President Joe Biden was in Florida last week post State of the Union and was taking swings at Florida Senator Rick Scott’s proposal to sunset federal legislation.
“The very idea the senator from Florida wants to put Social Security and Medicare on the chopping block every five years I find to be somewhat outrageous. So outrageous that you might not even believe it,” he said.
What is outrageous about Social Security, the world’s largest Ponzi scheme, is what most American’s don’t realize.
- Social Security is not insurance and it is not a trust fund
Peter J. Ferrara writes: Most people seem to imagine that Social Security operates like a traditional fully funded retirement program. In such a system, the tax payments of current workers are saved and invested to finance their own future benefits. As a result, a huge financial reserve is built up sufficient to finance accrued benefits at any point in time. This reserve is used to finance benefits during retirement years, while current workers at that time will be building up their own reserves to finance their own future retirement.
Social Security, by contrast, fundamentally operates on a pay-as-you-go basis. The tax payments of current taxpayers are not saved and invested to finance their own future benefits. Rather, most current tax payments are immediately paid out to finance the benefits for current retirees. Future benefits for present taxpayers are to be paid out of the future tax payments of future workers when today’s taxpayers are in retirement. Consequently, large cash reserves to finance benefits are never developed in such a system.
- Social Security bestows no contractual rights or any other type of property right on workers
Charles Rounds once wrote decades ago: In Flemming v. Nestor, 363 U.S. 603 (1960), the U.S. Supreme Court set the record straight. Social Security is actually nothing more than an umbrella term for two schemes that are legally unrelated: a taxation scheme and a welfare scheme.
Workers and their families have no legal claim, grounded in the Fifth Amendment or elsewhere, on the FICA tax payments that they make into the U.S. Treasury, or that are made on their behalf. Those funds are gone, commingled with the general assets of the U.S. government and fully available for purposes unrelated to Social Security. Being mere welfare recipients—not creditors or holders of equitable property rights—workers have hopes or expectations of future benefits, but no enforceable rights to them.
- Funds do into the General fund
All federal taxes, income taxes, estate taxes, gasoline taxes, and social security taxes, go indiscriminately into the same general fund of the federal treasury. From that general fund, Congress makes periodic appropriations for all the purposes of the federal government, including payments for social security benefits.
Congress could continue to collect the so-called social security pay roll taxes even though Congress discontinued all social security benefit payments. Congress could wipe out the social security pay roll taxes and yet continue to pay all present social security benefits out of the general tax receipts of the federal treasury.
Any apparent connection between the collection of social security pay roll taxes and the payment of social security benefits is purely coincidental. The Supreme Court has held that Congress is without Constitutional power to establish such a connection. For this reason, the so-called Federal Old Age and Survivors’ Insurance Reserve Fund is actually nonexistent. The legal illusion of such a fund was conjured up to dissolve popular resistance to one of the most cruel and unjust systems of taxation ever imposed upon the American people.