Very few outside of Washington's elite political inner circle had any idea then or now, of the long-term financial consequences average working Americans would suffer, thanks to the 1983 Social Security reform legislation.
To think a tax-cutting president would sign reform legislation resulting in a three fold increase in maximum Social Security taxes, was to think the unthinkable. To believe a tax-cutting president could perpetrate a tax hoax on average working Americans, was to believe the unbelievable. Yet 25 plus years later the unthinkable has become reality, the unbelievable, believable. The financial demise of millions of middle-class working Americans offers overwhelming evidence as to the malicious intent of the aforementioned reform.
U.S. Rep. Ginny Brown-Waite offers up this incriminating tes-timony; "For too long Congress has gambled with Social Security and its surplus. Lawmakers have engaged in an accounting shell game to pay other debts with taxpayer's hard earned retirement dollars. This practice is irresponsible and should be stopped immediately.
Prior to 1983 Social Security obligations were funded by a pay-as-you-go taxing structure, meaning its tax revenues were in approximate balance with retiree obligations, leaving very little if any imbalance at the end of each accounting period. In other words, one tax dollar in, one retiree dollar out. The 1983 Social Security reform legislation ushered in a pay-in-advance taxing scheme, whereby workers were taxed $5, retiree obligations were $4, leaving the excess to be saved and invested for the now retiring 78 million baby boomers. Based on the fear that Social Security was the verge of bankruptcy, the biggest taxing scheme in the history of the world was visited upon middle class America.
Over one 10-year period, Social Security taxes increased by an unprecedented 305 percent; millions of average working Americans saw their ability to save and invest erode. Two-wage-earner households became the norm, and future leaders. The race to financial inequality was on, as AARP adopted the entitled, and politicians began treating millions of average working Americans like rented mules.
Over time the financial consequences are undeniable; for persons retiring in 1980, Social Security received 5.15 percent of their lifetime wages; 7.34 percent in 1990; 9.56 percent in 2000, and in 2009 Social Security receives 12.4 percent of every dollar earned up to $106,800.
To complicate matters, excess Social Security tax dollars we began paying in 1983 are about to reappear in the form of Social Security IOU debt that will have to be paid again. Intergovernmental special obligation bonds or IOUs, have been used to transfer excess Social Security tax dollars to the general revenue fund, where they are mingled with other tax receipts, and spent on something other than intended. This accounting shell game has turned $2.43 trillion of potential Social Security trust fund assets into $2.43 trillion of Social Security IOU debt, growing at over $9,400 a second; a net turnaround approaching $5 trillion.
Regarding one generation kicking the can down the road to the next generation, Thomas Jefferson once said, "We shall all consider ourselves unauthorized to saddle posterity with our debts and morally bound to pay them ourselves."
There's 43,200 minutes in a month; please spare a few of those minutes to help raise this issue to the level it warrants. It's time for rented mules to demand the respect they deserve!
Jim Gries lives in Weeki Wachee and can be reached at [email protected]