Author Fears That Government Will Not Repay Social Secuity Debt
Free Downloads of the book, “Social Security: The Attempt To Kill It” by Allen W. Smith, Ph.D. will be available from Amazon.com for three days, beginning Saturday, September 21.
Smith, who has spent the past 13 years researching and writing about Social Security financing, is the author of several books on Social Security. Smith’s other books include, The Looting of Social Security, and The Impending Social Security Crisis. According to Smith, the mechanism which allowed the government to transfer $2.7 trillion from the Social Security fund to the general fund over a 30-year period, was the brainchild of President Ronald Reagan and his advisers, especially Alan Greenspan. Greenspan played a key role in convincing Congress and the public to support a hike in the payroll tax. A few years later, Reagan appointed Greenspan to become Chairman of the Federal Reserve System, and Greenspan served 19 years in that position. Greenspan’s new job was one of the most coveted positions in Washington, which leads one to wonder whether or not this appointment represented, at least in part, payback for the role Greenspan had played in making vast sums of new revenue available to the government.
According to Smith, President Reagan and his advisors knew, from the very beginning that, if Reagan’s proposed 30 percent cut in income tax rates was enacted into law, the government would soon face a severe cash shortage. Budget Director, David Stockman, had deliberately rigged the computer at the Office of Management and Budget to generate bogus revenue forecasts in an effort to convince Congress to enact his unaffordable proposed tax cuts. When Stockman first fed the data from Reagan’s economic proposals into the computer, he was shocked. The computer forecast that, if Reagan’s proposals were enacted into law, massive budget deficits would loom ahead for as far as the eye could see.
Smith argues that Reagan needed a new source of revenue to replace the revenue lost as a result of his unaffordable income tax cuts. He wasn’t about to rescind any of his income-tax cuts, but he had another idea. What about raising the payroll tax, and then channeling the new revenue to the general fund, from where it could be spent for other purposes? An increase in Social Security taxes would be easier to enact than a hike in income tax rates, and it would leave his income tax cuts undisturbed. Reagan’s first step in implementing his strategy was to write to Congressional leaders. His first letter, dated May 21, 1981 included the following.
“As you know, the Social Security System is teetering on the edge of bankruptcy…in the decades ahead its unfunded obligations could run well into the trillions. Unless we in government are willing to act, a sword of Damocles will soon hang over the welfare of millions of our citizens.”
Reagan wrote a follow-up letter to Congressional leaders dated, July 18, 1981, which included:
“The highest priority of my Administration is restoring the integrity of the Social Security System. Those 35 million Americans who depend on Social Security expect and are entitled to prompt bipartisan action to resolve the current financial problem.”
According to Smith, Social Security was not “teetering on the edge of bankruptcy.” in 1981, and Social Security was certainly not Reagan’s “highest priority.” Reagan had never been a friend of Social Security and his highest priority was to downsize all social programs. The only red flag on the horizon for Social Security was that there would be trouble when the baby boomers began to retire 30 years down the road.
Reagan’s scare tactics worked. Congress passed the Social Security Amendments of 1983, which included a hefty increase in the payroll tax rate. The tax increase was designed to generate large Social Security surpluses for the next 30 years. The public was led to believe that the money would be saved and invested in marketable U.S. Treasury Bonds, which could later be resold to raise cash with which to pay benefits to the boomers. But that didn’t happen. The money was all deposited directly into the general fund and used for non-Social Security purposes. Reagan spent every dime of the surplus revenue that came in on general government operations. His successor, George H.W. Bush used the surplus money as a giant slush fund. Both Bill Clinton and George W. Bush did the same thing. So we can’t blame the whole problem on Reagan. He just figured out how to steal the money from Social Security and his successor followed in his footsteps.
The $2.7 trillion that is supposed to be in the trust fund was all spent for wars, tax cuts for the rich, and other government programs. If the money is repaid at some point in the future, we could say is was just “borrowed.” But no arrangements have been made to repay the money, and nobody in government is suggesting that the money should be repaid. So, if it is never repaid, the money will definitely have been stolen.
Get your free download of “Social Security: The Attempt to Kill It” from Amazon.com Saturday through Monday http://www.amazon.com/SOCIAL-SECURITY-Attempt-Kill-ebook/dp/B0055IVUU6/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1379627777&sr=1-1&keywords=social+security%3A+the+attempt+to+kill+it
To learn more about Allen W. Smith’s research and books, please visit his website at http://www.thebiglie.net
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- Allen W. Smith
- Ironwood Publications
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