The Trust Fund Mirage

Americans have long been led to believe that Social Security is a rock-solid system. But from very early on, Social Security had to be regularly modified to remain financially viable. At its inception, the system had a combined employer-employee tax rate of 2 percent levied against the first $3,000 of earnings. That held until 1950, after which the payroll tax rate and the earnings that are taxable had to be continually adjusted upwards. In a statement that only applies through 2009, the system's administrators admit to this: "Since 1937, there have been 11 years in which benefits paid out exceeded income and so the assets of the Trust Funds had to be spent to make up the difference." By the 1970s and early 1980s those shortfalls were becoming an annual problem. To put Social Security back on a self-financing, pay-as-you-go basis, Congress enacted the Social Security Amendments of 1983 and raised the combined employer-employee tax rate in stages from 10.8 percent to 12.4 percent,...(Read Full Article)