Worried about Social Security going broke? Money may be disappearing faster than you think... As our Social Security dollars dwindle, the AP has learned that the U.S. government has paid millions of dollars in benefits to suspected Nazi war criminals who have since fled the country.
The worst part is that it may actually be legal and currently there is no mechanism to stop it.
You see, under current law, taxpayers who pay into the Social Security system are eligible to collect benefits at retirement. Here's how it works. In 1935, President Roosevelt signed the Social Security Act into law. Originally, Social Security was envisioned as a kind of social insurance to take care of seniors and those out of work: since so many folks didn't have retirement savings or means to deal with a catastrophic illness, the idea was to pay into a system while you were working in exchange for benefits when you needed them.
Today, under the system, employers and employees each make a contribution while employed. Benefits have expanded to include not only those who are retired but the disabled, minor children who have lost their parents, spouse and more.
The current rates for FICA (Federal Insurance Contributions Act) are as follows:
- Wages withheld by your employer from your pay at 6.2% for Social Security and 1.45% for Medicare;
- Additionally, your employer pays an additional 6.2% for Social Security and 1.45% for Medicare.
- The combined tax rate for individuals and employers is 15.3%.
If you're self-employed, you pay total FICA taxes of 15.3% (two times 6.2% Social Security + 1.45% Medicare taxes). There is an offsetting deduction for self-employed persons to ease the hit to your wallet.
For 2014, Social Security taxes are only imposed on the first $117,000 of income. There is no cap on Medicare contributions. The cap applies both to wages paid by an employer and by the self-employed.
For 2014, the additional Medicare tax also applies. Employers must withhold the 0.9% Additional Medicare Tax on employee wages paid in excess of $200,000 in a single year. That amount is paid by the employee only: there is no corresponding employer contribution for the additional Medicare tax.
Over time, your contributions are recorded and your payment at retirement is based on the amount that you pay - or, in some instances, your spouse's contributions. You're only eligible to receive benefits if you (or your spouse) have paid into the system for a certain period of time. Once you've paid in, you are pretty much guaranteed those benefits - the amount of benefits is based on your pay and the length of time you pay into the system (there is a cap on benefits). There are, of course, some exceptions to that rule and one significant exception is that you may not receive benefits if your citizenship has been taken away from you.
But. And it's a big but. If you leave the country voluntarily, you may be able to retain your benefits.
That's what seems to have happened here. You see, Nazi war crimes aren't U.S. crimes. We don't typically try criminals inside our borders for crimes allegedly committed outside our borders - especially if those crimes were said to have been committed by folks who are from outside our borders. So, no trials, no jail time.
We can, however, force people to leave if we can prove that they lied on their immigration papers in an attempt to secure a visa, Green Card or citizenship. It's the easier way to get rid of people we don't want here. And that's what we did to suspected Nazi war criminals.
But deportation hearings are long and messy and expensive. So, the Justice Department apparently struck deals with many of these suspected Nazi war criminals and simply asked them to leave. Many did. And since those taxpayers who leave the country voluntarily get to keep their Social Security benefits, we paid up, a consequence which some have alleged was purposeful - a carrot to expedite the exit process. However, spokesman Peter Carr of the Justice Department advised the AP that Social Security payments were not used as "an incentive or as a threat" to persuade Nazi suspects to depart voluntarily.
Whether it was a deal or a happy consequence for those alleged Nazi war criminals, the AP found that since 1979, at least 38 of 66 suspected Nazi war criminals who left the country - well over half - retained their Social Security benefits. Those payments are said to have reached millions: as of 1999, at least $1.5 million in benefits had already been paid out.
According to the BBC, those who benefited include Jakob Denzinger who served in a Death's Head Unit, an organization charged with administering concentration camps; Martin Bartesch, a guard at the Mauthausen concentration camp in Austria; and Peter Mueller, a Nazi SS guard.
Today, according to the AP, there are at least four Nazi war criminals who are still receiving benefits. At least one, former Auschwitz guard Jakob Denzinger, receives $1,500 each month at his home in Croatia.
Those who continue to receive benefits either as a result of voluntarily leaving the country or as part of a deal with the Justice Department - or a combination of the two - should be stopped, according to Rep. Carolyn Maloney (D-NY). Rep. Maloney, who serves on the House Oversight and Government Reform committee, said about the AP report:
It is deeply concerning that these individuals continued to receive Social Security benefits even after the Justice Department identified them as Nazi war criminals. The Office of Special Investigations had a mandate to remove these individuals from the United States, and the law is very explicit in saying that those who participated in the Nazi persecutions or genocide should have their benefits terminated upon their removal. In some cases that did not happen. I have asked the Inspectors General (letter downloads as a pdf) to look into this matter and I am drafting legislation to terminate the benefits of those who continue to receive a monthly check.
A previous bill, introduced by U.S. Rep. Bob Franks (R-NJ) in 1999, to cut off benefits to alleged Nazi war criminals was unsuccessful.
Of course, since there are only four such beneficiaries remaining, any new legislation which purports to cut off benefits for those accused of Nazi war crimes might be a little narrowly drawn. It does, however, raise the question about whether benefits should extend to everyone who pays in.
Currently, there are some restrictions on eligibility to receive benefits (Social Security publication downloads as a pdf). One, as noted, is that your benefits can be stopped if your citizenship is revoked. Additionally, you cannot receive benefits for any month in which there is an outstanding arrest warrant for certain felonies (largely linked to fleeing the country) or while you are in prison. Similarly, you can't receive benefits for any month you've been found to violate your probation or parole.
You can, however, continue to receive benefits if you move outside of the United States - but only if you move to a country we're friendly with. If you move to Azerbaijan, Belarus, Cuba, Georgia, Kazakhstan, Kyrgyzstan, Moldova, North Korea, Tajikistan, Turkmenistan, Ukraine, Uzbekistan or Vietnam, you generally can't receive benefits. Social Security may make exceptions if possible for some of those countries but absolutely not for Cuba and North Korea.
The rationale for allowing most taxpayers to keep their benefits is that, at some point, they've paid in. That's what Denzinger's son, Thomas, has said about his father's benefits. Denziger told the AP that his father deserved those benefits because "This isn't coming out of other people's pockets. He paid into the system."
And so he did. Should he be allowed to keep them? And if not, where's the line: what should the criteria be for retaining benefits?
