Note: This was originally posted on a website dedicated to debunking chain emails, but that website never got very far off the ground, and as such I have decided to repost it here. This was written in 2011, so some data is out of date.

Sometimes, you get a chain email that is so outrageous it’s hard to believe. The blockquoted portions are excerpts from the actual email, and below each section I’ll provide an analysis of the claims made in the email and explain why this email is so wrong. I’ll also provide linked sources for all of my information, something many chain emails cannot do. The original title of this email was “Entitlement My A**”.

"What the hell is wrong?" Remember, not only did you contribute to Social Security but your employer did too. It totaled 15% of your income before taxes. If you averaged only $30K over your working life, that's close to $220,500. If you calculate the future value of $4,500 per year (yours & your employer's contribution) at a simple 5% (less than what the govt. pays on the money that it borrows), after 49 years of working (that was me) you'd have $892,919.98. If you took out only 3% per year, you'd receive $26,787.60 per year and it would last better than 30 years (until you're 95 if you retire at age 65) and that's with no interest paid on that final amount on deposit! If you bought an annuity and it paid 4% per year, you'd have a lifetime income of $2,976.40 per month. The folks in Washington have pulled off a bigger Ponzi scheme than Bernie Madhoff [sic] ever had.

The tax rate for social security has never been 15%. However, the combined rate for social security and medicare would be 15% of your income if you were self-employed at any point from 1988 onward. (Social Security & Medicare Tax Rates) While this is certainly possible, in 2009 only 10.9% of the work force was self-employed. (Self Employment in the United States) It’s much more likely that a recipient of this email would have worked for some larger organization, where the combined tax rate for medicare and social security is currently 7.65%, nearly half of the quoted figure. The average combined tax rate for these programs since 1937 (the first year of social security payments; payments to medicare didn’t start until 1967) is only 4.86%.

The calculations above assume that you’ve worked 49 years at $30,000 per year. In the relatively unlikely scenario where you have been self-employed since age 16 in 1962, you would actually have paid $175,167. If you have been employed by an organization in that time, you would have paid $97,884. Still nothing to sneeze at, but that’s a difference of $122,616 from the figure quoted above.

Indeed, compounding interest is a powerful force; if you were to put $4,500 away annually and get a 5% interest rate, after 49 years I calculated a final wealth of $989,169.28, even higher than the number given above. However, at the lower rate of 3%, you would only have $197,833.86 saved for retirement. In an annuity providing 4% per year, you could only receive payments at the above rate of $2,976.40 per month for about six years before completely draining your funds. If you wanted to make that annuity last 30 years, your monthly payments would have to be around $900; while this is a small but livable sum, any medical care or unexpected expenses could easily wipe out your savings.

To respond to the final note, remember that Bernard Madoff’s scheme outright stole somewhere in the neighborhood of $36 billion from investors. (Bloomberg) This money went, more or less, directly into Madoff’s pocket, never to be seen again, except for the money that Madoff used to pay investors phony dividends. This email argues that social security is just such a scheme; what it does not mention is that government borrowing from the social security trust fund has occurred every year since the program’s inception, or that the government pays interest on that money borrowed. While there are long-term issues with the practice of the government spending money that it has borrowed from the trust fund, social security does hold government securities that can be redeemed at face value if necessary. (Social Security Trust Fund FAQ) The federal government currently owes social security $2.6 trillion. (2011 Annual Report) It is possible for social security to redeem these securities at any time, forgoing interest payments for cash at the time of redemption. While the current system could benefit from some revision, the money has not been outright stolen, as was the case in Madoff’s Ponzi scheme.

Entitlement my ass, I paid cash for my social security insurance!!!! Just because they borrowed the money, doesn't make my benefits some kind of charity or handout!! Congressional benefits, aka free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days, now that's welfare, and they have the nerve to call my social security retirement entitlements?

The benefits to members of Congress are many but are overstated here. The federal health care they receive is not free. (U.S. Office of Personnel Management) Pension plans are currently paid for under the Federal Employees’ Retirement System (FERS), which requires that members of Congress pay a percentage of their income - just as in social security - to receive the pension. As of 2009, 455 former members of Congress were receiving an average pension of $57,590.11. (Salaries of Members of Congress) Given the current congressional salary of $174,000 per member and 535 members, the FERS is receiving less than 5% of its funds from active members of Congress.

Admittedly, the congressional schedule is hardly rigorous, but that largely depends on your definition of “holiday”. The House of Representatives and the Senate both publish their schedule early in the year, and for 2011 the only holidays listed are the federal holidays: Martin Luther King Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day, Thanksgiving Day, and Christmas. (House Calendar) (Senate Calendar) Well, actually, it’s the day after Christmas, because Christmas falls on a Sunday in 2011. What most people find offense to is the number of recesses that Congress takes throughout the year; technically, legislators are supposed to spend this time in their districts, getting to know their constituents. There are 47 days of such time scheduled for 2011, along with a two day retreat for the Representatives, ten days of Spring Recess, 24 days of August Recess, and 17 days where Congress is simply not in session. These numbers only count days of the work week that are not Federal Holidays.

Vacation and sick day policies for congress members are the same as for any other federal position. Federal employees accrue 26 13 days of sick leave every year, along with 26 to 52 13 to 26 days of general leave (depending on the number of years of federal employment). (Federal Sick Leave Policy) (Federal Leave Policy) [The information in this paragraph was miscalculated, as Ken pointed out in the comments below, and as such I’ve corrected it. Thanks Ken!]

So, the nine (not 67) paid holidays should be available to anyone (although this is certainly not always the case) and the 100 days that congress members aren’t required to be at the capitol are still supposed to be work days. They actually could get more or less than three weeks of paid vacation - as do all federal employees - but definitely not unlimited sick days.

Also, while this 1950 article on Congressional time off isn’t 100% necessary, it is a good read.

We're "broke" and can't help our own Seniors, Veterans, Orphans, Homeless etc.!

Technically, the U.S. is very much in debt, but this hasn’t stopped us from spending money before, so I guess those quotation marks might be well-deserved. We do help all of those groups though, to the tune of $713 billion to seniors, $108 billion to veterans, $280 billion on health care for children and the poor, and $496 billion in aid to those in poverty or low-income situations, including families. (VA Office) (CBPP) The Center on Budget and Policy Priorities estimates that these programs account for 62% of our budget, and the president’s proposed budget for 2012 plans for these programs to account for about 58% of our budget. (President’s Budget for FY2012) No one is denying that these groups could not benefit from higher-quality, more efficient aid, but we are certainly helping them.

In the last months we have provided aid to Haiti, Chile, and Turkey. And now Pakistan......home of bin Laden. Literally, BILLIONS of DOLLARS!!!

Deciding how to quantify this is not easy. Let’s say that by “the last months” the author means the three months surrounding Osama bin Laden’s May 2, 2011 death: a period from March 1, 2011 to May 31, 2011. Actual spending data for such a recent time frame is not yet available, but the planned foreign spending for 2011 is $22.9 billion. (White House Budget Outlays via Politifact) For a quarter of the year - or three months - this would equate to $5.7 billion. While some of that is spend on narcotics control and law enforcement, the majority of that is, indeed, spent on providing aid to foreign nations. However, this is a paltry sum compared to the nearly $1.6 trillion spent on the groups mentioned above; actually, the total spending for 2010 on foreign aid is only 1.6% of that spent on seniors, veterans, and low-income groups.

Our retired seniors living on a 'fixed income' receive no aid nor do they get any breaks while our government and religious organizations pour Hundreds of Billions of $$$$$$'s and Tons of Food to Foreign Countries!

Estimates put the number of retirees relying solely on social security at around 15%. (American Public Media) All retired seniors who qualify for social security simply do receive aid, the question is the quality and quantity of that aid. As mentioned, the aid to seniors from the federal government is somewhere in the area of $713 billion, and the aid to foreign nations is $22.9 billion.

They call Social Security and Medicare an entitlement even though most of us have been paying for it all our working lives and now when its time for us to collect, the government is running out of money. Why did the government borrow from it in the first place?

The term entitlement is not being used in anything but a technical sense by the government. When we think of entitlement in a non-political sense, we may think of it as the unnecessary feeling of self-entitlement that some feel when they “deserve” certain treatment. In the terms of politics, an entitlement program simply “provides individuals with personal financial benefits to which an indefinite number of potential beneficiaries have a legal right whenever they meet eligibility conditions that are specified by the standing law that authorizes the program”. (Auburn University Department of Political Science) Similarly, welfare is the “provision of personal benefits to be consumed by qualifying individuals or families”. (Ibid.) Having a hard time telling those terms apart? They are not much different, but the pejorative connotation as used in this email is intended to get under your skin.

As mentioned above, the government “borrows” money from social security - which is a separate trust fund from the general fund of the U.S. Treasury - by investing the trust fund monies into U.S. securities. This is actually a requirement of the act itself, as all money in the trust fund not disbursed must be invested in securities with the full faith and credit of the U.S. government. (Compilation of the Social Security Laws) This is not a recent trend, either, as this has occurred every year since social security was enacted, with the federal government paying $2 million in interest on securities held by the social security trust fund in 1937. (Performance of Social Security Trust Funds 1937-2006) See also: 1 2 3 4 5 6.

Imagine if the *GOVERNMENT* gave 'US' the same support they give to other countries.

As we saw above, the government gives far more support in entitlements than to other nations; somewhere around 699,000% more.

Sad isn't it? 99% of people won't have the guts to forward this. I'm one of the 1% -- I Just Did

Yes, my friend, yes you are, and yes you did.

(Header image credit Humberto Moreno via Flickr).

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On Entitlement by Steve Richey is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.