SS became law in 1935 and the first payments were made in 1937. At that time the life expectancy of a man was 60.8 years. Early SS was available when a man turned 62, it was reduced by 30% from the maximum which available at age 65. If a man reached age 62 his life expectancy was 6.4 years or to the age of 71.4. But 50% of all men died before reaching 61 and an additional 19% died before reaching 62 and only 1 in 4 of those left reached 65.
Bureau of Labor Statistics (BLS) states that the total population in 1940 was 131,500,000 people. Of these 46.4% were children. They also show that the Civilian Work Force was 91% male and 9% female. Thus, the population looked like this:
- Children under 18 61,016,000
- Male under 62 31,083,444
- Male over 62 3,453,716
- Female under 62 28,757,472
- Female over 62 7,189,238
- Covered SS 35,390,000
- Total Adults 70, 484,000
- SS recipients 222,000 (All men or widows and children)
- The ratio of working to receiving SS was 159 to 1
- Men available for work 31,083,444 times (1-16.8% = 83.2%) times 91% = 23,533,897
- Females available for work 28,757,472 times 83.2% *9% = 2,153,559
- Total available to work 35,390,000 people.
- Total unemployed 31,083,444+28,757,472 times 16.8% = 10,053,288
By 1965 the SS Tax rate was raised to 6%. There were now 72,530,000 covered and 14,262,000 covered by SS and the worker ratio was down to 5.8 to 1. By this time the effects of better health care was being felt due to antibiotics childhood vaccines. Mens life expectancy was now 66.3 and womens was 73.3. Men who reached their 65 birthday could expect to live 7.4 years or until they were 72.4 on average. 53.6% of all men would live to be 65 up from 20.8% in 1940. So if you started collecting SS when you were 62 and lived past 65 you could expect to collect SS fo 10.4 years. In 1966 Medicare was enacted and FICA was added to the american vernacular. The original medicare tax rate was .3%
By the mid 1980 it was obvious to anyone who had a 3rd grade education that medicare and Social Security were insolvent. The congress changed the laws pertaining to both, they increased the tax rates and slowly over the next 30 years raised the retirement age for SS to 67. Plus, the established both trust funds, which they immediately turned into a federal slush fund. The congress loaned the money to other agencies of the Federal Government in the form of Bonds paying 3% interest. The agencies then spent the money.
The Congress did not however, increase the minimum age of 62 for SS and 65 for Medicare, nor did the make any adjustment for life expectancy. By then most Americans were beginning to plan their retirement arround SS. Which the original law never foresaw. By 1985 there were 120,560,000 covered workers and 36,650,000 recipients of SS. The worker Ratio had fallen further to 3.3 to 1
These agencies now hold bonds in the amount $4,800,000,000,000.00 for SS and an additional fund for medicare. Somewhere in the neighborhood of $10 trillion. So according to the SS Trust Fund Administrators SS is solvent. In 2012, in their infinite wisdom the reduced the SS tax rate paid by employees to 4.6% and for self employed to 10.6%. So when you examine the federal budget for 2012 you will see that they paid out $433 billion to SS recipients out of general revenues, e.i. Income Taxes. So where's the Trust Fund. Gone, spent, kaput, there is no trust fund only paper bonds held by agencies which only spend money, never ever has any one of them made so much as a dollar!
I won't postulate on what the congress will do but these two programs will eat up the entire US budget sometime in the next 15 years if they don't do anything to reform them.
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