By law, when Social Security taxes were increased in excess of benefit payments for the purpose of building a surplus for the years when those born between 1946 and 1964 (popularly known as the Baby Boom generation) would retire and their benefit payments would exceed projected tax revenues, the excess or surplus in funds was invested in U.S. Treasury securities: bonds, t-bills, etc.
I thought then and still believe now that a unique opportunity was missed. The surplus could not be invested in the stock market, the traditional vehicle for the greatest growth over time, because it was too large. We would have achieved backdoor socialism, whereby the federal government would come into ownership and control of all publicly traded companies.
That was not acceptable then and most of us would not welcome that now.
But the surplus could have been invested in roads, bridges, railway infrastructure that would generate revenue via tolls. It could have been used to fund homeownership for low-income and middle-income families, mortgages that would generate revenue via the interest rates. These would be investments that even now would be generating revenue for Americans' main retirement plan rather than be drains.
The opportunity was lost. It will not come again.
Thus, we have reached the point where the Boomers are retiring and beginning to claim their social security, as did their parents before them and their grandparents before them.
Understand that Social Security is not an investment. You hold nothing, no bond, no stock, no asset, no I.O.U. signed and legally enforceable in a court. Social Security is a wealth transfer program for those who are working to those who used to work but no longer do.
There is nothing wrong with that. Social Security is a promise, a promise from one generation to another, that we will support you in your old age in return for a promise that future generations will do the same for us. Facilitating and enforcing this generational promise is the federal government.
It has worked since its inception. It will continue working, except for the avarice of the uber-wealthy, whose drive to hoover up all the wealth of middle-income and low-income families boggle the imagination.
It is the political class, now the servile instruments of the uber-wealthy, who seek to finance an unsustainable tax cut by eliminating the generational promise of Social Security.
This meme is beginning to make its way across social media. While they have voted to cut benefits, almost totally Medicare and Medicaid, the Social Security cut is only $4 billion, they are not stealing anything. There is nothing to steal.
They voted to begin a slowdown in the reduction of the fund balance, so small as to be almost unnoticeable. But now is the time to remember the fable of the camel's nose. Start small, so small no one will notice or, if they do, how could they object?
If the cut becomes law, it will only be the beginning. As for Medicare, the cut will gut the program and hasten the crisis when we will either give up on health insurance or go to a single-payer system. (My money is on the latter.)
There is a difference between cash and bookkeeping. The $2.9 trillion surplus is actually only a bookkeeping entry: how much more has been collected in Social Security taxes than has been paid out. There is nothing to steal. But if Congress votes and the President agrees to wipe out the balance with a bookkeeping entry, that is huge.
The generational promise is gone.
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