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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February 25, 2010

It's official. The Social Security Trust Fund is Empty

It’s official.  The Social Security trust fund has no assets.  It was declared empty by the Social Security Trustees in the 2009 Social Security Trustees Report, which was signed by Treasury Secretary Timothy Geithner and the other Social Security Trustees.  The acknowledgement was in the form of a single sentence, buried deeply in the report.  That sentence reads:


 
“Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.”  


There is nothing ambiguous about that statement.  It says that the government does not receive any income from redeeming the bonds or from the interest that the “bonds” allegedly earn.  Even worse, it says that the government must finance redemptions and interest payments by increasing taxes, reducing government spending, or going still deeper into debt. 

 

Why is it that most Americans know nothing about this?  It is because that, with a few exceptions, the media has not reported it.  Instead, the media continues to help spread the misinformation that is dispensed by the AARP, other senior organizations, and many politicians.  One exception is Allan Sloan, Senior Editor at Large at Fortune Magazine.  He agrees with me that the Social Security trust fund contains no real assets.   

 

If the “trust fund bonds” provide no net income to the Treasury, either in the form of interest payments, or through the redemption of the actual bonds, where is the government going to get the money to replace the $2.5 trillion that it has looted from the trust fund?  I believe the American people deserve to have this question asked and answered by the media. 

 

I appeared on CNN with Lou Waters on September 27, 2000 and tried my best to convince him that the government was spending all the surplus Social Security revenue.  He looked at me in disbelief and asked, “Are you a voice crying in the wilderness?” As it turned out, I was a voice crying in the wilderness in 2000, and I continue to be such a voice a decade later.   During the ten years that I have been trying to expose the government’s misuse of Social Security revenue, an additional $1.4 trillion has been looted and spent by the government. 

 

People, who are in a position to know the truth, have been stating the above fact publicly for years. But nobody has been willing to listen.  Some examples:


 
“I come to you as a managing trustee of Social Security.  Today we have no assets in the trust fund.  We have promises of the good faith and credit of the United States government that benefits will flow.”—Paul O’neill, Secretary of the Treasury, June 19, 2001 

“There are no stocks or bonds or real estate in the trust fund.  It has nothing of real value to draw down.”—David Walker, Comptroller General of the Government Accountability Office (GAO), Speech in Washington DC, --  January 21, 2005                                                                              ,                                                                                                                                                                                                                                                                                                                                      
  “There There is no trust fund, just IOUs that I saw firsthand that future generations will pay—will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.”—President George W. Bush, Speech at West Virginia University at Parkersburg, April 5, 2005 

Such public statements have been rare, and they have not received much news coverage.  On the other hand, the AARP and the NCPSSM have no difficulty in getting media exposure for the misinformation they dispense.  They bombard their members and the public with the message that Social Security is very solvent and can pay full benefits until at least 2037 without any action.  That simply is not true.  Although I have been a member of both organizations for years, I am persona nongrata with both of them.   They refuse to respond to my letters, emails, or phone calls.  Although I have been a vigorous foe of privatization efforts and I have been working hard for more than a decade to save Social Security as we now know it by exposing the looting of Social Security, these organizations perceive me as an enemy and refuse to have anything to do with me.  I think their intentions are good and that they just have their heads buried so deeply in the sand that they don’t want to hear anything by their own propaganda.  
 

The sad fact is that, in just six or seven years, the cost of Social Security benefits will begin to permanently exceed payroll tax revenue, and the government will have to cut benefits or raise taxes.  The public just seems to be incapable of  accepting the harsh reality that for the past 25 years, our government has spent all of the $2.5 trillion is surplus Social Security revenue that was intended to be used for funding the retirement of the baby boomers.  It is true that the government has a moral and legal obligation to repay the looted money, but it seems highly unlikely that it will do so.  The primary purpose of the proposed fiscal commission is probably to sweep all the evidence of wrong doing under the rug and proclaim that Social Security must be cut in order to help reduce the deficit.  If this happens, the evidence of “the great Social Security fraud” will be covered up and Social Security benefits will be cut under the guise of a patriotic need to reduce the deficit.   
  
1:35 pm est 


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