RAIDING THE TRUST FUND

The Impending Social Security Crisis

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

 

THE IMPENDING CRISIS

 (From the book.)

 

When Barack Obama became the 44th President of the United States, on January 20, 2009, the nearly three decades of consecutive annual Social Security surpluses was about to end.  The surpluses, which were planned and built into the Social Security Amendments of 1983, would end with the small final surplus of 2009.

The original plan was that the surplus revenue would be saved and invested, in order to build up a large reserve with which to finance benefits for the baby boomers, who would begin retiring in 2010.  But there was no reserve because all of the surplus revenue had been embezzled by the federal government and spent on wars and other programs.  The Social Security program ran a surplus of slightly less than $20 billion in 2009.  That was the last surplus, and, in 2010, we began  permanent Social Security deficits that will escalate rapidly in the years ahead. 

President Obama was not one of the presidents who looted Social Security, but that may be only because there was no Social Security money to loot.  Presidents Reagan, George H.W. Bush, Bill Clinton, and George W. Bush managed to make off with every dollar of the $2.7 trillion Social Security reserve fund just like Bernie Madoff successfully stole billions of dollars from his trusting investor clients.  Of course, none of the presidents could have pulled off the heist without the cooperation of their respective Congresses. 

Although Obama did not participate in the Social Security theft, he continues to participate in the cover-up.  I fault Obama for not leveling with the American people about the true status of the Social Security trust fund.  I believe that Obama had an obligation to the American people, who elected him President, to expose the great Social Security heist.  In a sense, Obama did at lease hint that there was no money in the trust fund. 

During the 2011 crisis over raising the debt ceiling, President Obama was asked by a reporter whether or not he could guarantee that Social Security checks would go out on time, even if the debt ceiling was not raised.  Here is Obama’s response to that question:

“I cannot guarantee those checks will be mailed.  Unless a deal is struck, there may not be enough money in the coffers”

 

Most people seemed to think Obama’s statement was just a political ploy, designed to scare the public.  But President Obama was just being honest with the public.  Social Security doesn’t have a dime stashed away.  The Social Security checks could not go out without an increase in the debt ceiling. 

On October 3, 2013, during the government shut-down and a threated stalemate over raising the debt ceiling, Obama was even more blunt.  He said,

 

In a government shutdown, Social Security . checks will still go out on time.  In an economic shutdown--if we don’t raise the debt ceiling—they don’t go out on time. 

 

The president left little doubt that, without raising the debt ceiling, the government cannot pay full benefits.  Since the trust fund is empty, and the Social Security tax revenue is not sufficient to pay full benefits, the government simply would not have enough money to pay full benefits. 

 

The Social Security crisis we are now facing became much worse in 2010, when the annual Social Security surpluses of the previous 30 years suddenly turned into permanent annual deficits. The deficit for 2010 was 49 billion, and the gap between revenue, and the cost of paying full benefits, will get larger and larger in the years ahead. 

How did the government make up for the $49 billion deficit in Social Security in 2010?  It borrowed the money to pay back a tiny portion of its $2.7 trillion debt to Social Security.  Seventeen years from now, in 2030, the government would have to borrow $318.7 billion in order to pay full benefits.  The nation’s finances are under such close scrutiny by credit-rating agencies, the World Bank, and other nations, especially China and our other creditors, that we will be unable to borrow our way out of the Social Security crisis.

Of course, most Americans do not know that the government is now having to borrow money in order to pay full benefits.  How could they possibly know?  The Social Security Administration, the AARP, and the NCPSSM all have statements on their official websites which tell the public that Social Security has enough money to pay full benefits for at least two more decades.

These statements are outrageous lies.  Social Security has nothing but its annual tax revenue, which is insufficient to pay full annual benefits.  Social Security does not have $2.7 trillion in the bank.  It doesn’t even have 27 cents in cash reserves.  It has nothing but a pile of worthless government IOUs, which couldn’t be sold to anyone, even for a penny on the dollar.  Social Security is at the mercy of a government that has stolen $2.7 trillion of its money.

So the impending crisis is upon us now.  If the government was willing to raise taxes, in order to get cash with which to repay the stolen money, that would be a potential solution.  But the Republicans will not raise taxes for any reason.  Neither will they raise the debt ceiling by enough to cover Social Security’s needs.  There are only three options:  (1) raise taxes; (2) borrow more money; or (3) cut Social Security benefits.  If we rule out higher taxes and more borrowing, we are left with only one option—cutting benefits.

The nitty gritty of the problem is that Social Security will need to have that $2.7 trillion in surplus Social Security revenue paid back.  Unless the money is repaid, Social Security is in deep trouble.  That is why there are so many calls for cutting Social Security benefits.  That is probably also why President Obama has offered to cut benefits by changing the way inflation is measured for Social Security cost-of-living adjustments. 

The theft of the Social Security money is a terrible crime against the American people, and there is no point in mincing words.  The government did not borrow the Social Security money. It stole it.  And many members of Congress have no intention of ever repaying the money.  The American people have been misled by the government, over the past 30 years, about what has been done with their Social Security contributions.  Most seem to think the government saved the money and invested it in marketable U. S. Treasury bonds, as it was supposed to do.  But that didn’t happen.   

Not even one dollar of the $2.7 trillion in surplus Social Security revenue, generated by the hefty payroll tax hike of 1983, went to Social Security in any way.  Every dollar of the revenue was deposited in the general fund and used to pay for wars and other government programs. 

The money was replaced with non-marketable government IOUs.  These are nothing more than an accounting record of how much Social Security money has been used for non-Social Security purposes.  These IOUs are essentially worthless.   

Why isn’t the government’s embezzlement of the Social Security trust fund money common knowledge today?  It’s not common knowledge because the government does not want the public to find out that it has been using Social Security payroll tax revenue, as if it were income-tax revenue, for the past 30 years.  As bad as the federal budget deficits have been, they would have been much worse if the government had not used Social Security dollars to replace income-tax dollars that were lost as a result of the unaffordable tax cuts under both Reagan and George W. Bush

So it is all a Big Lie!  Both Republicans and Demo-crats contribute to the lie, because they are equally guilty of misusing the surplus Social Security revenue.  If this were a partisan issue, where all the guilt rested with one political party, as was the case with Watergate, the innocent party would have exposed the guilty party years ago.  But both Republicans and Democrats have a lot to lose if this becomes public information.  Many incumbents in both parties could be voted out of office, if their role in the Social Security fraud were made public. 

When I first discovered the Social Security fraud, thirteen years ago, I thought all I would have to do was to tell the media about the terrible scandal.  At that time, I believed that freedom of the press in America was a lot more free than it actually is.

            It took time for me to come to the realization that most of the mainstream media report only what the government wants the people to know.  The turning point in my thinking came as a result of my having the opportunity to talk with a savvy old lawyer who used to work for the Federal Reserve Bank of New York.  When I asked the lawyer why the major mainstream news media would not report the story about the looting of Social Security he said without hesitation, 

 

“They’ve been bought.”

 

I was startled by the lawyer’s remark.  Surely the government did not control what could and could not be reported by the media.  That was too much like the old Soviet Union.  This is America, where we send young men and women off to war to fight for our cherished freedom.  I asked the man,

 

“Who bought them?”

             

“People like Ben Bernanke and Tim Geithner,” he responded.

 

The lawyer then went on to tell me about what he called a “good old boys’ network.”  He explained that most people in high positions in government know other people in high places from previous contacts in college, law school, and past jobs.  He said that, if Ben Bernanke does not want certain information to be reported in the news, Bernanke’s wish will soon become known to all of the major media.  He followed up by saying,

 

“If Ben Bernanke does not want certain information reported by the news media, it will not be reported.” 

 

It has been very frustrating for me to run into one barrier after another while trying to get important information out to the public.  When I first discovered the Social Security fraud in 2000, it seemed so horrible to me, that I thought, once ignited, this giant bombshell would explode into the news and spread like wildfire throughout the world. Thirteen years later, because the truth has been concealed so carefully, the bombshell has not yet been ignited. 

One of the things that kept me going, throughout all those frustrating years was the story of  Australian physician, Dr. Barry Marshall.  In the early 1980s, Marshall discovered a link between a certain bacteria and peptic ulcers, which led him to believe that peptic ulcers were caused by bacteria and could be cured with antibiotics.  Since medical students had been taught for decades that ulcers were caused by excess stomach acid, and since treatment of stomach acid had become a very big and profitable business, there was much organized resistance to Dr. Marshall’s findings. 

He was ridiculed by fellow professionals and pharmaceutical companies.  Among other things, he was called a “crazy man saying crazy things.”  In 1998, by which time his treatment for ulcers had become almost universally accepted, he was quoted as saying,

 

Everyone was against me, but I knew I was right.

 

 During the decade it took for the medical profession to accept Dr. Marshall’s findings, many patients suffered needlessly, and some even died, from an ailment for which a cure had been found. 

 

A similar, more recent, story is the story of Harry Markopolos, an accountant who had figured out that Bernie Madoff was running a giant Ponzi scheme years before Madoff  was finally arrested.  Markopolis tried repeatedly, over a nine-year period, to warn the SEC about Bernie Madoff’s Ponzi scheme. In 2005, Markopolos sent a memo to regulators titled “The World’s Largest Hedge Fund is a Fraud.”  The memo outlined his suspicions in detail and invited officials to check his theories.  But the SEC wouldn’t take his warnings seriously and took no action.  Markopolis expressed his frustrations about not being able to bring down Madoff before he ripped off so many people. 

Markopolis said: 

 

“I felt like an army of one, I was a $50 billion failure.  I wasn’t good enough or smart enough to out maneuver the SEC, the press wasn’t listening to me, and I had no other avenue.   

 

In March 2009, Madoff pleaded guilty to eleven federal felonies.  He defrauded thousands of investors out of billions of dollars.  If the SEC had acted on the suspicions of Markopolos, when he first contacted them, investors would have lost a lot less money. 

            Patients with ulcers are no longer denied access to the cure discovered by Dr. Barry Marshall.  And Bernie Madoff was sentenced to 150 years in prison.  But the biggest rip-off in history, the $2.7 trillion of Social Security surplus money that has been used to finance wars, tax cuts for the rich, and other government programs, is still a secret to most Americans.  Even as politicians call for cutting Social Security benefits, the government’s misuse of the Social Security money is still a big dirty secret. 

Obviously, the American people have both a right and a need to know the truth about the Social Security trust fund.  The government should admit to the public that it has taken money and replaced it with IOUs. 

It is just so wrong for the government to spend Social Security money for non-Social Security pur-poses.  Even more troubling, is the fact that the news media and some senior organizations choose to help the government keep its big dirty secret from the public.  

This is not just a nightmare that we will eventually wake up from.  It is real.  The government has stolen all of the surplus Social Security revenue and spent it.  The money is gone!  And there is only one way to get it back.  The people must organize and demand that the government repay the stolen money.  Since much of the money was used to finance unaffordable tax cuts for the wealthy, that is the logical place to impose a special tax dedicated exclusively for repayment of the Social Security money.

 

There are more than 75 million baby boomers (people born between 1946 and 1964) in the United States.  Some of them are Republicans, some are Democrats, and some are political independents.  Some of the boomers are rich, some are middle class, and some are poor.  But there is one thing that all of the boomers have in common.  They are all being ripped off by the United States Government!

The boomers are the ones who contributed most of that $2.7 trillion, as a result of the 1983 payroll tax hike.   Previous generations were required only to pay for the benefits of their parents’ generation.  But, because there were so many baby boomers, it was decided that they would have to be treated differently.  In addition to paying for the benefits of the previous generation, which was customary, the baby boomers were also required to prepay most of the cost of their own benefits, which was not customary.  The extra contributions were supposed to be saved and invested in marketable U.S, Treasury bonds which could later be resold to pay for the benefits of the baby boomers when they retired.

The baby boomers kept their end of the bargain by contributing that $2.7 trillion in extra taxes.  But the government did not keep its part of the deal.  The government took all that surplus Social Security money and spent it on wars, tax cuts for the wealthy, and other government programs.  Not one dollar of the money was ever saved or invested in anything.  It was all spent like general revenue, as it came in, over a 30-year period.        

 

Seventy-five million people, if organized, have a lot of political power.   That many people can make big waves and a lot of noise.  They can change the political landscape.  And they have the right to be as politically active as they want to be.

The baby boomers have gotten a bum rap, almost from the day they were born.  They were blamed for the need to build additional elementary schools when they were old enough to attend school.  A few years later, they were blamed when the number of high schools needed suddenly skyrocketed. They were blamed for the surge in college enrollment when they reached college age.  They were blamed for a lot of things.  But, they are not to blame for Social Security’s financial problems. 

So, it is the baby boomers who have the greatest stake in whether or not the Social Security money is repaid.  They are the victims of the Social Security theft, and they have the potential power to force the government to repay the stolen money.   

 Many seniors have put their faith in the AARP and/or the NCPSSM to advise them and to relay the truth about Social Security to the public.  As a long-time member of both of these organizations, it pains me to have to say that, like the government, the senior organizations do not seem to want the truth to come out. 

As mentioned in an earlier chapter, in early 2004, I sent a letter to, then AARP CEO, William Novelli, along with a copy of my newly published book, The Looting of Social Security.  I sought the support of Novelli and the AARP in my effort to expose the looting of Social Security.  I fully expected them to cooperate with me in alerting the public to the Social Security fraud.  I thought they would want the public to know the truth about Social Security.  But I was wrong.   

In a letter of response, dated April 9, 2004, Novelli scolded me for even daring to call attention to the looting.  He did not deny that looting was occurring, but he was adamant about the importance of keeping the public from finding out about the looting.  He wrote,

 

“Saying that the trust funds have been looted could result in people losing confidence in Social Security, and that is counterproductive.” 

 

That letter from Novelli, nine years ago, was the one and only communication I have had with the AARP leadership.  I have tried repeatedly to communicate with them, but they will not respond.

 My experience with the NCPSSM has been similar.  I have sent copies of my books to them and requested the opportunity to meet with them and discuss the Social Security problem.  I have tried to communicate via email, snail mail, telephone and fax.  But they will not respond. 

I am as much a friend of Social Security as either of these organizations.  I believe Social Security is the most successful and most popular program ever created by the federal government, and you don’t fix something if it’s not broken.  Social Security is not broken.  Its only problem is that the federal government has embezzled $2.7 trillion of its money.  If the government would make arrangements to repay that money, as needed, there would be no need to make any major changes in Social Security in the near future.  

I would hope that the goals of the AARP and the NCPSSM for Social Security are similar to my goals.  But, if that were the case, why would these organizations have fought every effort I have made to expose the truth?  I am a scholar with a Ph.D. degree in economics, and I have been researching and writing about Social Security financing for the past 13 years.  Why wouldn’t these organizations want to meet with me and compare notes?  Why would I be persona non grata for all those years?  Why would they not want the public to know the truth about Social Security? 

 I don’t know the answers to these questions.  I can only speculate.  But, the one thing I know for sure is that both the AARP and the NCPSSM have knowingly and deliberately deceived the American people about the true financial status of Social Security for more than a decade.

Below are quotations from the official websites of the two organizations with regard to the current financial status of Social Security:

 

“Without any changes, Social Security will be able to pay 100 percent of benefits for the next 20 years.”

—AARP 

 

“If Congress does nothing—makes no changes at all—Social Security is projected to deliver full guaranteed benefits until at least 2033.”

—NCPSSM 

 

Members of these organizations, as well as non-members, visit these sites to get what they think is objective information about the true status of Social Security.  But both of the above statements are blatantly untrue.  To be more blunt, both statements are deliberate lies, and the leaders of these organizations know that the statements are untrue. 

The above statements would be true if the great Social Security theft had not taken place. But it did take place!  Every dollar of the $2.7 trillion in surplus Social Security revenue, that is alleged to be in the trust fund, was spent to fund wars, tax cuts for the wealthy, and other government programs. None of the money was saved, and, therefore, none of it was invested in real government bonds or anything else. 

If you had millions of dollars invested with Bernie Madoff (before he was arrested) you could rightfully say “I have millions of dollars worth of investments.” But now that Madoff is serving a 150-year prison sentence, and you know that most of your money is gone, you can no longer truthfully say that you have the money.

The same is true of the Social Security surplus money.  It is true that  taxpayers have contributed $2.7 trillion to the Social Security fund, and, if the money had not been embezzled and spent on other things, we could truthfully say that Social Security has $2.7 trillion of marketable real assets.  If that were the case, the above statements by AARP and NCPSSM would be true.  But we now know that the government did not save or invest any of the money in anything.  The money was all used for other purposes just as if it were income-tax revenue. 

So we cannot truthfully say that Social Security has $2.7 trillion of reserve assets with which to pay future benefits.  That is a lie.  Social Security is broke in the sense that it does not have anything except for the worthless IOUs and its annual tax revenue. 

The annual Social Security tax revenue has been falling approximately $50 billion short of covering the cost of paying full benefits. This means that the government has to borrow money, to make up for the shortfall, so that it can pay full benefits.         

 

In order to invest, you must have saved money.  If you haven’t saved any money, there is nothing to invest.  To say that the Social Security surplus revenue has been “invested” in “special government securities,” is a big fat lie, being told by the government and also by the AARP and the NCPSSM.  The fact that the government put paper IOUs in the trust fund doesn’t change anything.  These pieces of paper are stored in a fire-proof file cabinet located at the office of the Bureau of the Public Debt in Parkersburg, West Virginia.  President Bush visited that office and peered into the drawers of the file cabinet.  Bush pointed out that the file cabinet was the closest thing to a trust fund that has ever existed. 

I’m not sure why they chose to use a fireproof file cabinet.  If the IOUs caught fire and burned, it would change nothing.  It would still be true that the government has stolen $2.7 trillion of Social Security money and used it to fund non-Social Security programs. 

Today, Social Security is cash broke.  It does not have any money, except for its annual tax revenue, and that is not enough to pay full annual benefits even now.  Social Security does not have $2.7 trillion in the bank as some claim.  It has no cash reserves at all.  It would have had $2.7 trillion in the form of marketable U. S. Treasury bonds, if the surplus revenue had been saved, and invested, as was the intent of the legislation.  If that were the case, Social Security would have no problems today.  It has problems today only because the government failed to save and invest the money.  The money is gone! 

 The AARP and the NCPSSM both try to convince the public that those IOUs in the trust fund are just as good as the marketable Treasury bonds held by China and other American creditors.   But they are not at all like the marketable Treasury bonds, which the government was supposed to invest the Social Security surplus revenue in. 

U.S. marketable Treasury bonds are traded in markets around the world, and they are default proof.  If the United States government were to try to default on a single marketable Treasury bond, it would be seen by the public as a default on all such bonds.  That would send shockwaves through financial markets around the world and do permanent damage to the United States’ credit standing.  These U.S. marketable Treasury bonds are as “good as gold.” That is why the Social Security surplus revenue should have been invested in them.  If it had been, Social Security would be in great shape today.

The IOUs in the trust fund are nothing like the marketable Treasury bonds.  They are not traded in financial markets, and they are not default proof.  The government can default on the Social Security debt if it chooses to do so.  It would be perfectly legal for Congress to pass new legislation stating that the IOUs are now null and void.  If such legislation was passed by both the House and the Senate, and signed by the President, it would become the law of the land.  As mentioned in an earlier chapter, in the 1960 case of Fleming v. Nestor the United States Supreme Court, ruled that nobody has a “contractual earned right” to Social Security benefits. 

 The harsh truth is that the United States government is in the worst financial condition that it has ever been in.  The national debt which took 200 years to reach the $1 trillion mark in 1981, has increased sixteen-fold during the past 32 years. The tax cuts, under Ronald Reagan and George W. Bush were excessive, and they greatly reduced the amount of revenue that the economy can generate, even when the economy is booming.  Having succeeded in getting tax revenue low enough to “starve the beast,” and force the cutting of government programs, Republicans will do everything within their power to keep tax rates from going back up.  All revenue measures must originate in the House of Representatives, and the Republicans have a large enough majority to prevent that from happening. 

Unless the Democrats win back control of the House, and maintain their control of the Senate, in the 2014 midterm elections, it seems highly unlikely that there will be any new revenue legislation in the next four years. Similarly, the Republicans will continue to fight against any substantial increases in the debt ceiling.  Without increases in the debt ceiling, the government will be unable to borrow additional money.  If these circumstances hold true for the next four years, the only way to reduce the deficit and the national debt will be through additional cuts in government spending.  And that almost certainly means cuts in Social Security benefits. 

Cash flow is the only true measure of Social Security’s financial status.  And the cash flow is negative.  The AARP and NCPSSM can make believe that Social Security has a backup fund of $2.7 trillion as much as they want, but the harsh reality is that the only money Social Security has is its annual flow of tax revenue, which is insufficient to pay full benefits even for one year.  The only way to get additional money for Social Security, other than a tax increase, is for the government to borrow it. 

The $2.7 trillion that was supposed to be in the trust fund has been embezzled and spent by the government.  And the government is unable, and unwilling, to repay the money.  The IOUs are not cash, and there is no way to turn them into cash. They cannot be used to pay benefits, and they have no monetary value.   

  Some of the Social Security money went to help finance two unfunded wars, but much of the surplus Social Security revenue ended up in the pockets of America’s most wealthy individuals and companies, in the form of income tax cuts.  Neither the tax cuts of Ronald Reagan nor those of George W. Bush, were funded.  So the revenue lost from income tax cuts had to be made up with other tax dollars. 

 

The enemies of Social Security have been saying for the past 78 years, “Social Security is unsustainable in its present form.”  But they are wrong.  As long as the government kept its hands out of the Social Security cookie jar, the program functioned well.  And it can function well for another 78 years, with a few tweaks, such as removing the cap on earnings subject to the payroll tax. 

Since Social Security benefits have been paid out of the Social Security fund—not the general fund—for the past 78 years, Social Security has not contributed to the deficit or the debt. That is why it is indefensible to cut Social Security benefits as part of the overall effort to reduce the deficit.  As long as Social Security operates within its own budget, it should not be tied to the general budget.

In these difficult times, it would be nearly impossible for the government to come up with $2.7 trillion in a lump sum to repay all of the stolen money.  But, fortunately, it doesn’t have to.  It took 30 years for the government to loot the entire $2.7 trillion, so the money can be repaid, in instalments, over the next 30 years. 

Where should the money come from?  In my opinion, it should come primarily from the same people who benefited most from the Reagan and Bush tax cuts.  A small surtax on people in high- income brackets could generate sufficient money to repay the stolen funds without imposing any significant hardship on the taxpayers.  The revenue from the surtax would be earmarked specifically for repaying Social Security, and the funds would be deposited directly into the Social Security fund. 

This is a workable plan.  It would keep Social Security financially sound, while at the same time main-taining the independent nature of Social Security.  This action, plus legislation to remove the cap on income subject to the payroll tax, so that everyone would pay a payroll tax on all of their income, just as they do with the income tax, would make Social Security fully solvent for many decades without any other action. 

To those who say that it would not be fair to high-income taxpayers to remove the cap on the payroll tax I  say, you have been getting a break for the past 30 years while payers of the very regressive payroll tax have been helping pay for your income tax cuts. 

 

 

I don’t know why the AARP and the NCPSSM choose to side with the government instead of with their members.  I believe the two organizations owe it to their members, and to the public, to help expose the government’s theft of the $2.7 trillion of Social Security money. Why are they helping the government to keep the embezzlement a secret?  Why would they show a higher loyalty to Washington politicians than to their members and their Country?  It doesn’t sound rational.  But there is probably a lot that we don’t know about relationships between top government officials and the leaders of these two organizations. 

For example, while William Novelli was still CEO of the AARP, he did a personal favor for former Speaker of the House, Newt Gingrich. He wrote a glowing preface to Gingrich’s new conservative book on health care reform, Saving Lives and Saving Money.  Since Gingrich is one of the most vocal enemies of the current Social Security system, and supports privatization of the system, massive numbers of AARP members were outraged.  AARP members should be outraged today by the fact that their leaders refuse to help expose the great Social Security theft.   

 

If the AARP had been responsive when I first sought their help in exposing the looting of Social Security ten years ago, the looting could have been abruptly ended and that portion of the $2.7 trillion that has been looted since that time would be safely in the trust fund.  But they refused to even communicate with me. 

The AARP has it within their power today to undo a lot of the damage they have contributed to in the past.  If the AARP would publicly demand that the government find a way to repay the stolen Social Security money, millions of Americans would fall into line and publicly demand that the money be repaid. If the power of those 75 million baby boomers could be harnessed, they could move mountains and save Social Security.

I would suggest that one place to start would be to call for the removal from office of every current member of Congress.  Members of Congress have known about the Social Security theft for decades, and by remaining silent they have contributed to the problem. We need a thorough house cleaning in Washington and a lot of new patriots serving in Congress.  Both Republicans and Democrats are equally guilty of this great crime against the American public.

For emphasis, I would like to repeat excerpts from a previously mentioned Senate speech made by Senator Harry Reid (D-NV) twenty-three years ago, .and compare it with Reid’s public stance today

On October 9, 1990 Senator Harry Reid expressed his outrage at the misuse of Social Security funds during a senate speech.  Excerpts from the speech are reproduced below from the Congressional Record {Page: S14759}. 

 

“The discussion is 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…

It is time for Congress, I think, to take its hands—and I add the President in on that—off the Social Security surpluses.  Stop hiding the horrible truth of the fiscal irresponsibility that we have talked about here the past 2 weeks.  It is time to return those dollars to the hands of those who earned them….

I think that is a very good illustration of what I was talking about, embezzlement, thievery.  Because that, Mr. President, is what we are talking about here…On that chart in emblazoned red letters is what has been taking place here, embezzlement.  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. 

 

The same Senator Reid who made the above points, twenty-three years ago, sounded a very different tone when he appeared on NBC’s Meet The Press on January 9, 2011.  During that appearance, Senator Reed said, “Social Security is a program that works, and it's fully funded for the next 40 years.”

 

No wonder the American people are so confused about the true status of  Social Security.  Compare Senator Reid’s statement on Meet The Press with the words of Senator Tom Coburn (R-OK) during a senate speech on March 16 of 2011.  ““Congresses under both Republican and Democrat control, both Republican and Democrat presidents, presidencies have stolen money from social security and spent it.  The money’s gone.  It’s been used for another purpose.”

 

 

Social Security is not broken and does not need to be fixed.  On the other hand, the federal government is badly broken.  Social Security is, however, broke.  It doesn’t have enough income to pay full benefits.  The only money Social Security has is its annual tax revenue.  In 2010, Social Security’s tax revenue was $49 billion less than the cost of paying benefits, and the deficits will become larger and larger in the years ahead.  What about Social Security’s interest income? It doesn’t have any.  The government has never paid a dime’s worth of cash interest on its debt to Social Security.  Instead, it “pays” interest by issuing more of those same worthless IOUs, which can neither be sold nor used to pay benefits. 

The Social Security Administration, the AARP, the NCPSSM, and many others continue to repeat, over and over, the Big Lie that Social Security has $2.7 trillion in cash reserves, and it can pay full benefits for at least twenty more years without any action by the government.  Social Security should have $2.7 trillion in real assets in the trust fund, but it doesn’t have a dime.


 

Hard-working Americans paid enough extra taxes into the system, as required by the 1983 payroll tax hike, to generate $2.7 trillion in surplus revenue.  But none of the money was saved or invested in anything.  Instead, the money was all embezzled and spent for other purposes by the government.  The money is gone just as surely as the daylight is gone when the sun goes down.    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 



    

 

 

 

 

 

 

 


 

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