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February 21, 2005
The Tinkering With Social Security Has Never Stopped
I received the following email from someone who describes himself as "SomeGuy in St. Louis" in response to my recent post.Kerry Read your article today at Social Security Choice on 'The Crisis Is Now...'. My question is, 'When did Social Security quit paying Death Benefits to heirs'? Go back to the 1939 Amendments to Social Security, http://www.ssa.gov/history/reports/1939no2.html Survivors and lump-sum death payments: 1. Lump-sum death payments 1935-Amount equal to 3.5 percent of total wages less monthly benefits received. 1939-Amount equal to 6 times the primary benefit, provided that the deceased worker was fully or currently insured and left no widow, child, or parent who would, on filing an application in the month of his death, be entitled to monthly survivors benefit for such month.My Reply:
I also did some looking around the SSA's history as shown on its website and found the following: http://www.ssa.gov/history/death9.html This poster from the period 1937-1939 announces the fact that during this time Social Security paid lump-sum benefits to the estates of covered workers who died before attaining age 65. This type of benefit was discontinued by the 1939 Social Security Amendments and was replaced by the much more valuable survivors benefits program. http://ssa.gov/history/reports/briefhistory.html 08/13/81The Omnibus Budget Reconciliation Act of 1981 made major changes in Social Security, SSI and AFDC. These included: a phasing out of student's benefits; stopping young parents benefits when a child reached 16; limiting the lump-sum death payment and changes in the minimum benefit. What your question illustrates more than just being concerned with one certain aspect of the Social Security program, is how often the details of the program have been tinkered with by our rulers in DC, and will continue to be. The impression that the opponents of reform give that the system is 100% rock solid and has never changed since FDR is completely bogus. As I mentioned earlier, the details of the program have evolved quite drastically from what they were in FDR's time. The issue that has always fried me the most and I will never stop mentioning is the fact that the original program promised tax free pay-outs. Congress flagrantly violated that agreement and is currently taxing 85% of the benefits for many people. The opponents of reform also want us to believe that it is too risky to allow people to have any personal control over the retirement savings accounts and the only safe investment is with the SSA. We are not advocating that everyone be forced to switch to privately owned accounts. There are obviously plenty of people who would just as soon stick with how things are currently being handled. All we are asking is, for those people who want to have a choice of an alternative retirement savings account, that they be allowed to make that choice. Many people consider investing money on the open market to be less risky than trusting it to our rules in DC, who are allowed to change the terms at any time and in any way they feel like. If a private investment company were to modify the terms in a similar fashion, you can be sure that they would lose customers, as well as be sued for breach of contract; both actions which are not currently available to customers of the SSA. Kerry Kerstetter
Posted by Kerry Kerstetter at February 21, 2005 4:47 PM | Print