, are melting down before our eyes… after a century of generating revenue that allowed government to grow larger in a thousand other ways.

Zenzoe 8 years 35 weeks ago
Quote Textynnn:

Where are the other 5 myths??

Oopsie. Thanks for noticing. I've corrected it. It never was the "Top Ten." My mistake.

Alberto Ceras 8 years 35 weeks ago

calperson says: "Unfortunately, according to the Congressional Budget Office, Social Security will officially go bankrupt this year, because it will be paying out $45 billion more in benefits than it takes in."

Not true. The Congressional Budget Office says no such thing. SSA will pay out more this year than it takes in but it is far from going bankrupt. Here's what the Congressional Budget Office really says (Bold type mine. I give you the URL if you want to verifiy it):

Protects Social Security

•The President recognizes that Social Security is indispensable to workers, people with disabilities, seniors, and survivors. Based on current forecasts, Social Security can pay full benefits until 2037. The President is committed to making sure that Social Security is solvent and viable for the American people, now and in the future. He is strongly opposed to privatizing Social Security and looks forward to working in a bipartisan way to preserve it for future generations.

In addition, the $45 billion shortfall calculations exclude interest payments earned on the program’s trust fund. You can find investment and interest tables as of the end of May, 2011, here:

The Cogressional Budget Office further says:

The off-budget surpluses in the Social Security trust funds and the net cash flow of the Postal Service total 1,216 billions of dollars for the years 2011-2020.

This from The Washington Post:

The Social Security shortfall in one graph

By Ezra Klein November 1, 2010

Which goes back to a point I've been making on Social Security for a while now: Traditionally, Social Security has balanced its own accounts, and by either raising revenues (perhaps by lifting the cap on the payroll tax) or cutting benefits, it can continue to do so. But unlike with health care, where there's no answer but changing the system to get spending growth under control, you could plug Social Security's hole in any number of ways. If we decide that a small value-added or carbon tax is a better way to raise revenue than further payroll taxation, or that cuts in military spending make more sense than cuts in pensions, there's nothing about the nature of the program or the problem that would resist those solutions.

There’s also a lengthy analysis here:

Holly A's picture
Holly A 8 years 30 weeks ago

The program IS going broke be it next year or in 2037. It is a pyramid scheme regardless and one day will fail. The CBO estimated taxes necessary to continue both Social Security and Medicare by 2050 to be more than double (including employer contributions). That is unsustainable for our children, grandchildren and great-grandchildren. And it cannot be supported either by tax increases on upper-income workers either as you suppose without turning the program into (more of) a welfare plan which it was never meant to be. Increasing tax collections on all income requires a partner increase in the Social Security Benefit as checks are figured based on what the worker paid into the program. The entire reasoning behind limiting the amount of income taxes are collected on is because Social Security also has a limit on the amount one can receive in a benefit check. It is a pay-to-play benefit program not a socialist welfare program.
And neither did Bush want to put Social Security dollars into the stock market. He advocated personal Social Security accounts with investment options (for younger workers only) which included limited stock market investment. No one was going to have the ability to risk their entire fund.
Your "myths" are typical socialist LIES. You only include statistics YOU want to share when there are others the CBO offers that are rather dire about the futurenof Social Security. How about that current retirees are actually being paid by current workers (and always have been). There isn't this big pot of money sitting around anymore, even in treasury bonds.

Zenzoe 8 years 30 weeks ago

To Holly: Social Security works the same way an insurance program works. "Social Security is a social insurance program that is funded through dedicated payroll taxes called Federal Insurance Contributions Act tax (FICA)"

Get that? Federal INSURANCE Contributions Act. It is in no way a "welfare plan." You offend me. I am no welfare recipient. I've paid into Social Security my entire working life, and now I'm enjoying its benefits. How dare you insult hard-working seniors like that?!!

Try watching something besides Fox Noise, and you'll begin to be an informed citizen. Try listening to Thom Hartmann for a change. Avoid corporate media, and then stop spreading lies and myths on behalf of corporations.

delwoody 8 years 30 weeks ago

Thank You Zenzoe for your reply to Holly, well put. And as for Calperson, I wonder how much they were paid to blog that crap?

The GOP Propaganda machine is in full swing.

Zenzoe 8 years 30 weeks ago

So true, so true, delwoody —had to be paid to do it. Busy busy busy, aren't they?!

Alberto Ceras 8 years 30 weeks ago

Dearest Holly A, please give us the exact quotes (and tell us where we might find them) for your references to the CBO, as in these two sentences taken from your comment:

"The CBO estimated taxes necessary to continue both Social Security and Medicare by 2050 to be more than double (including employer contributions)."

"You only include statistics YOU want to share when there are others the CBO offers that are rather dire about the futurenof Social Security."

And why do you confound Social Security with Medicare? They are in no way similar.

Republicans love to call Social Security contributions "taxes." Deductions for Social Security are NOT taxes; they are contributions to a trust fund, they are NOT contributions for the support of a government. These funds are not - cannot be - used to finance government expenditures. Here are a couple of definitions for taxes:

The purpose of taxation is to finance government expenditures.

1. A contribution for the support of a government required of persons, groups, or businesses within the domain of that government.

Nor are Social Security payments "entitlements" as Republicans would have it. Unless you consider return on investments "entitlements."

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