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Subject:  Re: Means Testing SS Date:  1/13/2011  10:58 AM
Author:  Goofyhoofy Number:  68229 of 101560

Social Security has always been a welfare program.

It is a wealth transfer from thsoe with earned income to those who qualify to receive the benefits.

Well, no. In order to "qualify" for the benefits, you (or a spouse) must have paid in to the system. This is completely unlike "welfare", which has no such requirement.

From inception until rouhgly 1983, SS was largely pay as you go, and many early retirees collected way more than then paid into the system and more than any actuarially sound pension could have paid.

Partially, but largely not true. Social Security was passed in 1935. The first benefits were not paid out until 1937. The first benefits were a trifling 17¢. (Oh. And that was a lump sum annual payment. Monthly payments, similarly tiny, were not paid until 1939.) While there was undoubtedly imbalance, this is not different than an annuity or an insurance program which also has imbalance, depending on the longevity of the recipient or how the annuity's 'investments' do, or other factors. Again, I acknowledge that it's not "perfectly equal." It was never intended to be.

As for your "actuarially sound" comment, that's pretty generally wrong too. The Social Security taxes were sufficient to fund the program until the benefits were changed.. At inception, only the wage-earner could receive those benefits. After a few years spouses were included, and the rates were raised. And after several more years minor dependents were included, and the rates were raised again. But at no time was the program "actuarially unsound", at least until the potential benefit pool was enlarged, at which time the rates were adjusted to meet the new reality. Social Security's "problems" come because of two factors, 1) increased longevity (which is actually the minor problem) and 2) the size of the baby boom thanks to World War II. Neither of these is particularly insolvable, unless we choose to make it so.

I am curious though. Do insurance premiums never change? When hurricanes roar through Florida, do insurers not make adjustments based on changing conditions? Why do you think Social Security should be exempt from adjustments, but private market insurers not be?

Since roughly 1983, "[s]ome people have to pay federal income taxes on their Social Security benefits."

Yes. We have a graduated income tax. That Social Security is called "income" shouldn't be a surprise. It probably should have been from the beginning.

IOW, benefits are (and have been tipped) in favor of low wage earners.

The "tip" is quite modest, and if that is what you are using to define it as a "welfare" program, well, it seems a minor point, at least to me. And high income earners stop paying any SS security taxes at all after their first $106,000 or so, so I'm not really convince how awful this is.

The taxation of Social Security is not a "social security" issue, it is a taxation issue. We tax capital gains at different rates, too. Does that make them a "welfare program"? I have some tax-free muni-bonds. Are they a "welfare program?"
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