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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June 12, 2010

Social Security Amendments of 1983 Laid Foundation for Social Security Scam

  

The Social Security payroll (FICA) tax is earmarked exclusively for the payment of Social Security benefits, and politicians are supposed to keep their sticky fingers off this money.  Social Security has been self-funding since 1935, and the government has never dipped into the general revenue fund to pay Social Security benefits.  Throughout most of the 75- year history of Social Security, payroll tax revenue has been just about equal to Social Security benefit payments.  In some years there were small deficits, which were offset by small surpluses in other years.  Social Security money was used to pay Social Security benefits, and Social Security benefits alone. The government was not supposed to touch the Social Security revenue. 

 

The 1982 Presidential Commission on Social Security Reform, headed by Alan Greenspan, was given the assignment of fixing Social Security for the long term.  The primary problem that the commission had to wrestle with was the forthcoming retirement of the baby-boom generation, the largest generation in U.S. history.  The boomers would begin to retire about 2010, and as more and more of them retired, the cost of benefits would exceed the payroll tax revenue coming from working Americans.  The commission decided that the baby boomers should pay higher Social Security taxes than any other generation had ever paid.  In addition to paying enough taxes to fully fund the retirement benefits of the previous generation, which was customary, the baby boomers were required to pay additional taxes that would prepay most of the cost of their own benefits, which was not customary.  In other words, the baby boomers were hit with a double whammy.

 

The recommendations of the Greenspan commission were enacted into law as part of the Social Security Amendments of 1983. This legislation laid the foundation for the biggest fraud every perpetrated against the American people by their own government.  The 1983 payroll tax hike was designed to generate Social Security surpluses for the next 30 years.  This surplus Social Security revenue was supposed to be saved and invested in order to build up a large reserve in the trust fund.  Then, when the baby boomers retired and Social Security began to run deficits, the trust fund would be tapped and the money would gradually be used to supplement the inadequate payroll tax revenue.  If this had all been done, Social Security would not even be in the news today.  The trust fund would have contained approximately $2.6 trillion of “good-as-gold” marketable U.S. Treasury bonds that could be gradually sold in the open market so that full Social Security benefits could have been paid until 2037. 

 

Here is where the fraud begins.  When the surplus Social Security revenue began to flow in during the second term of Ronald Reagan, politicians decided that, since the money would not be needed for Social Security benefits for another 30 years, they might as well just put the surplus money in the general fund where it could be used to create a giant slush fund that could be spent for whatever it was needed for. 

 

As the surplus became larger and larger in subsequent years, Congress continued to spend it as if it were general revenue, and that practice has continued to this very day.  Approximately $2.6 trillion of surplus revenue has been generated by the 1983 payroll tax hike, and every penny has been “borrowed” or “embezzled” by the government and spent as general revenue.  It was a violation of the intent of the 1983 legislation, and, after passage of the Budget Enforcement Act of 1990, it became a violation of federal law.  Every dollar of that $2.6 trillion was specifically earmarked for paying future Social Security benefits, and the government had no right to use any of it for other purposes.  That money belongs to the Social Security trust fund and to the American workers who made those contributions.  Even the suggestion that Social Security money should be used to offset the deficits created by incompetent and irresponsible politicians who have brought this nation to the brink of national bankruptcy is outrageous.  The first act by the deficit reduction commission must be to make arrangements to repay the embezzled Social Security money.  

 

I first stumbled onto the great Social Security scam more than a decade ago while doing research for my book, “The Alleged Budget Surplus, Social Security, and Voodoo Economics.” At first I would not allow myself to believe what I had found.  It just did  not seem credible that the United States Government would take money from the Social Security contributions of working Americans and spend it on other programs without either the knowledge or the authorization of the American people.  But the more research I did, the clearer it became that a fraud of historic proportions had been taking place since the mid-1980s under both Democratic and Republican presidents and Congresses.    I was outraged and wanted the whole world to be outraged, but nobody wanted to listen.  On September 27, 2000, I appeared on CNN with anchor Lou Waters to discuss my new book.  I did everything within my power to convince Waters and the national TV audience that the government was spending all of the Social Security surplus on other programs.  His response was to ask me, “Are you a voice crying in the wilderness?”  I was a voice crying in the wilderness in 2000 and I continue to be such a voice ten years later.  I have been on a relentless mission for the past ten years to expose the Social Security scam.  I have published four books on Social Security, appeared on national TV three times and done more than 170 radio talk show interviews in my effort to alert the public to the fact that the government was embezzling their Social Security contributions.

 

During the 2000 presidential election campaign, I made extensive efforts to convince candidate Al Gore that he should break ranks with Bill Clinton and pledge to end the raiding of the Social Security trust fund.  I sent copies of my book and numerous letters to Gore, urging him to acknowledge the raiding of the trust fund and to pledge that he would end the practice.  I even sent Gore a last minute telephone message through my Florida senator’s office the evening before Gore was supposed to deliver his acceptance speech at the convention.  Of course, I cannot be sure that I was the source of Gore’s “Social Security Lockbox” proposal, but I believe that I was.  The important point is that Al Gore publicly acknowledged that the trust fund was being raided, and he promised to end the raiding.  Not to be outdone by his opponent, George W. Bush made a similar pledge, and the raiding of the trust fund became a major issue in the campaign. We will never know whether or not Al Gore would have kept his promise to stop the looting of Social Security.  But we do know that George W. Bush did not keep his promise.  He looted and spent approximately $1.5 trillion of surplus Social Security revenue.

 

Time is running out.  If the public is not made aware of the Social Security fraud before the deficit commission makes its recommendations in December, I fear that all the evidence of government malfeasance will be swept under the rug and future Social Security benefits will be cut.  I need the support and help of other Americans, who care about the future of Social Security, in getting the message out.  I urge readers to contact me via email or phone.  I especially welcome journalists who might want to interview me and help expose the scam. 

 

Allen W. Smith, Ph.D.

Professor of Economics Emeritus

Eastern Illinois University

Website: www.thebiglie.net

Email: ironwoodas@aol.com

Phone: 1-800-840-6812

       

                    
3:34 pm edt 


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