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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January 22, 2010

We Must Put America Back to Work
 

America is, today, in an economic crisis far worse than most of us realize.  People are anxiously waiting for hard times to end and prosperity to return again, just as they wait for winter to end and spring to begin.  But it doesn’t work that way.  The seasons of the year are a fairly predictable natural phenomenon.  The business cycle is not.  The economy is manmade, and the business cycle is highly dependent on the behavior of individuals, business units, and government.  At the beginning of 2010, the unemployment rate was 10.0 percent with 15.3 million American workers officially classified as unemployed.  Since the recession started two years ago, more than 7 million workers have lost their jobs, and most economists do not see a speedy recovery in the foreseeable future.  Instead, they see a lengthy period of high unemployment. 

 

The costs of prolonged high unemployment can be enormous, both in terms of the personal suffering of unemployed individuals and their families, and in terms of lost production for the nation.  The human suffering from long-term unemployment is just as real as the suffering that results from a natural disaster such as Hurricane Katrina.  But the victims of high unemployment, spread all over the nation, are not nearly as conspicuous as the victims of Katrina.  There is no way for the media to bring the plight of the unemployed into our living rooms in the same way that they portrayed the suffering that resulted from Katrina.   But prolonged unemployment can contribute to homelessness, hunger, mental depression and even an increased rate of suicides.  In economic terms, historians have estimated that the dollar cost of the Great Depression of the 1930s was greater than the cost of World War II.  They estimate that the dollar value of the lost production during the 1930s would have been a large enough sum to cover the cost of a new house, and several new cars, for each and every American family during the decade. 

 

The Great Depression was essentially a series of recessions.  Before the economy fully recovered from each recession, it would plunge into a new recession.  This pattern continued for a full decade.  Could we be in for another decade of economic stagnation?  We could, if we just sit back and wait for the economy to heal itself. During the first two years of the Great Depression, President Hoover vetoed every piece of legislation enacted by the Congress to speed up economic recovery.  Hoover argued that if we would just leave the free market system alone, it would restore balance and bring about economic recovery without any meddling by government.  But he was wrong. 

 

Our economy has been severely damaged by the events of the past 18 months, and we must take strong actions to get the economy back on track.  Consumer demand, which has been the engine for most economic recoveries in the past, is likely to remain weak indefinitely, and business investment is usually derived from consumer demand.  The weak consumer and investment demand must be offset by increased government demand, if the economy is to experience a speedy recovery.  There is nothing more wasteful than allowing able-bodied men and women, who want to work, to remain unemployed through no fault of their own.  There is much work that needs to be done in America.  Our aging infrastructure is in urgent need of updating.  How many more bridges will have to collapse before we wake up to the near-crisis state of our roads and bridges?  Also, we need to be developing alternative transportation systems and alternative energy sources.  There is more than enough work, that urgently needs to be done, to employ everyone who wants a job.  I am not talking about government jobs.  I am talking about government investment in the future of America that could result in millions of private sector jobs.  Bids would be taken from private contractors on the various local projects, and the winning bidders would then hire local workers to do the work. 

 

To those who argue that we cannot afford a major jobs program at this time because of the high budget deficits, my response is that we cannot afford not to tackle the unemployment problem.  There is no possible way to make a very big dent in the deficit without a strong economic recovery.  As much as I deplore the huge budget deficits and the skyrocketing growth in the national debt, I believe that, at this point in time, we must place a higher priority on ending the recession and restoring the economy to full employment than on deficit reduction.  However, the two goals are not mutually exclusive.  The high unemployment rate is a major factor in the high budget deficits that the nation is now running.  When unemployed workers return to work, income tax revenue increases at the same time that government spending for unemployment compensation goes down. Therefore, reducing unemployment has the effect of also reducing the deficit. 

 

11:55 am est 

January 6, 2010

How America Got So Deeply in Debt

Federal budget deficits and the soaring national debt are now very much in the news, and they have become a major concern for many Americans.  That is good, but the question I would like to shout out from the mountain top is, where have all these journalists and concerned Americans been for the past 28 years?  They are a quarter-century too late to nip the problem in the bud.

 

In 1981, the public debt reached $1 trillion for the first time ever.  It had taken 200 years, and the combined deficits of all the presidents from George Washington through Jimmy Carter, to accumulate that first $1 trillion.  But then, the nation threw caution to the wind and began traveling a course that would eventually lead it to the brink of national bankruptcy.  Just during the next 12 years, the debt skyrocketed from the $1 trillion, that took 200 years to accumulate, to an astronomical $4 trillion!

 

Where were all the critics of big deficits at that time, when they were so badly needed?  I was a critic during those years, but I certainly didn’t have much company.  I began writing a self-syndicated weekly newspaper column, in 1990, called “Economic Alert,” that appeared in 30 papers,  Week after week, I warned readers about the disastrous economic path the nation was following.  But messengers of bad news are never welcome.  I became a target of those who didn’t want the American people to know about the huge deficits and skyrocketing national debt that were resulting from the practice of Reaganomics.   I received many hostile letters, and was called “un-American” a “Marxist” and many other choice names. 

 

When Bill Clinton became president, he pushed a deficit-reduction package through Congress, that included both higher taxes and cuts in government spending.  The deficits gradually diminished during Clinton’s first six years, and, during the last two Clinton years, the nation experienced small budget surpluses, after 38 consecutive years of deficits.  But not all of Clinton’s actions were positive.  He misled the public into believing that there would be large budget surpluses for at least a decade, thus creating the dangerous budget-surplus myth. 

 

President George W. Bush pushed through Congress huge tax cuts under the guise that the government had large amounts of surplus money.  Bush led the government back into deficit territory during his first year in office, and the deficits just got bigger and bigger throughout the rest of his presidency.  When Bush turned over the reins of power to President Obama in January 2009, the national debt, which had been $1 trillion in 1981, and $5.7 trillion when Bush took office in January 2001, was more than $10.6 trillion. 

 

In 2008, the unthinkable happened.  At a time when the nation was already spending massive amounts of borrowed money on two wars, the nation’s banking system and the economy went into free fall, and we came much closer to a 1930s-style depression  than most Americans realize.  The financial system had to be bailed out, and the economy had to receive a large stimulus, in order to keep the nation from plunging into another great depression.  This action has contributed enormously to the large deficits and the growth in the public debt in the short term. 

 

We, as a nation, must acknowledge the reckless financial and economic policies of the past and resolve to make a major change in course as soon as the economy recovers enough to minimize the risk that stringent new fiscal polices might throw the economy back into a recession, or worse yet, a depression.  But, let us not forget that more than 90 percent of the $10.6 trillion national debt that Obama inherited was accumulated during the years between the beginning of Ronald Reagan’s presidency and the end of the George W. Bush presidency.   

    

 

7:52 pm est 


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