What is the worst thing that has happened to Social Security and Medicare?

The Federal Insurance Contributions Act (FICA) tax supposedly funds two major programs:

Social Security provides benefits for retirees, disabled individuals, and survivors of deceased workers. It’s designed to offer a safety net for individuals who can no longer work.

Medicare provides health insurance for people 65 and older and for some younger people with disabilities. It helps cover hospital care, medical services, and, in some cases, prescription drugs.

That is what you are supposed to believe. Unfortunately, FICA funds nothing. That is because of Monetary Sovereignty. All FICA dollars are destroyed upon receipt by the Treasury. They begin in the M2 money supply measure, but upon arrival at the Treasury, they cease to be part of any money supply measure. Effectively, they are destroyed. Due to the misinformation and disinformation you have been given, many bad things have happened to your Social Security and Medicare. Here are just a few:

1. Trust Fund Shortfalls: The Social Security and Medicare “Trust Funds” are not real trust funds. They are merely balance sheets showing additions and subtractions. Congress controls them totally and can change the numbers at will.

Their sole “purpose” (if one can label it a purpose) is to make you falsely believe you should accept smaller benefits. The trust funds and FICA were created and exist only to limit your benefits.

2. Demographic Changes: The government says that an aging population is causing more people to draw benefits while fewer workers are paying into the system.

While those facts are true, they lead to the lie that Social Security and Medicare are running short of money. Your FICA dollars do not fund Social Security or Medicare, and the “trust funds” do not pay for benefits.

The FICA receipts are recorded as accounting credits and combined with other Treasury receipts. The federal government owns the accounts and can unilaterally raise or lower collections and expenditures.

All Social Security and Medicare benefits are funded by creating new money, which the federal government can do endlessly.

3. Increase in Full Retirement Age (FRA): The Social Security FRA has been increased from 65 to 67 for those born in 1960 or later. This means people have to wait longer to receive full benefits.

4. Higher Earnings Subject to Social Security Tax: The maximum income subject to Social Security tax has been increased over the years.

5. Higher Medicare Premiums: Larger Medicare premiums are deducted from Social Security checks for most retirees.

6. Up to  85% of your SS benefits are subject to income tax. You giveth via FICA and the government taketh — and then taketh again via income tax.

7. At most, Medicare only pays 80% of your costs while paying reduced fees to doctors and hospitals. (Have you noticed that doctors and hospitals always receive less than they bill?)

In short, you and your medical team receive less than you should.

While all of the above are financially unnecessary and based on the false premise that federal spending is funded by taxes (like state government spending is), at least they are apparent. People can see that they receive fewer net dollars from the government. The following is the worst because it looks like a benefit but isn’t:

8. The Inflation Reduction Act (IRA) allows Medicare to negotiate prices for certain high-cost drugs under Medicare Part B and Part D

These drugs treat conditions like heart disease, diabetes, and cancer. The negotiations are projected to save Medicare beneficiaries $1.5 billion in out-of-pocket costs when the new prices take effect in 2026.

Sounds great? It’s supposed to. Now, think about it. Where will the money come from? Numbers 1 through 7 obviously take dollars from the private sector, otherwise known as “the economy,” and transfer them to the government, which neither needs nor uses them. The government already has infinite dollars. When it spends dollars, it simply passes a law and creates new ones. It can do this endlessly at no cost other than pressing a computer key.

Former Fed Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”

Former Fed Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.”

Fed Chairman Jerome Powell: “As a central bank, we have the ability to create money digitally.”

St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

Number 8, which masquerades as a benefit to the private sector, is just a transfer of dollars from one part of the economy (the people who work for pharmaceutical companies) to another (the people who pay FICA). No new dollars are created, which means no new benefits are created. The government forces one part of the economy to pay another and claims it is providing you with a benefit. Even worse, the charade supports the false belief that federal spending is funded by federal taxes, specifically the lie that FICA funds SS and Medicare. It is akin to the lie that your employer pays half of FICA, when in fact, you pay all of it. Your employer includes the cost of FICA when determining your salary. That is why employers love to classify workers as “independent contractors.” It allows them to pay higher salaries at less cost. One day, probably not during my lifetime, the American public will understand that federal government financing differs from state/local government financing. The former is Monetarily Sovereign. The latter is monetarily non-sovereign. If you don’t know the difference, you don’t understand federal government finance. Click this link to begin understanding. The people have not been informed that federal taxes fund nothing and that the government pays for everything by creating new dollars ad hoc. So what is the purpose of federal taxes if not for funding spending? Read this. The people need to be informed that the government has 100% control over the U.S. dollar it invented. It can give dollars any value (inflation). Historically, it has often arbitrarily changed the value of the dollar. It can pay for anything, no matter how many dollars are needed. Yes, the federal government could pay for comprehensive, no-deductible, free Medicare for every man, woman, and child in America. And yes, it could pay everyone a free Social Security benefit, eliminating poverty, homelessness, illiteracy, hunger, and inequality in America. And yes, it could pay to make America, as the Bible said, “. . .  the light of the world. A city set on a hill . . . .” And it could do it all without collecting a penny in taxes. So long as you accept the lies, you will continue to be like cattle grunting and mooing toward the slaughter. And sadly, I can’t see that changing during my few remaining years. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY