Motley Fool spreads the bullshit about Social Security

You probably know Motley Fool as a site that spreads reasonably accurate information about the stock market and individual stocks, along with buying suggestions.

I never have subscribed to that service for one main reason: If they knew what they were talking about, they could make a lot more money by following their own trading advice than by giving advice.

So why do they give advice?

A little more than two years ago, they proved to me that they didn’t know what they were talking about by publishing a scare story referencing Social Security’s financial troubles.

The article was titled 7 Reasons Social Security Is in Big Trouble By Sean Williams – Oct 3, 2020.

The article comes with this caveat: “You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services,” which seemingly means: “If you pay us, we’ll tell you what we really believe.”

Social Security: Reform or Runout – American Journal of Trial Advocacy

Here are some excerpts from that article.

Over the past eight-plus decades, we’ve watched Social Security grow into the most important social program in this country.
Today, nearly 65 million people receive a monthly payout from the program, with over 22 million of these folks pulled out of poverty thanks to their benefits. 
But the program is in big trouble. Every year since Social Security first began paying benefits (1940), the Social Security Board of Trustees has released a report that examines the short-term (10-year) and long-term (75-year) outlook for the program.
Since 1985, the OASDI Trustees’ report has cautioned that program outlays would exceed collected revenue over the long term.
Put another way, Social Security has unfunded obligations over the next 75 years.
More specifically, the latest Trustees report estimates that Social Security’s $2.9 trillion in asset reserves (i.e., its net cash surpluses built up since inception) would run out by 2035.

The above is nothing but bullshit.

“Collected revenue,” i.e., FICA taxes, do not fund Social Security or Medicare. Indeed, no federal tax pays for anything.

All federal taxes are destroyed upon receipt. The federal government has the infinite ability to create dollars from thin air. That is how it created the first dollars, and that is how it still creates dollars.

Unlike you, and me, and state/local governments, and businesses, the federal government pays all its bills by creating new dollars, ad hoc.

The dollars you pay to Social Security (actually, the Treasury) come from the M1 money supply measure. But when your dollars reach the Treasury, they cease to be part of any money supply measure.

Because the federal government has the infinite ability to create dollars, it has infinite dollars.

Adding your dollars to the Treasury’s infinite dollars does not change the number of dollars the Treasury has. Infinity plus any number = infinity.

When your dollars reach the Treasury, they cease to exist. Although the Treasury keeps records of dollars received and spent, these records are unlike private bookkeeping records.

They do not show “Dollars Available.” The Treasury has infinite dollars available.

To be clear: Social Security isn’t going bankrupt just yet.
It has two recurring sources of revenue — but if and when these asset reserves are depleted, an across-the-board benefit cut of up to 24% may await retired workers and survivor beneficiaries.


Social Security, like every other federal agency, has just one source of revenue: The federal government.

Social Security has as many dollars as Congress, and the President want it to have.

In total, the 2020 Trustees report estimates that Social Security is facing $16.8 trillion in unfunded obligations between 2035 and 2094, which is $2.9 trillion higher than in the previous year.
How exactly does the nation’s top social program suddenly find itself on such poor financial footing


Social Security has no unfunded obligations. All federal obligations are funded by the government’s full faith and credit.

The federal government promises to pay all its bills which it has done since its inception. It never can run short of dollars to pay its bills. Every financial obligation has been funded by money creation.

1. Baby boomers are retiring

I’m not a fan of blaming baby boomers simply for being born, but their exodus from the labor force is weighing down the worker-to-beneficiary ratio.

According to intermediate-cost model estimates from the Trustees report — which represent what’s most likely to happen — the number of retired workers receiving benefits should surge from 45.1 million in 2019 to 64.6 million by 2035.

Over that time, the worker-to-beneficiary ratio is expected to decline from 2.8-to-1 to 2.2-to-1. 

As a reminder, the payroll tax revenue collected from workers was responsible for $945 billion of the $1.06 trillion in revenue collected for Social Security in 2019. So, yes, the retirement of boomers is a big deal.


This is the myth that Social Security is funded by FICA. It isn’t. Even if FICA collections totaled $0, the federal government could continue paying benefits forever.

2. We’re living longer than ever before

Another bittersweet concern is that we’re living longer. Between 1940 and 2020, the average life expectancy at birth for Americans jumped from north of 64 years to almost 79 years.

On the one hand, living longer is fantastic. We get to spend more time with our friends and family, and do what we love. But it’s not necessarily a great thing for the Social Security program.

According to data from the Social Security Administration, the average 65-year-old will live about 20 more years. Social Security was never designed to pay benefits for multiple decades.

Further, the full retirement age — i.e., the age at which retired workers can collect 100% of their monthly benefit, as determined by their birth year — will have only risen by two years through 2022. Meanwhile, life expectancies are up by more than 15 years since 1940.

Put simply, longer average life spans are straining the Social Security program.


The federal government has the infinite ability to pay benefits. Even if FICA were eliminated, the federal government could supply full Social Security to every man, woman, and child of all ages.

President FD Roosevelt knew SS didn’t need FICA when he began it. He created FICA, not to fund SS, but to keep Congress from ending it.

He didn’t say, “We put payroll contributions in to pay for benefits.” He said,

“We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions… With those taxes in there, no damn politician can ever scrap my Social Security program.”

Congress and subsequent Presidents still have found ways to cut the program by taxing benefits and by raising the qualifying age.

Ironically, they only were able to do this by using FDR’s logic falsely to convince the public that FICA funds SS.

3. Income inequality is on the rise

Social Security’s woes can also be partly blamed on rising levels of income inequality.

The 12.4% above payroll tax, which does the heavy lifting for Social Security, is applied to earned income (wages and salary, but not investment income) ranging between $0.01 and $137,700, as of 2020.

Approximately 94% of working Americans will earn less than $137,700 this year, meaning they’ll be paying into Social Security on every dollar they earn.

Earned income above $137,700 is exempt. Between 1983 and 2016, the amount of earned income escaping Social Security’s payroll tax roughly quadrupled from north of $300 billion to $1.2 trillion.

Additionally, the well-to-do have little or no financial constraints when paying for preventative medical care or prescription medicines.

The same can’t be said for everyone else. As a result, the rich are living notably longer than everyone else and collecting bigger monthly benefits in the process — further weighing down Social Security.

Donald Trump, who pays virtually no FICA taxes, collects the same Social Security you do.

The reason: Social Security benefits have nothing to do with FICA. The government pays for SS benefits just as it pays for every other financial obligation: By creating dollars from thin air.

Did you ever wonder why Social Security has a “trust fund” but the military has no “trust fund?” The SS trust fund is a fake. It is not a real trust fund at all.

All the phony rules related to the fake SS trust fund are arbitrary inventions to reduce the benefits paid to you. The whole process is a fraud on America.

There are no real federal trust funds. 

4. Net legal immigration levels have been halved

Immigration is also a serious problem, albeit not for the reasons you might have read about.

As a whole, immigration is a net positive for the Social Security program.Most legal migrants into the U.S. tend to be young, and are therefore going to spend decades in the labor force contributing via the payroll tax.

The Trustees’ intermediate-cost model assumes a net average of 1,261,000 legal migrants entering the U.S. every year over the long-term.

However, net immigration rates into the U.S. have been sinking for the past two decades. In the most recent rolling five-year measurement from the World Bank, a net average of 954,806 legal migrants entered the U.S. annually between the second half of 2012 and the second half of 2017.

Less legal (and undocumented) immigration will almost certainly weigh on the worker-to-beneficiary ratio. 


The worker-to-beneficiary ratio is meaningless. Beneficiaries are paid in U.S. dollars. The federal government has the infinite ability to create U.S. dollars.

5. Birth rates are at all-time lows

Couples also bear part of the blame for Social Security’s woes.

The program counts on a steady or rising level of births each year to offset the number of older workers leaving the labor force.

The intermediate-cost model had been running with an assumption of 2 births per woman for years, but lowered this figure to 1.95 births per woman in 2020. This is a big reason we saw unfunded obligations jump by $2.9 trillion from the previous year.

In 2019, the U.S. birth rate hit an all-time low of 1.68 births per woman, below even the high-cost model estimate of 1.75 births per woman provided by the Trustees. Couples are waiting longer to get married and have children.

They’re having fewer unplanned pregnancies and have been discouraged from having children by the poor state of the U.S. economy. Without a quick turnaround in birth rates, the worker-to-beneficiary ratio will be negatively impacted. 


Workers don’t pay for SS. The government does.

The government could pay double or triple the number of workers simply by doing what it always does for every government agency: Create dollars from thin air.

That is the process it has used since the inception of the dollar.

6. The Fed has crippled Social Security’s interest-earning capacity

Even the nation’s central bank gets a wag of the finger.

The Federal Reserve is tasked with controlling and influencing monetary policy.

It primarily does this by increasing or decreasing the federal funds rate, which is the overnight lending rate that banks charge one another. Moving this rate higher or lower causes ripples that influence interest rates.

With the U.S. economy currently in recession, and the Fed maintaining a predominantly dovish stance for much of the past decade, the federal funds rate is now at a record-tying low range of 0% to 0.25%.

This is great news for companies and individuals looking to borrow, but awful for anyone looking to generate interest income.

Social Security’s $2.9 trillion in asset reserves are required by law to be invested in special-issue bonds and, to a lesser extent, certificates of indebtedness.

The yields on newly issued bonds have been plummeting, with some yielding a meager 0.75%. In other words, the Fed’s dovish monetary policy means less interest-earning capacity for Social Security.

Obsolete bullshit now that interest rates are high.

But even if interest rates were triple or one-third of what they are now, this would not change, by even one penny, the federal government’s ability to fund Social Security.

Think of how nonsensical the notion is of the federal government not paying enough interest to an agency of the federal government (which is what the Motley Fool claims).

This is how ridiculous the Motley Fool argument has become. They are telling you: “If the federal government paid more interest. The federal government could afford to pay more benefits.”


7. A Capitol Hill deadlock

Finally, point your finger at lawmakers on Capitol Hill.

Though lawmakers may be somewhat responsible for some of the issues described here, it’s really their inability to find common ground to fix Social Security that’s worthy of blame.

For every year that Congress doesn’t resolve Social Security’s cash shortfall, it usually widens. The longer lawmakers wait to act, the costlier the fix will be on working Americans who form the backbone of the Social Security program.

Democrats and Republicans have each offered plenty of solutions on how best to resolve Social Security’s shortcomings. But since both parties have solutions that work to strengthen the program, neither side feels compelled to find common ground with their opposition.

We can only hope that Congress finds a way to work together on a bipartisan solution sooner rather than.

Mostly bullshit with one small glimmer of truth in the final statement.

SS doesn’t have a “cash shortfall.” The word “shortfall” implies something unintentional.

But this “shortfall” is intentional.  It’s like claiming the federal government has a law shortfall.

The “fix” needn’t be costlier “on working Americans.” No working American would need to pay for the “fix.”

Congress quickly could solve the “problem” only when it admits that the real problem is the Big Lie that taxes fund federal spending.

That would result in a giant step toward “fixing” SS.  



Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
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