A Common Sense reader wrote about a radio program they had been listening to that discussed the current state of Social Security. For as long as I can remember, people have been saying that Social Security may not be there to make payments once we reach the magic age. Also, I have heard that there are too many baby boomers and it’s too much for the government to make all those payments. But didn’t all those baby boomers pay into Social Security for all those years of working?
So I decided to do a little research on the matter.
Social Security was presented to the American public in 1936 (nearly 75 years ago) in a pamphlet published by the government. This is what it said (and be sure you pay close attention to the closing sentence):
“After the first 3 years--that is to say, beginning in 1940--you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. This will be the tax for 3 years, and then, beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. After that, you and your employer will each pay half a cent more for 3 years, and finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.”
Wow. Did we ever get sold a bill of goods. Something went sadly amiss with this program. Or maybe that’s just how you convince your constituents to voluntarily give up a chunk of their paychecks for the entirety of their working lives.
The pamphlet continues on to discuss why giving your money to the government is better than placing it in your own bank:
“What you get from the Government plan will always be more than you have paid in taxes and usually more than you can get for yourself by putting away the same amount of money each week in some other way.”
Somehow, I think that the bank venue would have been more profitable. Over such a long period of time, one would have plenty of time to invest in CDs with their more lengthy investment requirements and their more profitable paybacks.
I thought that this was fascinating and that you might find it of interest also. If you want to see how this plan was presented to the American public, read The 1936 Government Pamphlet on Social Security.