The imminent failure of the Social Security system has been a fairly hot topic for several years now. But according to their own brochures it seems to have been doomed from day one. I was down at the local Social Security office with one of my clients yesterday ( he suffers from fibromyalgia as well as a number of other ailments, so receives SSI) and picked up SSA Publication No. 21-059 to peruse while we were waiting. The brochure’s compelling title is Social Security – A Brief History and you can probably pick up your own copy if yo uwish at your local SSA office.
While reading about how FDR sold generations of Americans into slavery by creating the Social Security Administration I discovered that even the least observant of government watchers should have seen it was doomed from the start. From page 5 of the aformentioned brochure-
Under the 1935 law, monthly benefits were to start in 1942. From 1937 until 1942, Social Security was to pay benefits to retirees in the form of a single, lump-sum refund payment. The earliest reported applicant for a lump-sum refund was a retired Cleveland motorman named Ernest Ackerman, who retired one day after the Social Security program began. During his one day of participation in the program, a nickel was withheld from Mr. Ackerman’s pay for Social Security, and, upon retiring, he received a lump-sum payment of 17 cents.
Am I the only one that sees the problem? Despite their continued use of the word “refund”, the very first payee from Social Security took out more than three times what he had put in! Not to mention all of the processing and transaction costs involved in signing him up, withholding that nickel and processing his claim! The free market would never allow such a ridiculously inefficient program to come into being in the first place. But if it did, surely it would have been closed down within days of that first windfall check being sent out.