Originally posted by: JEDI
Why doesnt the US govt invest social security $ in US Treasuries and earn more than 2%/yr?
Because Social Security isn't an investment, and shouldn't be thought of as such. It's merely a tax, with a promised, undefined future benefit which you may or may not get, if there's money available at that time. Even the Social Security Administration says as much:
"There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said:
"The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.
In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that
entitlement to Social Security benefits is not contractual right."
Link
You have no legal right to anything from SS, no matter what you've paid in, and Congress can reduce or eliminate benefits at any time. Is it any wonder the program is mandatory? Only a fool would contribute to SS otherwise.