SSI

It is sometimes said that government benefit programs never end but that is not always the case. Prior to 1996 alcoholism was considered a disability by Social Security Income (SSI) and alcoholism was considered a disability under this program. Alcoholics living on the street were receiving $600 per month but the law required that they have a permanent address to send the checks and there must be a responsible person to receive the money. It was common for the alcoholic to use the neighborhood liquor store as this address and the owner as the responsible person. The store would keep track of the purchases during the month and when the check arrived, they would deduct the amount owed and turn over the rest to the recipient. It the limit was reached they would be cut off until next month. It served as an interest free loan of next months purchases. This had been going on for many years but was stopped in 1996. Studies showed the Social Security Administration (SSA) didn't monitor addicts properly, and only one-fifth of those required to be in treatment actually were.

SNAP

The latest government scandal is in the food stamp program. The Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps is administered by the Agriculture Department at a cost of $100 billion dollars per year. The USDA estimated that in 2023 about 11.7% of payments were improper so why is that still going on today and how does it happen. Application fraud which includes lying about income, household size or residency is where most problems start along with retail fraud where store owners exchange SNAP benefits for cash or nonfood items. Food stamps are traded on the street at a 50% discount. This is common among addicts to get cash to buy drugs. Some dealers will take the stamps directly. Once again Minnesota has the dubious position of leading the way in the fraud. This week, federal agents targeted 20 plus MN retailers involved in SNAP trafficking, where benefits are exchanged for cash or ineligible items. Audits indicate a lack of security left hundreds of thousands of people receiving double benefits or benefits intended for deceased individuals. This follows the scandals surrounding the “Feeding Our Future”, Child Care and Autism fraud. While this investigation is centered in MN most experts believe it is prevalent in other states. This leads many to believe that the government is too large to properly administer.

Social security private

The federal government thrift plan was started in 1986 and has been a success. There are five funds and a five percent employer match. The plan has a $25,000 per year maximum and is similar to the 401K plans in the private sector. The President today signed into law a new tax deferred savings plan for the millions of people who do not have an employer pension plan. The plan is for people who earn less than $35,000 and they can save $1,000 per year with a government match of $1,000. This could be the start of privatizing social security (SS). The worker would have his social security money which is deducted from his pay check deposited in the new savings plan. This would include the matching amount from the employer. It would start slow with anyone turning age 25 next year being eligible. The payroll deduction is 7.65% of which 6.2% is for social security. That amount includes 2.2% to cover the cost of disability and survivor benefits and the remaining 4% is for SS. This is matched by the employer and so 8% of salary can be set aside each paycheck and deposited into the new savings plan. Based on past market performance this will far exceed the current SS benefits and the employee will own the account. This means any money left over at death will pass to the heirs. This will remove the discrimination against Blacks under the current system because it is based on life expectancy and Whites live longer. This would also remove SS from the responsibility of government. If a person age 25 earning $40,000 per year gets a 3% raise each year and invests 8% of his salary that earns 10%, he will have $1.56 million in his account at age 62. If he invested this money and earned 8%, he would have $10,000 per month income for life and then pass on the $1.56 million to his heirs. Under the current SS system, he would receive $9,200 per month and have nothing to pass on. The estimate of his earning 10% on his savings during his work career is based on the 100 years average for the stock market. This would have the added advantage of putting money into the private sector to be invested in the economy. Instead of living off the interest at retirement he could purchase a life annuity for $9,400 per month and guarantee his retirement income or some combination of the two.