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
Facebook: Rodger Malcolm Mitchell


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


Have you written to your Senator and Representative about this?

In the previous post, “That Big Lie just keeps on rollin’ along,” and in many earlier posts, we discussed how the media, economists, and your politicians have been telling you “The Big Lie” which is:

Pennsylvania Pickpockets Busy in Coffee Shops, Restaurants
Would this make you angry?

Federal taxes fund federal spending.

In fact, federal taxes fund nothing, and knowing that, you either shrug your shoulders or you get angry and start phoning/writing your politicians.

I hope the latter.

Think of it this way. What if Amazon or some other retailer cheated you out of $1,000. Or someone picked your pocket.

How angry would you be? How many phone calls would you make and what letters would you write?

Then think of all those unnecessary tax dollars you send to the federal government. A lot more than $1,000 I assume. 

Or what if your boss screwed you out of last month’s salary? Compare that to the screwing you are getting from Social Security, all because of The Big Lie.

Read excerpts from this article:

Social Security Changes That May Be Coming For 2023 by John Csiszar

The wage base is the amount of a worker’s earnings that are taxable for Social Security purposes.

The 6.2% Old Age, Survivors and Disability Insurance (OASDI) tax, which funds various Social Security programs, applies only to the first $147,000 of a worker’s earnings for 2022.

But this number is also tied to changes in inflation and is likely to go up significantly in 2023.

That 6,2% against $147,000 (if your salary is that high) comes to $9,114 taken from you that pays for nothing.

But it gets worse. When your company decides on salaries, it figures the total cost of employing you. Because your company also must pay $9,114, it deducts the money from what it is willing to pay you.

Trust me on this. I have owned several companies and that is exactly the way we decided how much we could afford to pay for employees.

So, immediately, you are paying up to $18 thousand for nothing to a government that has the infinite ability to create dollars and neither needs nor uses your dollars.

The wage base in 2021, for example, was $142,800, but the high rate of inflation in 2021 pushed that number 2.9% higher.

Workers should expect another bump up in 2023, meaning higher earners should expect to pay more in Social Security taxes.

The original and fundamental purpose of Social Security is to help people financially when they no longer work. So one would think that the less you have earned over the years, the more financial help you need.

But Social Security doesn’t work that way. It gives more help to the people who have been earning more all these years.

And, defying all logic, it pays more money to people who already have enough money to tide them past their “normal” retirement age.

Here is what the government says: “You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.”

Get it? If you have enough money not to need Social Security help when you are 62, you’ll be paid more for every year you wait.

That might make sense if the federal government was like a private insurance company, and had only a limited number of dollars available.

But the federal government has infinite dollars, so it makes no sense to pay wealthier people more. 

Although no one wants to pay more taxes, the increase in the wage base has a silver lining for high earners.

While more of their income will be taxed, more of their earnings also will be credited to their future Social Security benefit.

Again, the richer are given more than the poorer.

The amount you earn in your working career is one of the most important factors in determining your ultimate payout — along with when you file for benefits.

The people who most need financial help are given less, and the people who need less are given more.

Although all of these potential changes for 2023 are notable, probably the biggest question about Social Security is what it will look like by the mid-2030s.

At that point, the SSA anticipates that the Social Security Trust Fund will be exhausted.

The government wants you to believe that Social Security is like private insurance, where you pay premiums, and your premiums pay for benefits.

But, if premiums are insufficient to pay promised benefits, the insurance company goes broke and you get nothing.

Social Security is not like that. You pay “Social Security taxes,” but those taxes do not pay for benefits. 

As we saw in the previous post, the so-called “Trust Fund” is not in any way like a real trust fund. The SS “trust fund” merely is a ledger balance that the federal government can change at will. 

The government wants you to visualize the process like this,
<————– with your taxes going into the trust fund and the trust fund paying your benefits.
In reality, the process looks like this——————>

Your taxes disappear into the Treasury, and the Monetarily Sovereign federal government pays you from its infinite supply of dollars.

There is no fiscal connection between your tax dollars and your benefits. Even if everyone paid $0 taxes, the federal government could pay your benefits, forever.

While Social Security will continue to pay benefits, thanks to payroll taxes on current workers, estimates see benefit levels dropping to 80% of current levels.

Social Security can pay any benefits Congress and the President wants it to pay, regardless of payroll taxes.

Although some type of legislative solution is likely to crop up over the next decade, both current workers and retirees should keep an eye on ongoing developments.

Here, the author of the article, perhaps unknowingly, may admit that the benefits are totally under Congress’s control when he uses the term “legislative solution,” rather than a fiscal solution.

The legislative solution would be to eliminate the fake connection between taxes and benefits and simply pay benefits. After all, benefits are paid to Congress, SCOTUS, POTUS and almost every other federal agency, without reference to tax collections.

In summary, thousands of dollars are being taken from you under the false pretense that federal taxes fund federal spending.

The only time this will stop is when you get angry at having your pocket picked and express your anger, loudly and clearly. 

Is it worth your time and effort?


Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell



The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.


AARP tells the Big Lie

In most people’s minds, AARP is an organization that supports us old folks. Well, maybe:

60 Minutes reportedin a 1978 exposé that AARP had been established as a marketing device by Leonard Davis, founder of the Colonial Penn Group insurance companies. Until the 1980s AARP was controlled by Davis, who promoted its image as a non-profit advocate of retirees in order to sell insurance to members.

AARP severed ties with Davis in 1979 and began dropping Colonial Penn products. AARP sought competitive bids for insurance coverage and in 1981 chose Prudential Insurance Company of America to underwrite the group health plan for AARP members.

The organization was originally named the American Association of Retired Persons, but in 1999, it officially changed its name to “AARP” to reflect that its focus was no longer American retirees.

AARP no longer requires that members be retired, and there are no longer any age restrictions even for a full membership.

If AARP truly wished to support old people, or any other members, it surely would understand the way Social Security and Medicare are financed. Even more than “understand,” it would broadcast the truth to the world.

Sadly, instead of broadcasting the truth, AARP promulgates the Big Lie that Social Security and Medicare rely on trust funds, which are supported by the regressive FICA tax.

AARP, and all others who repeat the Big Lie, claim that lacking tax increases or benefit decreases, Social Security (and Medicare) cannot survive, a claim that is not made regarding other federal agencies.

Here is what AARP says:

Editor’s note: Americans may not see eye-to-eye on many things, but fully 96 percent of us agree on the importance of Social Security.

And no wonder: The program, now 86 years old, has become the bedrock of our retirement finances. Which begs the question: Why are its finances not more secure?

As a federal agency, the finances are as secure as the finances of any other federal agency, i.e. Social Security has unlimited finances subject to the whims of Congress and the President.

To answer that, AARP talked with dozens of experts about Social Security and its future viability. Here’s what we learned.

If AARP did indeed talk with “dozens of experts,” it would have learned the facts. Based on AARP’s claims, it didn’t talk with real experts, or it intentionally is lying:

“Those who tend to distrust the government seem to have less faith that Social Security will be there for them in its current form,” said Michael Baughman, a financial planner in Tryon, North Carolina. 

Social Security’s finances are unquestionably on a downward slope, and fixing them is primarily in the hands of the U.S. Congress.

If no action is taken, the moment of crisis — meaning when the program would no longer have enough money to fully pay its promised benefits — will happen in just over a decade.

That much is true: The financial future of Social Security is in the hands of Congress, but not in the way AARP wants you to believe.

The “moment of crisis” is an invented problem, the result of the myth that Social Security is funded by FICA.

It is not.

Quote from Luther Gulick, an expert on public administration and one of the founders of the American Society for Public Administration”

I raised (with Franklin D. Roosevelt), the question of the ultimate abandonment of the pay roll taxes in connection with old age security and unemployment relief in the event of another period of depression.

I suggested that it had been a mistake to levy these taxes in the 1930’s when the social security program was orgiginally adopted.

FDR said, “I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits.

With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.

FDR also mentioned the psychological effect of contributions in destroying the “relief attitude.”

FICA is the single, most regressive tax in America. Despite Roosevelt’s intentions, it has the opposite of the desired effect. FICA widens the Gap between the rich and the rest. 


The rich receive and control a massive percentage of income, wealth, and power in America, but the middle classes and the poor pay almost all of the FICA tax.

It is conceivable that self-described billionaire Donald Trump, for instance, never has paid a penny into the so-called Social Security (non-existent) “trust fund.”

In any event, all FICA dollars are destroyed upon receipt by the Treasury, so it is functionally impossible for FICA to fund Social Security, Medicare or anything else.

Like all federal taxes (and unlike state/local taxes), FICA very simply is your money flushed down a giant federal toilet, never to be seen again.

money down the drain
The tax dollars you send to the U.S. Treasury, are not used for anything. They are destroyed upon receipt.

Reid Ribble, a former Republican congressman from Wisconsin’s 8th District, says, “Republicans have never wanted to increase revenue, and just dealing with it on the benefit side is not politically feasible.”

In simple English, Republicans say they don’t want to increase FICA or decrease benefits. Democrats say the same, though for different reasons. So that produces a conundrum for those who believe in the trust fund myth.

The most likely FICA increase would be to make richer people pay more, which Republicans, being the “Party of the Rich” loathe.

Republicans wouldn’t mind a benefit decrease, but Democrats would hate that. Instead, Dems would prefer charging FICA to the rich, which is a no-go for the GOP.

Without Social Security benefits, 21.7 million more Americans would be below the poverty line, according to the Center on Budget and Policy Priorities.

Social Security does more than send eligible retirees a payment every month. It provides ongoing income to surviving spouses and their children as well.

Social Security Disability Insurance (SSDI) helps pay the monthly bills for qualified disabled workers and their families.

Although most of those whom Social Security keeps out of poverty are older adults, 6.9 million are under age 65, including 1.2 million children.

Not surprisingly, Social Security has widespread support. “It’s crystal clear that Americans of all generations value the economic stability Social Security has offered for the last 86 years — even more so as we face the health and economic challenges of a global pandemic,” says Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer.

Middle- and lower-income Americans love Social Security. The rich Americans? Not so much.

The rich would be perfectly happy if no one collected SS benefits. Eliminating all social benefits would widen the Gap between the rich and the rest.

(Without the Gap, no one would be rich, and the wider the Gap, the richer are the rich. Widening the Gap is the only way the rich become richer.)

And now, in all its glory, comes the Big Lie:

Absent any change in law, the Social Security trust funds — the financial accounts that the program draws from when annual payments to Americans are larger than annual tax collections — will be out of money in about 12 years.

At that point, the program would have only ongoing tax revenue with which to fund payments; calculations show that would cover only 78 percent of promised benefits.

The so-called Social Security “trust fund” (and Medicare “trust fund”) are not trust funds at all. They simply are balance sheet lines over which Congress and the President have total control.

The numbers in the “trust funds” arbitrarily can be changed by Congress and/or the so-called “trust funds” could be eliminated tomorrow, with Congress supporting SS the way it supports every other federal agency: By allocating funds.

Here is what the Peter G. Peterson Foundation, a right-wing group that has no love for the poor, admits about federal “trust funds.”

Sep 20, 2016, Peter G. Peterson Foundation

A federal trust fund is an accounting mechanism used by the federal government to track earmarked receipts (money designated for a specific purpose or program) and corresponding expenditures.

The largest and best-known funds finance Social Security, Medicare, highways and mass transit, and pensions for government employees.

Federal trust funds bear little resemblance to their private-sector counterparts.

In private-sector trust funds, receipts are deposited and assets are held and invested by trustees on behalf of the stated beneficiaries.

In federal trust funds, the federal government does not set aside the receipts or invest them in private assets.

Rather, the receipts are recorded as accounting credits in the trust funds, and the receipts themselves are comingled with other receipts that Treasury collects and spends.

For a more detailed view of real (not federal) trust funds, see: What Is A Trust Fund?

how a trust fund works
This is how real trust funds work. It is not how the Social Security faux “trust fund” works.

There are three parties involved in all trust funds:

The grantor: This person establishes the trust fund, donates the property (such as cash, stocks, bonds, real estate, art, a private business, or anything else of value) to it, and decides the management terms.

The beneficiary: This is the person for whom the trust fund was established.

The trustee: The trustee, which can be a single individual, an institution, or multiple trusted advisors, is responsible for making sure the trust fund maintains its duties as laid out in the trust documents and according to applicable law.

The primary difference is that a real trust fund holds money or other assets in trust. It’s not a simple checking account that accepts and doles out dollars at will.

To Congress, 2034 is a long way off. But the sooner the legislature acts, the quicker and easier it will be to bolster the trust funds’ reserves, due to simple math: Smaller revenue or benefit changes made now would accrue over time, which is a far more efficient way to secure the funds than paying for a last-minute major repair job.

Real trust funds don’t have reserves that need to be “bolstered.”  And since the Social Security “trust fund” must be “bolstered,” and the benefits can be changed at will, what is the purpose of that “trust fund”?

It’s nothing more than a line in a balance sheet.

Fully 12.4 percent of your gross income has gone to Social Security each paycheck by way of the Old-Age, Survivors, and Disability Insurance (OASDI) payroll tax.

The amount of wages subject to the payroll tax is capped and indexed annually; in 2022, a worker pays the tax on wages up to $147,000.

For a self-employed worker clearing that amount or more, that means an annual OASDI tax bill of about $18,200.,

The math goes like this: If you earn $147,000 a year, you pay $18,200 in FICA taxes, about twelve percent of your pay.

But if you earn $10,000,000 a year, you pay . . . that’s right, that same $18,200 . . . about 2 tenths of one percent of your pay.

If all your income came from sources other than salary (as does the income of most rich people, you would pay $0 FICA.

That difference demonstrates one of the ways the rich have bribed Congress to widen the Gap between the rich and the rest.

But it’s even worse than that:

After the Social Security Administration (SSA) pays beneficiaries, any tax dollars that are left over go into the trust funds, now totaling $2.91 trillion, to be tapped at a time when taxes coming into the system aren’t enough to cover ongoing benefit payments.

No “leftover” tax dollars go anywhere. The federal government does not save any tax dollars sent in, simply because it already has the unlimited ability to create infinite dollars to pay out. All tax dollars are destroyed.

When you send a tax check to the Treasury, the dollars come out of your checking account Those dollars are part of the M1 money supply measure which includes “physical currency and coin, demand deposits, travelers checks, other checkable deposits and negotiable order of withdrawal (NOW) accounts.

The instant your check is received by the Treasury, it no longer is part of M1. It ceases to exist in any money supply measure. (The federal government has an infinite supply of money, so there is no money measure of federal money.)

M1 is reduced, and effectively, your tax dollars are destroyed.

To make up for its income shortfall, the SSA this year will start drawing on the trust funds. Based on recent calculations, absent any major changes, the funds will run dry in 2034.

That’s 24 years earlier than the SSA estimated when the system was last overhauled in 1983.

There are no funds to “run dry.” Two simple computer key taps, one labeled “Assets” and one labeled “Liabilities” will instantly restore the trust fund’s balance sheets.

How did we get here? As long predicted, demographics explain a good deal: In a decade, the entirety of the boomer generation — some 70 million Americans born between 1946 and 1964 — will have hit retirement age.

As a result, the number of people receiving Social Security benefits come 2034 will be more than double the beneficiaries in 1985.

But what wasn’t known as accurately was how much longer those boomers would live. “From 1940 to 2019, life expectancies at age 65 have increased by about 6.5 years,” says Amy Kemp, chair of the Social Security Committee of the American Academy of Actuaries.

The impact: Many workers will be receiving benefits for a longer period of time. And those with higher incomes, which are generally those who receive higher benefit amounts, tend to live longer on average.

At the same time, there has been a continued decline in the nation’s birth rate; that means there are fewer younger workers to support the benefits promised to older workers.

In 1955, there were more than eight workers supporting each Social Security beneficiary. Now there are 2.7 workers per beneficiary.

All of the above is total beeswax. The question was, “How did we get here?” The answer is: By pretending that our Monetarily Sovereign government’s finances are like personal finances and that it can run short of dollars.

Contrary to the nonsense you repeatedly are told, the contributions made by young workers do not fund the benefits paid to old workers. The contributions made by young workers do not fund anything. They are destroyed.

Additionally, the country’s growing income inequality has had a negative effect on the amount of payroll taxes going into the trust funds, as wages above the payroll tax cap have grown much faster than wages under the cap.

And why is there a “cap”? Because that is the way the rich, who run America, want it. They want the Gap between the rich and the rest, to widen as much as possible.

If nothing is done, Social Security is projected to still be able to pay roughly three-quarters of promised benefits for the remainder of the century.

Or, if the government and AARP would tell the truth, they would say, “Social Security will be able to pay all promised benefits in perpetuity, whether on not it collects a penny in FICA taxes.”

So what needs to happen to secure Social Security for the long term?

Simple: Congress merely has to end FICA (which actually it has done temporarily at times), and fund SS directly, just as it does for virtually all other agencies.

There are variables that are out of the direct control of the SSA or Congress, such as the economy, wages, life expectancy, and birth rates.

But if projections hold more or less true, on paper the options are fairly simple: Congress will have to raise taxes, modify benefits or do some of both.

Both of those totally unnecessary actions will widen the Gap between the rich and the rest, effectively making the rich richer — exactly what the rich want.

Those options come down to any variation of a handful of leading approaches discussed by policymakers. Here are several, starting with ways to bring more money into the system.

Adjust the cap. This year, someone with $1 million in work income would pay the same amount of OASDI tax as someone with $147,000 in wages.

Intentionally misleading. “Work income” does not include income from rent, certain types of royalties, capital gains, and dividends. They are not subject to FICA taxes.

However, you have to pay the tax on all earned income including your salary, tips, commissions and anything else that counts as wages.

How convenient for the rich, since most (or all) of their income is derived from rent, royalties, capital gains and dividends.

Eliminating the taxable wage cap would keep the trust funds solvent until 2060, according to Social Security.

The Big Lie. The so-called “trust funds” are as solvent as Congress wants them to be. Raising or lowering the taxable wage cap would not affect “trust fund” solvency.

Also, it would have a scant effect on the rich, who get most of their income from non-wage sources.

Increase payroll tax rates. As noted, the current rate is 12.4 percent. Some propose raising that incrementally — say, by 2 percentage points, to 14.4 percent — as a way to bring additional dollars into the trust funds.

But some experts note that such tax increases would be hardest felt by those who earn lower wages or are self-employed.

But that’s the plan, isn’t it. That’s how the Gap is widened, i.e. how the rich get richer.

Broaden the base. Not all state and local employees are covered by Social Security. Some have only public pension coverage.

Bringing all newly hired state and local workers into the Social Security system would create a large new influx of cash, although it would mean more beneficiaries to pay later. 

Yes, by all means, let’s soak all those low-paid state and local workers, so that the states will be forced to raise salaries. And where will the states get the money to raise salaries? From other taxpayers, of course.

Broaden the definition of income. Certain forms of income are not subject to SSA payroll taxes, such as the value of employer-sponsored group health insurance.

Gradually eliminating such exclusions — and collecting payroll taxes on the additional income — would keep the trust funds healthy for roughly four additional years.

It would have no effect on the ability of Social Security to pay benefits, and the rich simply would find other forms of income, and continue to dodge the useless tax.

A significantly larger target, and so more politically challenging, would be to levy a Social Security tax on annual investment income, as opposed to just payroll taxes.

The other side of the coin is implementing changes that reduce benefits to certain Social Security beneficiaries.

It’s all sleight of hand to make you believe the Big Lie that federal taxes fund federal spending.

Introduce more progressivity. Typically referred to as “means testing,” this approach calls for adjusting the size of your Social Security payments based on your wages, wealth, or income.

And you don’t think the Donald Trumps of the world will find dodges to that.  He already has increased the value of his assets when asking for a loan, and decreased the value of the same assets when paying taxes.

A “wealth tax” is computationally impossible, because the values of most assets is too debatable.

Cut benefits for new recipients. Another approach would be to pay newly eligible retirees a little less per month than promised. 

Reduce the cost-of-living adjustment (COLA). Each year, the SSA usually adjusts beneficiary payments to help protect their purchasing power from inflation.

The yardstick used is the government’s Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which takes into account the price increases for everything from apples to gasoline to rent. 

Change benefit calculations. Adjusting the complex formulas used to determine your Social Security payments could result in modestly lower benefits that could help increase the life of the trust funds. 

Up the retirement age. You can start taking Social Security, with reduced benefits, at age 62. Wait until you’re 67 (if you turn 62 in 2022) and you qualify for your full benefit. 

This last dumb idea is known as the “Work ‘Til You Drop” provision. All of the “solutions” rely on the same faulty belief, that federal taxes fund federal spending.

Some have suggested scrapping the entire program and converting it to individual account plans similar to a 401(k) retirement program, in which you contribute some or all of your current payroll taxes to a self-managed retirement account invested in stocks, bonds and other securities; you would bear the risks and rewards of your choices.

The above completely reverses the fundamental purpose of Social Security, which is to aid the middle- and low-income Americans, who can’t afford retirement, or don’t know how to manage money in their old ages.

Experts also note that such a program would mean the trust funds would be depleted sooner, putting current benefits at even greater risk.

Oh, those mythical, phony”trust funds.” We certainly don’t want to deplete what doesn’t even exist, do we?

Legislators in Congress routinely propose bills to alter Social Security, ranging from small adjustments to substantive overhauls.

In fact, so far in the 2021–2022 legislative session, dozens of members of Congress have introduced bills related to Social Security. To date, none has moved to a full vote.

But not one member of Congress has acknowledged the underlying fact that Social Security is funded by federal spending, which is infinitely available.

This lack of action isn’t surprising, given Congress’ big disagreements on Social Security reform.

To our well-bribed Congress, SS “reform” always means “more tax and less benefit,” all to widen the Gap.

The 1983 legislation negotiated between House Speaker Tip O’Neill and President Ronald Reagan that has kept the program solvent over the past four decades was a squeaker (though it ultimately won large bipartisan support).

SS is a solvent as Congress wants it to be. All Congress and the President need do is vote to add a few trillion to the budget for social purposes. No need to struggle with phony fixes.

That bill gradually raised full retirement age for beneficiaries to 67, levied taxes on Social Security payments for some beneficiaries, and increased taxes, all of which would be difficult to reach consensus on in Congress today.

Cutting benefits and increasing taxes did nothing to increase SS solvency.

Today, 12 percent of men and 15 percent of women on Social Security rely on it for 90 percent or more of their income. Even a modest reduction in benefits would hit them hard.

And 37 percent of men and 42 percent of women on Social Security get 50 percent or more of their income from the program.

And yet, not only do we hit these people with a FICA tax, but we also tax benefits. If the government really was trying to help people, this would make absolutely no sense.

But that is not what the government is bribed to do. It is bribed to make the rich richer.

With around 65 million people today receiving benefits, that means tens of millions of Americans depend heavily on the program. And already, their payments aren’t high.

The average retirement benefit from Social Security was $1,555 a month in 2021, or $18,660 a year. The average rent for a one-bedroom apartment in the U.S.? About $1,680 a month, according to

“When I did my research on it, probably the hardest-hit recipient of Social Security was a widow who has outlived her family savings and is now living in old age, strictly on Social Security,” Ribble says. “She’s trying to live off a $700- or $800-a-month payment.”

And the above is after the same widow was forced to pay12% of her salary on useless FICA. (Yes, 12%, not 6%, because employers take their share into consideration when calculating salary affordability.)

If history is any guide, there’s reason to hope that Congress will find a solution. Says Social Security’s Goss: “We’ve never reached the point where we depleted the reserves and had to reduce benefits.”

More false propaganda from the government. Those reserves don’t fund benefits.

In 2022, AARP will continue to urge members of Congress to shore up Social Security’s long-term finances and keep the promises made to all current and future beneficiaries.

We have fought hard against arbitrary cuts to the cost of living adjustment (COLA) and against bills like the Trust Act that target Social Security as a way to deal with budget deficits.

And we fought hard to ensure that those on Social Security would be able to get economic stimulus payments without having to file separately.

AARP also has “fought hard” to maintain the fiction that federal FICA taxes fund SS benefits.

Given that Big Lie, there can be no solution that does not include a tax increase or a benefit decrease. That’s simple arithmetic.

If you begin with the wrong premise, you cannot arrive at a correct solution.

State taxation: Twelve U.S. states now tax Social Security benefits. In 2022, AARP will work at the state level to eliminate this tax burden for more retirees and their families.

How about working at the federal level, to eliminate those tax burdens? Not paid to do that, AARP?

Federal taxes — payroll taxes, income taxes, luxury taxes, all other federal taxes do not fund federal spending. Contrary to the Big Lie, all federal taxes are destroyed upon receipt by the federal government.

Unlike the monetarily non-sovereign state and local government, our Monetarily Sovereign federal government creates all its spending money ad hoc. It neither needs nor uses income for any purpose.

The ostensible purpose of federal taxes is to guide the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to encourage. Another purpose is to assure demand for the U.S. dollar, which is necessary for paying taxes.

The real purpose of federal taxes is to make the rich richer, by widening the Gap between the rich and the rest.

To effect this result, the rich bribe the media via advertising dollars and media ownership. And the rich bribe the economists via promises of jobs at “think tanks” and via contributions to universities.

And the rich bribe the politicians via political contributions and promises of lobbying jobs.

All that bribery is expensive, but worthwhile for the rich, as the Gap has widened greatly, i.e. the rich have become richer.

[No rational person would take dollars from the economy and give them to a federal government that has the infinite ability to create dollars.]

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.


(Every spending cut demanded by conservatives is designed to widen the income/wealth/power Gap between the rich and the rest, while the few spending increases backed by the conservatives are designed to reward and protect the rich.)

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

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.”

Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

Statement from the 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.”

Press Conference: Mario Draghi, President of the ECB, 9 January 2014
Question: I am wondering: can the ECB ever run out of money?
Mario Draghi: Technically, no. We cannot run out of money.