 For those already on Social Security, the taxes they pay on a portion of their
benefits has also been earmarked for the fund since 1983.
Economist and former professor Allen W. Smith, however, says there is no trust
fund — and a number of elected officials, including former President George W.
Bush, have acknowledged that.
"To make a long story very short, we are supposed to have $2.7 trillion in
Social Security surplus, all earmarked for the baby boomers' retirement, due to
money generated by amendments approved in 1983," says Smith, who has researched
the topic for 15 years and is author of several books, including "The Looting of
Social Security" and "Ronald Reagan and the Great Social Security Heist" (www.thebiglie.net).
"But there's no money in the fund."
Where did it go? Four administrations, from Reagan to George W. Bush, spent it
on myriad non-Social Security efforts.
"Obama didn't have a chance to use it — it was gone," Smith says.
The 1983 amendments approved under Reagan generated revenue by accelerating
Social Security payroll tax increases, allowing a portion of benefits to be
taxed and delaying cost-of-living adjustments from June to December.
According to the Social Security Administration website, "the surpluses are
invested in (and the trust fund holds) special-issue Treasury bonds."
But what's actually sitting in the trust fund are nonmarketable government IOUs — worthless, Smith says.
The fact has been publicly acknowledged by a 2009 Social Security trustees
report, by Sen. Tom Coburn and by President George W. Bush, who in 2005 said:
"There is no trust fund, just IOUs that I saw firsthand. ... Future generations
will pay — pay for either in higher taxes or reduced benefits or cuts to other
critical government programs."
Speaker of the House John Boehner offered a sobering statement on ABC's "This
Week" on Oct. 6, 2013: "Ten thousand baby boomers like me (are) retiring every
single day — 70,000 this week; 3.5 million this year. And, it's not like there's
money in Social Security or Medicare. The government, over the last 30 years,
have spent it all."
Smith examines what needs to happen starting today.
-
Get the secret out. The total cost of paying full benefits in 2010
exceeded Social Security tax revenue by $49 billion, and the gap between revenue
and costs will become larger in the coming years. "On Sept. 27, 2000, I appeared
on CNN Today to discuss my book 'The Alleged Budget Surplus, Social Security,
and Voodoo Economics.' The host did not take me seriously and asked me if I was
'a voice crying in the wilderness,'" Smith says. "I'd quickly realized that he
was right, with the exception of multiple statements by politicians and
officials."
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-
Get the AARP, NCPSSM and the media involved. The only way the government
was able to pay full benefits in 2010 was to borrow billions from China, among
other creditors. The public is repeatedly being told by government officials and
leaders from the AARP and the National Committee to Preserve Social Security and
Medicare that the trust fund has enough money pay full benefits until 2033. "I
have tried engaging the leaders of these organizations with my research, but my
attempts have been unsuccessful," Smith says.
-
Get the baby boomers engaged in protesting once again. Boomers are no
strangers to taking to the streets to express their outrage. However, "I'm
beginning to think that it's going to take missed checks before the public gets
raises their voices," Smith says. "Unfortunately, you just don't know what you
have until it's gone."
___
Allen W. Smith has devoted much of his adult life to battling economic
illiteracy and promoting economic education. He taught economics for 30 years
before retiring as professor of economics at Eastern Illinois University in 1998
to become a full-time writer. "Understanding Inflation and Unemployment,"
Smith's first book, became an alternate selection of Fortune Book Club when it
was published in 1976. "Understanding Economics" (Random House; 1986) was used
in more than 600 schools in 48 states. In recent years, Smith has focused his
research and writing on government finance and Social Security. He has discussed
economics and Social Security on national television and has been a guest on
more than 100 radio talk shows. Smith holds a bachelor's in education degree
from Ball State University and master's and doctoral degrees in economics from
Indiana University.
[Text from file received from
News and Experts]
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