AMAC Magazine - Volume 17 / Issue 6 - NOV/DEC 2023

Dear Rusty, Is there any way that Congress will vote to pay back the Social Secu- rity funds they took for their stupid reasons and left IOUs in place of the funds? Because of the funds they took going back many years, we didn’t have any decent COLAs for a few years. In fact, there were, I think, 3-5 years that we didn’t get any COLA. Please, Rusty, can you find out if this is true or false? Help us seniors! Signed, Resentful Senior What About All the Money Congress Stole from Social Security?

Social Security and restore it to financial solvency and avoid a future cut in every- one’s benefits. Regarding COLAs (Cost of Living Adjust- ments) and the lack thereof for several past years, COLAs are determined by the government’s standard inflation measure – the Consumer Price Index (CPI). There were several years (2010, 2011, and 2016) in which the CPI showed no inflation, so therefore, no COLA increase was given. Last year, due to soaring inflation, everyone got an 8.7 percent increase in their Social Security benefit, but that doesn’t happen every year. FYI, the average annual COLA increase over the last two decades has been about 2.6 percent, although COLAs can vary wildly between years depending on each year’s inflation measure. In any case, the lack of a COLA increase in past years was not a result of any political chicanery; it was the result of low inflation during those years. Signed, Russell Gloor This article presents the opinions of the AMAC Foundation Staff and is intended for informa- tion purposes only. It does not represent legal or financial guidance.

Dear Resentful Senior, I can assure you that I’ve fully investigated the allegation that politicians have squan- dered Social Security’s money and found that charge to be, simply speaking, a myth. I’ve gone back and looked at Social Security revenues and expenses since the govern- ment first started collecting FICA payroll taxes in 1937 and found that every dollar ever collected for Social Security has been used only for Social Security purposes. Over the years, various claims have been made that the money has been used for other things, but I’ve researched each of these charges and found them all to be false. Where the misconception mostly originates is that any excess money collected from working Americans for Social Security is invested in special issue government bonds that pay interest, as mandated by President Roosevelt when Social Security began. As with any investment, a financial obligation instrument is given in return for dollars received. Remember when we used to buy US Savings Bonds? We’d use our money to buy those bonds, hold them, and later redeem them for a higher amount than we paid. That’s exactly how Social Security

contributions have always worked – excess money collected from working Americans is used to purchase special issue govern- ment bonds, which are held in reserve, earn- ing interest, for future Social Security needs. These special bonds reside in a Social Secu- rity Trust Fund and, as of the end of 2022, were worth about $2.8 trillion. Are these bonds “worthless IOUs,” as some would claim? Hardly, since they are redeemable as needed to pay Social Security benefits. Considering that, since 2010, Social Securi- ty’s income from American workers’ payroll taxes has been less than needed to cover the benefits paid out, the redemption of bonds held in the Trust Fund is the only reason that Social Security has been able to continue paying full benefits to every beneficiary. The Trust Fund is a financial safety net that is now protecting all SS beneficiaries from having their benefits cut. The problem is, unless Congress acts soon to reform Social Security’s financial picture, the Trust Fund will be fully depleted by about 2033, resulting in about a 23 percent cut in everyone’s monthly Social Security benefit. I’m optimistic that will not happen (it would be political suicide), and hopefully, Congress will act soon to reform

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