There has been an e-mail circulating recently where a guy is upset with government spending, and also that the federal government has changed how they’re referring to social security payments. They’re now calling them “Federal Benefit Payments” (on the check themselves). In other words, he’s upset that they’re now officially being referred to as entitlements, but he feels like he has “earned” his payments because of all of the Social Security taxes he paid over the years. He goes on to cite how much more money he could have had if he had been able to invest that money himself.
Well, I agree that our government is bloated, getting away with too much and spending too much, including what we spend on government employees and pension, foreign aid, etc. I also agree that we would be better off over the course of our lifetimes if we could take our Social Security taxes and invest this in the private sector, leaving the government (and its huge overhead) out of it. (Bush tried this in 2005, and it got nowhere, basically because it was misunderstood as a threat against senior citizens.)
However, I don’t agree with the assumptions made in this e-mail about how much one would have if he could invest his own Social Security money, because: 1) The 4% and 5% interest rates that are used are unreasonable. Today’s rate on CDs is more like 0.2%. This cuts the assumed amount by about 65% (back to less than what he will collect in Social Security); and, 2) for most people, if they’re not forced to save it, they won’t.
Also, I do believe that Social Security (along with Medicare) is an entitlement program because the government collects taxes and then (after the overhead) redistributes the (remaining) money to select groups of people.
However, the main things that I disagreed with were his statements concerning senior citizens:
– “We’re ‘broke’ and can’t help our own seniors, veterans, orphans, and homeless.”
– “Our retired seniors living on a ‘fixed income’ receive no aid nor do they get any breaks…”
Consider an average elderly man who was born in 1929, and who made average wages all of his life. He entered the workforce in about 1947 and worked for 45 years, retiring in 1992. Even if he reached the maximum SS wage limit each year, he paid a total of only $37,000 into SS. However, during the 20 years that he has been retired, he has received $300,000 in Social Security payments (an 800% return). Also, he paid about $8,000 into Medicare, but Medicare has paid $300,000 of his medical bills (a 3,700% return).
So, I believe that we do indeed “help our own seniors.” I don’t see how anyone can say that our senior citizens don’t receive any aid or that they don’t get any breaks, just because they’re living on a “fixed income,” because: 1) Their income isn’t really fixed, because they receive periodic adjustments for inflation, just like the rest of us who get an occasional 2 or 3% increase; and, 2) Many senior citizens make more money than the rest of us, especially when considering their Social Security payments, Medicare benefits, pensions, and gains on personal savings.
We also help our veterans with pensions and medical benefits for life. And, we help our orphans and homeless with programs like Public Assistance (welfare), food stamps, Medicaid, and free school lunches. I would argue that we spend one or two trillion dollars every year helping “our own seniors, veterans, orphans, and homeless.”