Retirees face potential 33% benefit CUT if they receive MORE benefits. What??

The following story appeared today online. It purports to tell you why you’ll have a benefit cut if Social Security benefits are not taxed.

That’s right. The article claims that either you allow the government to take away part of your benefits via taxes, or it will take away part of your benefits via benefit cuts.

This Hobson’s choice is brought to you by the rich, who want to widen the income/wealth/power Gap between them and you.

Spoiler alert: Here’s the “why” mentioned in the headline of this post: The lies of the rich and the ignorance of the populace.

Retirees face potential 33% benefit cut under new tax plan; Here’s why

Story by Andrea Arlett Nabor Herrera

Trump-backed tax plan may slash Social Security benefits by 33%, raising solvency concerns /

Retirees across the United States may soon face a daunting financial challenge. A proposed tax plan, supported by President Trump and several legislators, aims to eliminate federal income taxes on Social Security benefits, tips, and overtime.

While this might initially seem beneficial, experts warn it could lead to a significant reduction in Social Security benefits, potentially cutting them by 33% by 2035.

Proposed tax plan details

The tax proposal suggests removing federal income taxes on Social Security benefits, a move that could eliminate a crucial revenue stream for the program.

Currently, Social Security is funded primarily through payroll taxes (91%), with a smaller portion coming from taxes on benefits (4%) and interest from trust fund assets (5%). The elimination of these taxes could severely impact the program’s financial health.

Not one word of the above paragraph is true. All federal spending, including spending for the Supreme Court, for Congress, for the Senate, for the House, for the military — ALL federal spending — is funded the same way: By federal new money creation.

Congress and the President vote for spending, and the money is automatically created. No fake “trust funds” are involved.

The federal government, being Monetarily Sovereign, cannot run short of dollars, nor can any agency of the federal government run short unless Congress and the President want it to.

The financial helplessness implied in the article is a lie. The federal government has ownership and control over the Social Security agency, and so can add as many dollars as it wishes at any time it wishes.

Social Security faces financial challenges due to a growing retiree population and a slower-growing workforce.

The Congressional Budget Office (CBO) estimates that under current law, the Social Security Trust Fund will be depleted by 2034. If this occurs, benefits would need to be reduced to about 77% of scheduled payments, equating to a 23% cut.

The Social Security “trust fund” is not a trust fund. It is merely a record of payments.

As a record, and only a record, it “has” no money. It’s just a balance sheet for informational purposes. The purpose of FICA taxes (according to the SS founder, President Franklin D. Roosevelt) is to give you the illusion of ownership, so you will protest against cuts.

FICA does not fund SS benefits. It actually limits benefits as practiced by Congress.

Impact of eliminating benefit taxes Removing taxes on Social Security benefits would eliminate a revenue source expected to contribute $1.1 trillion over the next decade.

False. The “revenue” source is not FICA taxes. The revenue source is the federal government, which has the unlimited power to credit those taxes to Social Security — or not — or to credit some other figure.

The amount of FICA does not control how much Social Security is allowed to spend. Congress and the President do.

If Congress and the President wished, they could pass a law saying, for instance, that every person living in America receives double the current level of SS benefits. That law would be funded by Congressional fiat just as taxing benefits now is reverse funded by fiat.

This would exacerbate the program’s deficit, potentially depleting the trust fund sooner. The Committee for a Responsible Federal Budget (CRFB) estimates that eliminating these taxes could advance the fund’s depletion by one year, while Penn Wharton suggests it could be two years.

The CRFB is a libertarian-leaning mouthpiece that likes to express shock at how many growth dollars the federal government pumps into the economy. Their solution to the non-problem invariably tends toward cutting benefits to the middle- and lower-income groups, but seldom suggests cutting tax loopholes enjoyed by the rich.

How much you need to save in order to retire

If taxes on Social Security, tips, and overtime are all eliminated, as proposed by President Trump, the CRFB estimates the trust fund could be depleted three years earlier.

This scenario could lead to benefit cuts as early as 2032, rather than 2035, putting additional financial strain on retirees.

Again, the above is a lie or ignorance, hoping that you will believe the lie or share the ignorance. The bottom line: The author claims that any increase in your benefits will result in a decrease in your benefits, so shut up and accept your losses.

Magnitude of potential benefit cuts The proposed tax eliminations could reduce Social Security revenues by up to $2 trillion over the next decade.

Translation: The proposed tax eliminations could increase Social Security benefits by up to $2 trillion over the next decade, while also increasing the number of growth dollars added to the economy by those same $2 trillion.

This would necessitate deeper benefit cuts than currently projected. The CRFB estimates that benefits could be reduced by 33% by 2035, compared to the 23% cut projected by the CBO under existing law.

The same old lie: “Don’t you dare ask for more or we’ll give you even less than you currently receive. And by the way, we’re giving the rich another tax break, but that doesn’t count.”

Experts like Nancy Altman, President of Social Security Works, caution against the proposed tax eliminations. Altman argues that while eliminating taxes might increase benefits for some, the overall impact would be detrimental, leading to drastic benefit reductions. She describes the proposal as “not honest,” highlighting the potential long-term harm to retirees.

Shame on you, Nancy. Shame on you.

The proposed tax plan, while seemingly beneficial in the short term, poses significant risks to the financial stability of Social Security. Retirees could face earlier and more severe benefit cuts, underscoring the need for careful consideration of the plan’s long-term implications.

As the debate continues, stakeholders must weigh the immediate benefits against the potential for substantial future losses.

If ever the stakeholders, i.e. SS current and future recipients, ever begin to understand the truth, there will be an uprising and (gasp!) the income/wealth/power Gap between the rich and the rest will narrow.

OMG!

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

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