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Allen W Smith

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Member Since: Aug, 2006

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Books
· Ronald Reagan and the Great Social Security Heist

· The Looting of Social Security--Free E-book

· The $2.6 Trillion Social Security Theft!

· Thought Boosters: How to lift your spirits by enhancing your thoughts

· Andrew Rockefeller Ford, III

· The Impending Social Security Crisis: The Government's Big Dirty Secret

· The Big Lie: How Our Government Hoodwinked the Public, Emptied the S.S. Tr

· THE LOOTING OF SOCIAL SECURITY: New Release

· Demystifying Economics The Book That Makes Economics Accessible to Everyone

· Social Security The Attempt To Kill It


Articles
· Never Miss An Opportunity To Say A Kind Word

· Reader Comments

· Living vs. Business

· Be Yourself

· Happiness Is A Way Of Traveling--Not A Destination

· Let Mourning Stop When One's Grief Is Fully Expressed

· Let Mourning Stop When One's Grief Is Fully Expressed

· Other People May Be Watching And Imitating Us

· It Is Alright To Talk, But We Must Also Listen

· Don't Build Yourself Up By Tearing Others Down


News
· Reviews of New Social Security Book

· New Social Security Book Free on Saturday.

· Free Downloads from Amazon.com Saturday and Sunday

· Free Copies of The Looting of Social Security Available Through Wednesday

· Update On Free Downloads of Social Security Book

· Urgent Social Security Book Free for Five Days on Amazon.com

· The $2.6 Trillion S.S. Theft now free at Amazon.com

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Social Security, The Hidden Problem

1/8/2010 3:35:00 PM

by Allen W Smith


That payroll tax hike has generated about $2.5 trillion of surplus Social Security revenue to date. If the money had been saved and invested, as it was supposed to be, Social Security would be in good shape today. But the money was neither saved nor invested in anything. Instead, it has been used as a giant slush fund to pay for tax cuts, wars, and other government programs for the past 25 years. The government has “borrowed,” or “stolen” every dime of the surplus Social Security revenue. If the government eventually repays the looted money, we can say that the government “borrowed” it, but, unfortunately, no provisions have been made for repaying the money. Furthermore, it may not be politically feasible to raise taxes for the purpose of replacing tax revenue that was misspent in the first place. If the looted money is never repaid, it will have clearly been “stolen” from American workers who paid the extra Social Security taxes.

Social Security: The Hidden Problem

by

Allen W. Smith, Ph.D.

 

            There is much debate today about how solvent Social Security is, but most of the debate is over when the trust fund will run out of money, not about whether or not the trust fund actually holds real assets.  The conventional wisdom, prior to the economic downturn, was that the trust fund had enough money to pay full Social Security benefits until about 2041.  That date has now been revised to about 2037.  

            In order to understand the true status of the trust fund we need to go back to 1982, and then examine the events that have taken place since that date.  In 1982, the Presidential Commission on Social Security, chaired by Alan Greenspan, warned that Social Security would face serious problems when the baby boomers began to retire about 2010, unless Congress took immediate action to begin building up a reserve in the trust fund that could later be drawn down in order to pay full benefits to the baby-boom generation.

            In 1983, Congress enacted the legislation recommended by the Greenspan Commission, which included a hefty hike in payroll taxes.  In essence, the legislation required the baby-boom generation to pay enough taxes to fund the benefits of the previous generation, as was customary, plus enough additional taxes to prepay most of the cost of their own benefits, which was not customary. 

            That payroll tax hike has generated about $2.5 trillion of surplus Social Security revenue to date.  If the money had been saved and invested, as it was supposed to be, Social Security would be in good shape today.   But the money was neither saved nor invested in anything.  Instead, it has been used as a giant slush fund to pay for tax cuts, wars, and other government programs for the past 25 years.  The government has “borrowed,” or “stolen” every dime of the surplus Social Security revenue.  If the government eventually repays the looted money, we can say that the government “borrowed” it, but, unfortunately, no provisions have been made for repaying the money.  Furthermore, it may not be politically feasible to raise taxes for the purpose of replacing tax revenue that was misspent in the first place.  If the looted money is never repaid, it will have clearly been “stolen” from American workers who paid the extra Social Security taxes.

            This is the hidden Social Security problem.  The trust fund holds no real assets. This was made clear by David Walker, Comptroller General of the GAO, in a speech given January 21, 2005.  Walker said, “There are no stocks or bonds or real estate in the trust fund.  It has nothing of real value to draw down.”   On April 5, 2005, President George W. Bush shocked many Americans, during a speech at West Virginia University at Parkersburg, when he openly admitted, “There is no trust fund, just IOUs that I saw firsthand that future generations will pay—will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.”  

            The government was successful in keeping this dirty secret from the American people for a long time, but, little by little, the secret is slipping out.  Even the 2009 Social Security Trustees Report acknowledges the problem with the following words.  “Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.”  Because of the empty trust fund, in just seven years, when the cost of Social Security benefits begin to exceed payroll tax revenue for the first time in a quarter-century, either benefits will have to be decreased, or taxes will have to be increased.

 

Dr. Allen W. Smith, is Professor of Economics, Emeritus, Eastern Illinois University.  The author of seven books, Smith has been researching and writing about Social Security financing for the past ten years.  Visit his website at www.thebiglie.net.  

 

www.thebiglie.net


More News by Allen W Smith

· Reviews of New Social Security Book - 4/18/2014 3:25:00 PM
· New Social Security Book Free on Saturday. - 4/18/2014 3:03:00 PM
· Free Downloads from Amazon.com Saturday and Sunday - 2/14/2014 5:31:00 PM
· Free Copies of The Looting of Social Security Available Through Wednesday - 9/9/2013 3:14:00 PM
· Update On Free Downloads of Social Security Book - 9/8/2013 7:02:00 PM
· Urgent Social Security Book Free for Five Days on Amazon.com - 9/6/2013 10:04:00 AM
· The $2.6 Trillion S.S. Theft now free at Amazon.com - 9/1/2013 12:43:00 PM
· Allen Smith's promotinal free books on Amazon.com Saturday to Wednesday - 8/30/2013 7:24:00 PM
· Government Owes $2.7 Trillion to Social Security - 5/16/2013 6:32:00 PM
· Social Security’s Day of Reckoning Has Come - 10/10/2012 11:44:00 AM
· Free E-book, The Looting of Social Security is Now Available - 4/13/2012 4:34:00 AM
· Happiness is a Journey--Not a Destination - 12/21/2011 8:06:00 PM
· PUTTING AMERICA BACK TO WORK - 12/18/2011 12:23:00 PM
· Landmark 1983 Social Security Legislation Led to Major Fraud - 12/17/2011 7:31:00 PM
· Censored Social Security Book Back in Print - 10/29/2010 6:03:00 PM
· It's Time to Tap the Empty Social Security Trust Fund - 3/21/2010 9:04:00 AM
· It's Official: Social Security Trust Fund is Empty - 2/20/2010 12:30:00 PM
· We Must Put America Back to Work - 1/22/2010 2:23:00 PM
· Will Government Repay Its Debt to Social Security? - 1/9/2010 7:00:00 PM
· How America Got So Deeply in Debt - 1/6/2010 2:22:00 PM
· National Debt Skyrocketing Reports Economist, Allen W. Smith, in New Book - 1/30/2008 2:18:00 PM
· New Book Faults Both Clinton and Bush for Empty Social Security Trust Fund - 12/14/2007 4:48:00 PM

Books by
Allen W Smith



The Looting of Social Security--Free E-book

Buy Options
Kindle, more..




The $2.6 Trillion Social Security Theft!

Buy Options
Kindle, more..




THE LOOTING OF SOCIAL SECURITY: New Release

Buy Options
Amazon, more..




Thought Boosters: How to lift your spirits by enhancing your thoughts

Buy Options
Kindle, more..




Demystifying Economics The Book That Makes Economics Accessible to Everyone

more..




Andrew Rockefeller Ford, III

Buy Options
Kindle, more..




The Big Lie: How Our Government Hoodwinked the Public, Emptied the S.S. Tr

Buy Options
Amazon, more..



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