Ron Paul's Texas Straight Talk - A weekly Column

August 28, 2000

Reforming Social Security to Protect Present and Future Senior Citizens

Social Security reform is a critical issue for all Americans. Some seniors in my district depend on their Social Security benefits for all or much of their monthly income. These seniors paid payroll taxes throughout their working lives to fund the Social Security system. Their monthly benefits do not represent an entitlement payment, but rather a return of their own tax dollars paid over a lifetime of work. Our seniors certainly deserve to know that their needed retirement funds are secure.
Unfortunately, Washington politicians have not hesitated to spend Social Security funds for other purposes over the years. It is important to remember that the system originally was designed as a forced retirement savings program. Social Security monies were to be set aside in a separate trust fund used only for the payment of benefits. Revenue-hungry politicians, however, have needed to pay for more and more government programs over the past decades. The result is that the Social Security trust fund has been violated: Social Security "surpluses" have been spent on a myriad of federal programs. When the government spends Social Security funds elsewhere, it must rely on new payroll taxes to meet its current Social Security obligations. This means those payroll taxes are never set aside at all, but rather used to pay current benefits. The resulting conflict between generations is the inevitable result of the shameful and reckless policy of spending Social Security trust funds for purposes other than the payment of benefits.
The first step we must take to reform Social Security is to protect the trust fund from big-spending politicians. I introduced H.R. 219, the "Social Security Preservation Act," for this very purpose. The Act states that all monies raised by the Social Security payroll tax will be spent solely on pension payments to beneficiaries. Any excess funds will be invested in interest-bearing certificates of deposit in order to allow the trust fund to grow, and to keep the trust fund from being used for other purposes. I am proud that the nonpartisan National Taxpayers Union reported that I was one of only seven members of the House of Representatives who voted not to spend one penny of the Social Security trust fund for other programs last year. My legislation will finally make it illegal for politicians and bureaucrats in Washington to continue dipping into trust funds. Simply put, these politicians are stealing from our senior citizens.
The second reform we must make is to stop taxing Social Security benefits. Seniors already have paid income and payroll taxes throughout their working lives. Social Security benefits are financed by tax dollars, so any tax imposed on benefits is simply another form of double taxation. Furthermore, "taxing" benefits is merely an accounting trick, which allows Congress to reduce benefits without honestly announcing its intentions. Prior to 1984, Social Security benefits were exempt from federal income taxes. In 1993, the current administration successfully passed legislation allowing up to 85% of benefits to be taxed (up from 50%). I introduced legislation to repeal this increase in 1997, and earlier this year I voted for the "Social Security Benefits Tax Relief Act" to repeal the increase, which was successful in the House. More importantly, I cosponsored H.R. 761, which would eliminate all taxes on Social Security benefits. I intend to continue my efforts to convince my colleagues and the administration to end this very unfair tax.
Other positive reforms have support in Congress. Earlier this year, Congress passed legislation I cosponsored ending the earnings limitation on seniors. This legislation was needed to encourage our seniors to seek productive employment without suffering the loss of Social Security benefits. Overwhelming public support for the change prompted the President to sign the bill into law. These reforms are needed to protect not only today's senior citizens, but also today's younger working people who deserve a solvent Social Security system.