Social Security’s Long, Dark Secret is Finally Out
“The bitter fighting over the government shutdown and the forthcoming debt ceiling debate, has had one positive effect for the American people”, says economist and author Dr. Allen W. Smith. According to Smith, both President Obama and House Speaker John Boehner have publicly acknowledged that the Social Security trust fund is empty. The $2.7 trillion reserve, which is allegedly in the trust fund is gone. Smith says the money was embezzled by the federal government, over a 30-year period, and spent to finance wars, unaffordable income tax cuts, and other government programs.
Smith says that knowledgeable individuals have known about the great Social Security heist for decades, and Dr. Smith, himself, has devoted the past 13 years of his life to researching and writing about Social Security financing. While doing research for a book in 2000, Dr. Smith stumbled onto the Social Security fraud. The government was channeling the surplus revenue, generated by the 1983 payroll tax hike, into the general fund and using it just like income tax revenue. Smith was outraged, and he vowed to expose the scam to the public. On September 27, 2000, the author appeared on CNN News to discuss his newly published book, “The Alleged Budget Surplus, Social Security, and Voodoo Economics”, and to try to alert the public to what was happening to their Social Security contributions. But CNN anchor, Lou Waters, wouldn’t take Smith seriously. He seemed more amused than interested in what Smith was saying. He ended the interview by asking the economist, “Are you a voice crying in the wilderness?” As things turned out, Smith has spent the past thirteen years being little more than a voice crying in the wilderness.
In a speech in Rockville, Maryland on Thursday October 3, President Obama let the cat out of the bag. He said:
“In a government shutdown, Social Security checks still go out on time. In an economic shutdown—if we don’t raise the debt ceiling—they don’t go out.”
According to Smith, the reason that full benefit checks cannot go out without an increase in the debt ceiling, is because Social Security does not have enough revenue to pay full benefits. Since 2010, the government has had to borrow money to make up for the shortfall in revenue. Without an increase in the debt ceiling the government cannot borrow the money. If Social Security had reserve money in the trust fund, as so many people think, some of the reserve money could be used to pay benefits. But there is no reserve money because the government has spent all of it, as it came in. The IOUs in the trust fund are not real bonds. They are non-marketable. They cannot be used to pay benefits and they cannot be converted into cash. Essentially, they are worthless.
Just three days after Obama’s big Social Security surprise, Speaker Boehner made even bigger news by saying Social Security did not have any money because the government had spent it all over the past 30 years.
Appearing on ABC’s This Week with George Stephanopoulos, Boehner spilled the beans big time. Below is an excerpt from the transcript:.
STEPHANOPOULOS: So you sit down with the president. What would you offer him in that conversation?
BOEHNER: Let’s look at what’s driving the problem. 10,000 baby boomers like me 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, has spent it all. And so now, we’re in this whipsaw effect. This is only year three. This is going to go on for another 22 years as baby boomers retire. We know these programs are important to tens of millions of Americans. But if we don’t address the underlying problems, they are not sustainable.
Smith is critical of Boehner for not acknowledging that these underlying problems were dealt with in the Social Security Amendments of 1983, which were initiated, and rammed through Congress by Ronald Reagan and Alan Greenspan. The whole alleged purpose of that legislation was to force the baby boomers to prepay most of the cost of their own benefits in order to run surpluses for the next 30 years. The boomers paid their extra taxes, which amounted to $2.7 trillion dollars over the entire time period. It was, in fact, that $2.7 trillion paid by the boomers and intended to fund the boomers’ retirement, that was stolen and spent as general revenue. The surplus revenue was supposed to be saved and invested in marketable U.S. Treasury bonds, which could be resold as the baby boomers retired. But the government did not save any of the Social Security surplus revenue. Instead, the government deposited the money into the general fund and used it as general revenue. The fraud included leading the American people to believe the surplus money was being saved and invested, when it was, in fact, all being spent. The embezzled, Social Security money was replaced with something called “special issues of the Treasury” which is just a fancy name for government IOUs. They couldn’t be sold to anyone even for a penny on the dollar.
The whole sad story is explained in Dr. Allen W. Smith’s two books, “THE LOOTING OF SOCIAL SECURITY”
“THE IMPENDING SOCIAL SECURITY CRISIS”
Dr. Smith is adamant that Social Security is not broken and does not need to be fixed. He says the only problem is the theft of $2.7 trillion of Social Security money by the government. Smith argues that, if the government would repay the stolen money, Social Security would be able to pay full benefits for two more decades without any other government action. He says Social Security could be made fully solvent for many more decades by simply removing the cap on earnings subject to the payroll tax, so everyone paid payroll taxes on all of their income just as they do with the income tax.
Smith says that, since it took the government 30 years to loot the trust fund, repayment could be made in annual installments over the next 30 years.
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 Smith
- Ironwood Publications
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