Border wall funding, a government shutdown (or a government showdown!), trade relations and tariffs between the U.S. and China, the Fed continuing to raise rates with a teetering stock market — there has been plenty to fret over this holiday season. But something else is happening quietly that is nevertheless one of the most important issues in the history of America.
I am referring to, what I label as, the coming disenfranchisement of our Social Security system, at least as we know it.
Disenfranchisement, quite a stark word, is defined as the state of being deprived of a right or privilege. As a lawyer, I should know better than to use this word in relation to Social Security, since the U.S. Supreme Court ruled in the 1960 case Flemming v. Nestor that the receipt of payments from the program was not a“right,” even where a participant had paid into the system for years.
Even so, the reality is that most Americans count on and expect that “their” Social Security, in its present form, will be there for them. But it will not – at least that is what the current math unfortunately tells us.
Make no mistake, Social Security is a pay-as-you-go system. Even though there is an estimated nearly $3 trillion in the trust fund, this simply reflects accounting entries of the net surpluses the fund has been credited with, plus interest earned, since inception. There is no actual money in the fund, just the special-issue Treasury bonds, which are in fact government IOUs. The real surpluses have been used by the federal government as a funding source of many things.
But no more – the days of surplus payments are over now and under the current system will be for the coming 75 years. For the first time since 1982, this year more benefits will be paid than revenues collected. This is no surprise to the government, as they have projected and forecasted these figures based on our demographics in the annual Trustee Report since 1941. – READ MORE