This is one of the longest running questions in the minds of seniors, and one that has gotten more intense as the predictions about the program’s long-term stability have eroded over time.
At this point, in a good economy, the program would be able to pay scheduled benefits until early in 2035. That means that someone turning 76 today expects on average to outlive the system’s ability to keep its promises. So the question deserves the attention of most voters.
There is only one answer of certainty. Congress did not spend your hard earned dollars on other programs. This story of blah, blah, blah has been around since I was a teen, and likely will last well beyond the decline of Social Security. The story thrives in a vacuum of fact, and serves only to promote the stagnation of reform.
Here is the narrative : While the American people diligently paid into the Social Security Trust Fund, Congress systematically took the money and spent it on just about every government program out there.
Here are the facts.
- Between 1937 and the end of 2021, the OASI program in total collected $18.7 trillion in payroll taxes. (OASI Income)
- Between 1937 and the end of 2021, the program in total spent $18,8T on benefits paid to eligible beneficiaries. (OASI Expense)
- The program has not generated any excess cash since 2010 with which Congress could spend on other programs. (OASI Tax Revenue)
- Congress has added more than 800B in general fund subsidies. So even when there was excess cash to borrow, every penny borrowed by the government was spent on one program : Social Security. (OASI Income)
That means at the end of 2021 there was roughly a negative 900B to spend on other government programs.
In total, 2021 was the crossover year where every penny of payroll tax ever collected in the history of the program had been spent on existing retirees. Not one penny is left to have been spent on welfare queens, offset tax cuts for the wealthy, or any government program out there.
This myth has been promoted by activists who want to give voters a reason that the greatest program in the history of government is failing. The Senior Center League for example tells its members : “Spending the money in our Social Security Trust Fund was just one of the things that Congress has done to damage its future.” The failure of such a wonderful program must stem from the invisible hobgoblins that infest Washington D.C.
The myth tends to build a very vocal and unrelenting voting block, which stands against reform. These voters definitively reject the idea of benefit reductions, arguing that the real solution is to “put the money back”. Worse, they oppose tax increases because that revenue will only be borrowed and spent on other things.
The problem with Social Security has nothing to do of course with financial mismanagement. The cause of the crisis is Congressional inaction in response to the well documented gap between projected revenue and expense. The cause of that problem is those voters who elect Congress after Congress promising to do nothing in the face of the most predictable crisis in history.
To illustrate the impact of the passage of time, roughly 10 years ago, we could have increased the retirement by 1 month every 2 years until the retirement age was 68 to solve 44% of the problem. Today to replicate that efficacy, Congress would have to increase the retirement age by 3 months per year until the retirement age was 70, and index it thereafter.
It is a reasonable estimate that the retirement age would be 70 until 2058 by which time workers would wait until 71. For the guy who is 34, the cost of just 10 years of stagnation is 3 years of retirement. Mind you that solves less than half of the problem. That isn’t happening.
If you are 70, you can expect to be around when the program falls into insolvency. The cause of this unfavorable outcome isn’t Congress spending your hard earned money on someone else. It is that you have voted for decades for people who say as little as possible about the program during campaigns, and do nothing once they are elected.
We are the problem. By and large we are more willing to believe in the Loch Ness monster than the possibility that our politicians have stood by and allowed a predictable crisis to take root and grow.