RAIDING THE TRUST FUND

Allen W. Smith, Ph.D.

RAIDING THE TRUST FUND
Read Chapter One Free RAIDING THE TRUST FUND
The Long Struggle
The Big Lie
Allen W. Smith, Ph.D.
The Looting of Social Security
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CONTEMPLATIONS

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"A Voice Crying in the Wilderness"

When Allen W. Smith appeared on CNN to discuss his newly published book, The Alleged Budget Surplus, Social Security and Voodoo Economics, on September 27, 2000, he thought that what he was about to say would soon become breaking news that would spread throughout the nation like wildfire.  Smith was so outraged by what he had discovered a few months earlier that he thought it would shock the public and generate a national scandal that would make Watergate pale by comparison.    Smith thought that, when the public found out that their Social Security contributions were being embezzled, and used to help finance Reagan's large tax cuts for the rich, they would share his outrage and demand action.  Smith thought that taking money from the payroll tax contributions of working Americans and transferring it to America's richest citizens was more than wrong.  It was immoral.  

Dr. Smith, a strong supporter of Social Security as we now know it, saw the raiding of the Social Security fund as a first step toward destroying the current Social Security system and replacing it with a privatized system.  The payroll tax hike of 1983 was designed to generate Social Security surpluses for 30 years prior to the retirement of the oldest baby boomers in about 2010.  These surpluses were to be saved and invested in marketable U.S. Treasury bonds, which could later be resold in the open market to raise cash with which to pay benefits to the boomers.  If the $2.7 trillion in Social Security surplus revenue, which the tax hike was designed to accumulate by 2010, were to be taken by someone like Bernie Madoff, the baby boomers would be  out of luck. The enemies of Social Security would then point to the dire financial condition of Social Security as proof that Social Security benefits had to be cut, and the system should be scrapped and replaced with a privatized system.  Most readers can readily see that if the $2.7 trillion in surplus Social Security revenue had been taken by Madoff, who is now serving a 150-year prison sentence, Social Security would now be in deep trouble.  Bernie Madoff did not steal the Social Security money. but the United States government did.  The money is gone and the only way to get it back is by raising taxes, which appears to be politically impossible in the near future.   

If the CNN interview, thirteen years ago, had gone differently, Smith thinks the public outrage would have been so strong that Congress and the president would have been forced to bring the raiding of Social Security to an abrupt end.  If that had happened, all the surplus revenue that came in after 2000 would today be safely held by the trust fund in the form of "good-as-gold" marketable U.S.Treasury Bonds, which could be sold in the open market as needed to pay benefits to the boomers. 

Smith was really excited as he entered that CNN studio.  He would soon be able to tell millions of viewers about the Social Security theft.  But the interview didn't go the way he had hoped.  Instead of showing interest in what Dr. Smith had to say, the CNN Anchor, Lou Waters from Atlanta, was amused, and he treated the interview as a big joke.  He ended the interview with these words:

"We're not hearing any of this in the news.  I'm involved in the news.  Are you a voice crying in the wilderness?" 

As thing turned out, Smith was a voice crying in the wilderness in September 2000,  and he has continued to be such a voice to this day.  In addition to Reagan, Presidents George H.W. Bush, Bill Clinton, and George W. Bush all looted and spent every dollar of the surplus that came in during ther presidencies. Obama might have done the same, but we can't know for sure because the surpluses were over and Social Security was running permanet annual deficits by the second year of Obama's presidency.

Dr. Smith is the author of nine books, and he has appeared on CNN, CNBC, and more than 200 radio talk shows.  He has a B.S. in Education degree from Ball State University and a Ph.D. degree in Economics from Indiana University.

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Links to articles: 

 

 

 

 Interview with investigative reporter, Mike Deeson, WTSP--CBS local affiliate in Tampa: http://www.wtsp.com/news/local/article/195201/8/Social-Security-Trust-Fund-stolen-by-the-Government

 

Archive of Allen's articles published by Dissident Voice.org: http://dissidentvoice.org/2013/05/government-owes-2-7-trillion-to-social-security/ 

Archive of Allen's articles published by FedSmith.com: http://www.fedsmith.com/author/allen-smith/

Allen's articles published in the Orlando Sentinel:   http://articles.orlandosentinel.com/2012-08-07/opinion/os-ed-social-security-con-080712-20120806_1_social-security-trust-fund-ious; http://articles.orlandosentinel.com/2013-06-10/news/os-ed-social-security-061013-20130609_1_social-security-income-subject-payroll-tax  

 

 

 

 

 

 


CONTACT ALLEN:  Phone: 1-863-875-2735     Email: ironwoodas@aol.com

Allen W. Smith is available for media interviews and speaking engagements.  Call 1-800-840-6812.

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Allen converted his Honda Odyssey into the "Social Security Info-van" several years ago with the hope that  it might be another tool with which to deliver his message directly to the public. 
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Allen's Blog 

"THE LOOTING OF SOCIAL SECURITY"

Email Address: ironwoodas@aol.com

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November 28, 2009

Abuse of the Social Security Trust Fund Began in the 1980s

 

The mishandling of Social Security funds has been going on since the mid-1980s.  As soon as the surpluses, resulting from the 1983 payroll tax hike, first began to flow into the Treasury, politicians from both political parties began using the money like a giant slush fund.  At that time, it would be at least 30 years before the funds would actually be needed for Social Security, so politicians developed the bad habit of “temporarily borrowing” the money and using it for non-Social Security purposes.  That bad habit never was broken, and every dollar of the $2.5 trillion in surplus Social Security revenue, generated by the tax hike, has been spent, leaving no real assets in the trust fund.    

 

Some members of Congress were outraged by the practice and tried to nip this misuse of Social Security revenue in the bud.  On October 13, 1989, Senator Ernest Hollings of SC expressed his outrage during a speech on the Senate floor.  Excerpts from that speech, taken from the Congressional Record, follow.  “…the most reprehensible fraud in this great jambalaya of frauds is the systematic and total ransacking of the Social Security trust fund…The public fully supported enactment of hefty new Social Security taxes in 1983 to ensure the retirement program’s long-term solvency and credibility.  The promise was that today’s huge surpluses would be set safely aside in a trust fund to provide for baby-boomer retirees in the next century.  Well, look again.  The Treasury is siphoning off every dollar of the Social Security surplus to meet current operating expenses of the government…The hard fact is that in the next century…the American people will wake up to the reality that those IOUs in the trust fund vault are a 21st century version of Confederate banknotes.” 

 

A year later, on October 9, 1990, Senator Harry Reid of NV expressed similar outrage.  Excerpts from his Senate speech, taken from the Congressional Record, include, “…Are we as a country violating a trust by spending Social Security trust fund moneys for some purpose other than for which they were intended.  The obvious answer is yes…During the period of growth we have had during the past 10 years, the growth has been from two sources.  One, a large credit card with no limits on it, and, two, we have been stealing money from the Social Security recipients of this country.”  

 

Senator Daniel Patrick Moynihan of NY even introduced legislation in early 1990 to repeal the 1983 payroll tax increase.  In an effort to keep politicians from spending the Social Security surplus money on other things, Moynihan wanted to eliminate the surplus revenue and return Social Security to a “pay-as-you-go” system.   President George H.W. Bush was furious about Moynihan’s proposed legislation.  Bush said, “It is an effort to get me to raise taxes on the American people by the charade of cutting them, or cut benefits.  And I am not going to do it to the older people of this country.”  

 

Bush, the “read-my-lips-no-new-taxes” president, did not need to raise taxes as long as he had access to the surplus Social Security revenue.  During his four years in office, $211.7 billion in Social Security surplus revenue flowed into the U.S. Treasury.  Every penny of it was spent for general government expenditures, and none of it was saved and invested for the payment of future Social Security benefits, as is commonly believed. This practice has continued until this day. The plan was that when benefit costs start to exceed payroll tax revenue, in about seven years, the Social Security trustees would begin dipping into the huge reserve that was supposed to be built up in the trust fund to make up the revenue shortfall in order to continue to pay full benefits.  Unfortunately, there are no assets in the trust fund that can be dipped into.

 


 

10:34 am est 


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