A recent column in the LATimes “Paul Ryan makes it official: Republicans are coming after Medicare next” says:
“Ryan couched his policy prescriptions in the context of “entitlement reform,” employing an overused term for social insurance policies that include Social Security and Medicare, the costs of which Americans cover through payroll taxes during their working careers.”
This type of inaccurate, misleading or outright biased reporting drives me nuts and fosters misinformation and thereby false conclusions for support or opposition.
No, payroll taxes DO NOT cover the costs for SS and Medicare; not even close and yet in large part because of this kind of reporting many, perhaps most, seniors believe they paid for their benefits and therefore are “entitled.” For example, payroll taxes are not even sufficient to keep the Medicare HI trust funded. Part B premiums cover only 25% of costs and the rest is an open-ended expense to all taxpayers.
Social Security payroll taxes are not sufficient to pay current benefits. Interest paid to the Trust must be used, the source of which is general tax revenue. Income taxes paid on some Social Security benefits are used to fund Medicare as are additional taxes on certain investment income.
No, the costs of Social Security and Medicare are not paid for through payroll taxes. Without Ryan or someone else “coming after” the current fiscal situation Americans will learn in a few years that payroll taxes only cover about 75% of the cost of Social Security 😢