I could probably write a column, or more appropriately, a book, called "The Top-100 Myths About Social Security." There is just so darn much misinformation out there, mostly online, about our nation's bedrock social insurance system.
Those myths can be divided into two broad categories: political and practical. In a recent column, I dealt with the latter. I wrote about all the misconceptions people have about how retirement benefits are figured and about the eligibility rules for other kinds of Social Security benefits.
Because we are in the midst of a presidential campaign, in which Social Security will no doubt be discussed at rallies and in debates, I thought today's column would be a good time to debunk the political myths. And let's start with the biggest one of all.
Myth No. One: The government has stolen Social Security money and used it for other purposes.
This one grows out of a misconception of how Social Security is financed. The government takes in almost $2 billion per day (yes, two billion each day ) in Social Security payroll taxes. What happens to that money? Every nickel of it is immediately converted into U.S. treasury notes. So the Social Security trust funds do not hold cash. (Think about it: It would be foolish for the trust funds to hold trillions of dollars in cash.) The trust funds hold treasury notes. And three times each month, a huge chunk of those notes are redeemed, with interest paid, in order to make good on the Social Security checks due that month. In the meantime, the government uses the invested Social Security trust fund money for whatever purposes the government needs to spend money. But the key point is this: The money is invested and the Social Security system holds the bonds. Millions of Americans and thousands of foreign investors and hundreds of private pension plans hold U.S. Treasury bonds. Do they think the government is stealing their money? Of course not. They think of it as a sound investment. So why do so many people insist on thinking the same procedure used by the Social Security system is theft?
Myth Number Two: Illegal immigrants get Social Security benefits.
I simply don't know how to respond to this allegation other than to say illegal immigrants do NOT get Social Security benefits. To qualify for benefits, you must prove to the government that you are either or a U.S. citizen, or that you are a noncitizen living in this country legally. That latter point may surprise some people. There are thousands on noncitizens who get Social Security checks, because they have lived in this country legally and worked and paid Social Security taxes. (By the way, there are many hundreds of thousands of U.S. citizens who get social security benefits from other countries because they lived and worked in those countries.) But to repeat: Illegal immigrants are not draining Social Security funds. In fact, many studies have shown that just the opposite is the case. Many thousands of people living here illegally who have somehow acquired illegal Social Security numbers have pumped billions of dollars into the Social Security trust funds over the years and never collected a dime in return.
Myth Number Three: Social Security hands out welfare benefits to people who never paid into the system.
This myth comes from two misconceptions people have. The first is confusing the Supplemental Security Income program with Social Security. SSI is a federal welfare program the Social Security Administration manages for the government. It pays a very small monthly stipend to poor elderly and disabled people. SSI benefits, which may indeed go to people who have never worked and paid taxes, are NOT funded out of Social Security taxes. They are financed, like all other welfare programs, out of general tax revenues. The second misconception has to do with Social Security dependent and survivor benefits. There are millions of spouses, widows, widowers and children who are getting Social Security benefits even though they may have never worked and paid into the system. But they are the legal dependents or survivors of someone who has done just that.
Myth Number Four: Social Security needs radical reform to stay solvent for future generations. Myth Number Five: Social Security is sacred. Leave it alone.
These final two myths are diametrically opposed to one another, but I'm lumping them together because they both deal with the issue of Social Security reform (or lack thereof). Social Security has changed a lot over the last 80 years. The program has always been tweaked and reformed to meet the needs of the American public or to respond to past funding shortfalls. And it will need to be tweaked again in the near future to deal with the demographic crunch caused by the retirement of the baby-boom generation. But "tweaked" is the key word. Many studies have shown that a few relatively modest reforms are all that is needed to keep the system solvent for future generations.
Next week, I'm going to give you a chance to save Social Security. I will present a number of realistic proposals for reform and tell you what each proposal would actually do to Social Security's bottom line.
If you have a Social Security question, Tom Margenau has the answer. Contact him at [email protected] To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.