History lesson on your Social Security card

I have a friend or relative who is a member of the Tea Party. As is the wont of this particular friend or relative, with midterm elections looming and my liberal tendencies posing the danger that I might vote Democratic, she or he forwarded me a message recounting one of many dastardly disasters Democrats daily devastate decent democracies with.

I’ve asked not to receive these e-mail forwards anymore. They still came.

I’ve ignored them. They still came.

I responded once, and debunked the e-mail point by point, and they stopped coming for almost a year. So, in the event someone you love sends you crap like this, feel free to lift from my post wholesale. I figure I’m off the hook for about another year, and I’m happy to spread the wealth around. (We liberals are like that.,)

Portions of the original e-mail are reprinted in boldface, to separate them from my comments. Please note that I went out of my way to be polite and respectful to my friend or relative who is active in the Tea Party.

Pay attention not to what they speak but what they do.

How many of you remember this about our SS card?

History Lesson on Your Social Security Card

Thanks for sending this e-mail. I decided to accept its challenge to verify its claims, and found the experience informative. As you can see, the message doesn’t hold up well to examination. Most of its information is false, and the facts that it does get right are portrayed in such a misleading manner that you can essentially brush this e-mail off as baloney. (As Mark Twain would have observed, “There are lies, damn lies, and things you get forwarded on the Internet.”)

I’ve gone through to address the points one by one, and when I’ve remembered, I’ve linked to my source so you can check it out for yourself.

Social Security Cards up until the 1980’s expressly stated the number and card were not to be used for identification purposes. Since nearly everyone in the United States now has a number, it became convenient to use it anyway and the message, NOT FOR IDENTIFICATION, was removed.

Our Social Security

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:

1.) That participation in the Program would be Completely voluntary,

No longer Voluntary.

This claim is an error. Franklin Roosevelt did indeed propose the Social Security program in 1935, and he was indeed a Democrat. However, there is no language in the Federal Insurance Contributions Act for participation in the Social Security program to be voluntary. There never has been either. Since the inception of the Social Security program, FICA taxes have been deducted from paycheck automatically, for everybody.

2.) That the participants would only have to pay 1% of the first $1,400 of their annual Incomes into the Program,

This claim is also fallacious. The language of the act establishing Social Security did set the rate to 1 percent of the first $3,000 of annual income. The law also included provisions to increase that rate to 3 percent over the next 12 years.

You can verify this at the web site of the Social Security Administration: http://www.ssa.gov/history/35acviii.html

Now 7.65% on the first $90,000.

Also untrue, from what I can tell. As of 2005, the rate is 6.2 percent on the first $90,000 of annual income. This rate, incidentally, has been increased many times over the years. It may have gone up since 2005, I suppose.

3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year,

No longer tax deductible.

Actually, it never was tax deductible. The Social Security Act of 1935 specifically stated that FICA withholdings should not be considered tax deductible, and from what I’ve been able to find in the time I took to fact-check this e-mail, they never have been.

4.) That the money the participants put in would go to an ‘independent ‘Trust Fund’ rather than into the general operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and Under president Johnson the money was moved to The General Fund and Spent.

The Social Security Trust Fund was established in 1939 to receive Social Security taxes withheld from paychecks. This fund — and therefore the money it holds in trust — is managed by the Department of the Treasury. it is not in the “general operating fund.” So the person who wrote this e-mail has misrepresented, probably unintentionally, another aspect of how the Social Security program works.

The difficulty is that the government, under both Republican and Democratic administrations, has borrowed from that fund, but not by taking money from it. I’m no accountant, but my understanding is that the federal government borrows money from the Social Security trust by selling Treasury bonds to the Social Security trust, which then allows it to spend the money from the sale on programs not directly related to Social Security. The Treasury bonds would then later be redeemed by the trust fund, with interest. This is a common accounting ploy in the federal government, one that both major parties have been guilty of employing.

You can read a report by the Social Security Administration on this sort of thing over here: http://www.ssa.gov/OACT/TRSUM/index.html

Also, in 1969, toward the end of the Johnson administration, there were changes in how Social Security was tracked in the federal budget, but not (and this is important) how it was spent. So that claim appears to be in error as well. http://web.archive.org/web/19970617031124/http://www.ssa.gov/OACT/ASKACT/part6.html

5.) That the annuity payments to the retirees would never be taxed as income.

Actually, President Roosevelt never said that, nor was that in the language of the Social Security Act. That was a matter of policy, set by the Department of Treasury in 1938 and 1941. That policy stood until 1983, when the Social Security Act was amended.

http://www.ssa.gov/history/1983amend2.html

Under Clinton & Gore Up to 85% of your Social Security can be Taxed.

Social Security benefits became taxable in 1983, during the first term of President Reagan. The “up to 85 percent” claim is accurate — from what I can tell, it’s the first completely accurate claim in this e-mail, but the important thing to remember is that it’s “up to” 85 percent. People below a certain threshhold are taxed on a lower percentage of their benefits. And even then, it’s up to 85 percent of it can be taxed, not up to 85 percent of it can be taken away as taxes.

Unemployment benefits also became taxable during the Reagan administration, which also makes no sense to me.

Since many of us have paid into FICA for years and are now receiving a Social Security check every month — and then finding that we are getting taxed on 85% of the money we paid to the Federal government to ‘put away’ –

Yeah, that’s odd.

you may be interested in the following:

Q: Which Political Party took Social Security from the independent ‘Trust Fund’ and put it into the general fund so that Congress could spend it?

A: It was Lyndon Johnson and the democratically controlled House and Senate.

As noted before, the Social Security Trust Fund is not a part of the general fund. So this claim is wrong.

Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding?

A: The Democratic Party.

Again, this is just false. Social Security withholdings have never been tax-deductible.

Q: Which Political Party started taxing Social Security annuities?

A: The Democratic Party, with Al Gore casting the ‘tie-breaking’ deciding vote as President of the Senate, while he was Vice President of the US .

Wrong again. Social Security benefits became taxable in 1983, while President Reagan was in office. The change in regulations was recommended by the Greenspan Commission, which Reagan himself appointed. Now, you could argue that since the Democratic Party controlled both the House and the Senate, that it was responsible for setting that policy, but it’s worth noting that President Reagan, a Republican, did not veto the bill when it came to him, but signed it instead. Also worth noting is that a Republican-appointed commission recommended these changes. It appears to have been a bipartisan effort to tax Social Security benefits.

The rate of taxation did increase to 85 percent — upon certain income thresholds — in 1993, under the Clinton administration, but that’s not the claim the writer is making here.

Q: Which Political Party decided to start giving annuity payments to immigrants?

AND MY FAVORITE:

A: That’s right! Jimmy Carter and the Democratic Party.

Immigrants moved into this country, and at age 65, began to receive Social Security payments! The Democratic Party gave these payments to them, even though they never paid a dime into it!

And this is also just plain wrong. No one can collect on Social Security — not a native-born citizen, not a naturalized immigrant, not a resident alien, and not an illegal alien — unless she or someone else such as a parent or spouse, has first paid into it. The writer here is falsely conflating Social Security with Supplemental Services Income, intended to help the elderly, blind or disabled with no or practically no income, to maintain their dignity. Shame on anyone who takes issue with a program like that. Immigrants can collect from SSI under certain circumstances, but SSI is funded by the general budget and not by Social Security.

Incidentally, SSI was created in 1972 by President Nixon, and not by President Carter.

So, let me thank you for sending me this e-mail, because it has been informative. I’ve learned more about Social Security and its history in the time it took me to investigate the claims in this e-mail than I ever learned in school. Hopefully you can set the record straight for whoever sent you the original e-mail; I’m sure they’d appreciate having the right facts in front of them. I’m just sorry that someone has misrepresented such a decent program so badly, and that their errors have been so widely proliferated on the Internet.