The Social Security Trust Funds are estimated to be depleted by 2034. Were they robbed? I’ve heard a variety of versions of this story. Essentially many believe the Trust Funds were diverted/robbed to pay for other government programs leaving future retirees high and dry.

The fact is the Social Security Trust Funds have received every dollar they were entitled to receive under the laws that govern the program, and no money from the Funds was ever used for anything but the payment of benefits. So why will they run out of money in just seventeen years?

Over the decades since Social Security was created, we, the American people fought tooth and nail against tax increases that would have kept the Trust Funds afloat and were happy to see benefits extended beyond those in the original design. As a result Social Security has been severely underfunded. If anyone robbed Social Security it was us.

The two funds, the Social Security Disability Income Fund and the Social Security Old Age and Survivor Insurance Fund together help support 60 million people; 43 million retired people and their dependents, 6 million survivors of deceased people and 11 million disabled people.

In 2023 when the Disability Income Fund is depleted, the tax revenue supporting the program will only be able to pay 89 percent of the benefits, and in 2035 when the Old Age and Survivor Insurance Fund is depleted, the tax revenue will only support 77 percent of projected benefits. Most analysts implicitly assume the Old Age and Survivor Trust will be tapped to fund disability payments, bringing the projected life of the two together to 2034, 100 years after Social Security’s conception.

When Franklin D. Roosevelt first considered creating a social insurance program in 1934, he envisioned a self supporting system, similar to an insurance contract, where contributions for a worker would be collected over his or her lifetime and invested. The contributions and investment interest combined would provide the funding to pay out the worker’s benefit at the end of their work life.

Of course this wasn’t possible in the early years of the program, because it would be decades before a worker would have contributed enough for a fully funded benefit. Therefore the early payments had to be funded from the contributions of those still working.

The new law included a schedule of tax increases to be implemented over time to make the program self-funding. Without the tax increases, the system was projected to require government subsidization by 1980.

When Social Security was implemented the benefit payments were cheap relative to the tax revenues that were being collected.  In 1940, there were more than 159 workers for every beneficiary. As a result, congress didn’t see any harm in pushing the tax increases back as well as expanding the program.

By 1955, we were down to nine workers for every beneficiary, and the ratio of workers to beneficiaries steadily declined from there. Sure enough, just as predicted, the system was in dire straights by 1977.

After two rounds of tax increases and increases in the full retirement age in the 1980s, congress secured some breathing room. But with the baby boomers retiring in droves and after a decade of low interest rates, that breathing room turned out to be shorter than anticipated.

In order to solve the problem, an immediate tax increase of 2.6 percent or an immediate reduction in benefits for all current and future beneficiaries of 16 percent (or some combination of the two) is necessary. Yet fixing Social Security is blatantly off the current administration’s agenda.

Social Security is once again in dire need of a fix, and few who are still working have confidence that the program will be there for them. Yet we continue to demand that our politicians avoid tax increases and changes in benefits for the worse. As the time when we have no choice but to severely curtail benefits draws nearer, keep in mind that we are only getting what we asked of our politicians. The only thieves in the Social Security heist are us.

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