There is a pop meme on Social Security that the government spends 6x more money on those age 65+ compared to those age 0-17 – and thus, the system is rigged against young people.
That claim uses true numbers – but is based on cherry picking only Federal dollars.
The Federal government run Social Security and Medicare systems account for the bulk of spending. The Federal government spends little on services like public education.
Public education is funded primarily by state and local taxes. When you count this spending, the amount of tax money spent on those age 0 to 17 is almost identical to that spent by the Federal government on those age 65+.
Services like Medicare Part A, and Social Security, are also funded, in part, by taxes on workers throughout their careers, whereas spending on age 0-17 is funded by general taxes.
A related meme is that today’s Social Security benefits are paid entirely by today’s workers, implying that today’s workers are getting screwed.
But that is highly misleading because that is how Social Security was designed and how it has always worked. This is not new.
Today’s retirees, when they were working directly funded the SS benefits of the the then retirees. That is, those working in 1970, 1980 or 1990, were directly paying the Social Security benefits of those who at that time, were already retired.
In the 1980s, Congress “reformed” Social Security, raising “full benefits” age from 65 to 67 and increasing payroll deductions, in part, to fund a “trust fund” to help pay their own future SS benefits. Thus, many of today’s retirees, while they were working, paid for past retiree benefits AND also the trust fund that was supposed to be for their own future.
“The reforms intentionally generated large surpluses in the Social Security Trust Fund by having Baby Boomers pre-pay for their own retirement.
However, by law, those surpluses were invested in U.S. Treasury bonds — meaning the government borrowed the money and spent it on general operations, leaving the trust fund holding IOUs (Treasury securities)”
- Up to 50% of Social Security benefits became taxable for higher-income recipients (later raised to 85% in 1993)
- Federal employees were brought into the Social Security system for the first time
- A 6-month delay in the cost-of-living adjustment (COLA) was enacted
But Congress can’t do math and didn’t understand that the fertility rate had collapsed (see chart, below)- and erected a pyramid scheme that will collapse. The trust fund component is headed to depletion – and then SS benefits become funded again, entirely as direct transfer from worker deductions.
It’s a mess created by idiots in Congress in the past, and contemporary Congressional reps that have continued to kick the can down the road.
But the main point here is to correct the record – Social Security has always been a mostly “pay as you go” system, passing contemporary worker payroll contributions directly to retirees. This is not new. It is a fatal design flaw that Congress assumed the future population would grow forever, thanks to arrogant asshole Paul Ehrlich and his incredibly wrong population predictions. (You have no idea how much he influenced wrong policy for decades – that will cost us yet for many more decades.)
Second, today’s retirees paid for both past retiree benefits and to fund their own SS Trust Fund – but inadequately. In effect, they were paying twice but will soon see their own Social Security benefit promises slashed.
Meanwhile, pundits on X continue to assert this scheme is new and its a plot by “Baby boomers” to screw Gen Z. (Another example of why I have left X).
The fundamental problem is the level of intelligence in members of Congress is very low. They prefer to play political games rather than solve anything.
