by Allen W. Smith / May 18th, 2013
The government has embezzled all surplus Social Security revenue,
generated by the 1983 payroll tax hike, and spent the money on wars and
other government programs. None of the money was saved or invested in
anything. Social Security is not broken, but at the moment, it is
broke. The cost of paying full benefits in 2010 was $49 billion more
than Social Security tax revenue for the year. So the government had to
borrow $49 billion (probably from China) in order to pay full benefits.
And the gap between the cost of benefits and Social Security tax
revenue will get bigger and bigger in the years ahead.
The
only reason the government has been able to keep the public from
finding out about “the great Social Security theft,” for all these
years, is because the AARP and the NCPSSM have cooperated with the
Social Security Administration in their official talking points about
Social Security. The AARP has the following statement posted on its
website: “Social Security will be able to pay 100 percent of benefits
for the next 20 years.” The NCPSSM has this statement on its website:
“Social Security is projected to deliver full guaranteed benefits until
at least 2033.” But these statements are not even close to being true,
and the leadership of these organizations know that they are
deliberately misleading their members, and the public, with these false
statements.
Social Security doesn’t even have enough money to pay this year’s
benefits without borrowing. Its tax revenue for 2010 was $49 billion
less than the cost of paying full benefits in 2010. And the gap between
Social Security revenue and the cost of paying full benefits will
become larger and larger in the years ahead.
The government IOUs in the trust fund are not like the marketable
U.S. Treasury bonds held by China and America’s other creditors. Those
marketable bonds can be converted into cash at any time by selling them
in the open market. The IOUs in the trust fund are like a handwritten
note that a bank robber might leave behind in the empty vault, stating
how much money he has stolen. The note tells the bank how much money is
missing, but it won’t help the bank get the money back. Similarly, the
IOUs in the trust fund are a record of how much Social Security money
was taken and spent on other programs. But the IOUs are not marketable,
and they cannot be converted into cash. And the interest income, that
the SSA claims the government is paying, is not cash interest. It is in
the form of more of the same worthless IOUs that the trust fund already
holds.
The harsh fact is that Social Security does not have any cash
reserves. That is why President Obama said that he couldn’t guarantee
that Social Security checks would go out on time without a budget
agreement, because “There might not be enough money in the coffers to
cover them.” The government owes Social Security $2.7 trillion, but
the government is both unable and unwilling to repay the stolen money,
at least in the short run.
The good news is that the Social Security System is not broken. It
works well and has done so for the past 78 years. The problem is that
the United States federal government is badly broken, and no “fix” is
upon the horizon. The only problem is that,
Social Security does not have enough revenue to pay full benefits,
and the government has stolen the cash reserves it is supposed to have
in the trust fund. If the government would enact legislation requiring
the repayment of the stolen money, perhaps in installments over the next
30 years, Social Security’s short-term problems would be fixed.
Forget about that old propaganda statement the enemies of Social
Security have been repeating, over and over, since Social Security was
first created. It goes like this:
Social Security, in its present form, is unsustainable over the long run.
That is just a big lie that the enemies use as a weapon in their war
against Social Security. There is nothing basically wrong with the
Social Security System, and it would not even be in the news today if
crooked politicians hadn’t stolen $2.7 trillion of its money.
Dr. Allen W. Smith is a Professor of Economics,
Emeritus, at Eastern Illinois University. He is the author of seven
books and has been researching and writing about Social Security
financing for the past ten years. His latest book is The Impending Social Security Crisis: The Government’s Big Dirty Secret. Read other articles by Allen, or visit Allen's website.
This article was posted on Saturday, May 18th, 2013 at 8:00am and is filed under Social Security.
No comments:
Post a Comment