American Logic

[Igel]

7. Yes, and they always have been.

That is precisely how Social Security was set up from day 1. The first dollar paid into SS was paid out shortly thereafter. It wasn't kept, it wasn't retained.

Under Reagan Social Security taxes were increased to produce a bunch of excess monies earmarked for SS. It went into a "trust fund."

A couple of years ago expenses and tax income became equal, so virtually no money went into the trust fund that year. Don't know about the current state of affairs. Projections are that in a few years they'll be digging into the trust fund, then Social Security benefits will still be paid for using current taxes, and in 20 years or so the trust fund will be exhausted. (The trust fund cannot be held in cash, by law--that's how it's been straight along. Any excess revenue goes into special Treasury bills that cannot be privately held and the money is then handed over to Congress. Congress spends it, because Congress doesn't keep a lot of excess money around. So when they start to use trust fund money Congress will have to repay the money from then-current revenues. That may mean raising taxes, it may mean converting trust fund T-bills to T-bills sold at public auction, it may mean cutting some expenses or programs, or it may mean disposing of the obligation or reducing SS benefits by Congressional fiat. All that SS money is just general tax revenue earmarked by Congress for a special purpose, and what Congress gives Congress can take away. There is no Constitutional authority for any tax on income but income tax, and all income tax is under Congressional authority, so all the talk about what Congress "must" do is just what Congress has said Congress must do ... until Congress says otherwise.)

Unemployment insurance is the same: They keep some money in reserve, but otherwise current revenue = current expenses. UI is at the state level, however, not federal.

They're not called "insurance" for no reason. That's how insurance works.