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The Looting of Social Security: How the Government is Draining America’s Retirement Account

September 22, 2008

The Looting of Social Security: How the Government is Draining America’s Retirement Account

Every cent generated by the 1983 Social Security tax increase—money ostensibly earmarked and saved for the retirement of the baby-boom generation—is gone, spent by our government. But most Americans are ignorant of the crime. The emptying of the Social Security Trust Fund is the greatest fraud ever perpetrated on the American public, and acclaimed author and economist Allen W. Smith reveals how George W. Bush and Congress are pulling it off. While George W. Bush has repeatedly condemned “corporate wrongdoers,” he is guilty of fiscal mismanagement and outright deception that makes Enron and WorldCom pale in comparison. Smith explains the history of Social Security from its inception in 1935 to the present, including the enactment of the 1983 Social Security tax increase. Then, step by appalling step, he details how the government’s promise to the American people—a pledge to never spend the Social Security funds—was broken by every succeeding administration. Sadly, The Looting of Social Security quite simply reveals how George W. Bush has stolen more than $3 trillion of Social Security money to fund tax cuts for wealthy Americans while robbing many of their hard earned money and their rights.

Customer Review: WHAT trust fund?
The Social Security Tax was challenged in the Supreme Court shortly after it was passed into law. The government’s lawyers argued…

“These are true taxes,” they stated, “their purpose simply being to raise revenue…. The proceeds are paid into the Treasury as internal revenue collections, available for the general support of the government.”

They HAD to take that position, to keep the tax from being struck down on constitutional grounds.

The court ruled in favor of the government. In the summary, the court stated…

“The proceeds of both taxes (SS and unemployment) are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way.”

There is not, and never has been a true SS trust fund or “retirement account” to loot. Any excess funds are replaced by government bonds (IOU’s) and the money deposited in the general spending account. That’s the way the system was designed.

Customer Review: The problem started with the Kennedy-Johnson tax cuts
Smith is correct that counting the social security trust fund surplus as part of the federal government’s general revenue ,in order to mask the size of the budget deficit, is dishonest .Although Smith correctly mentions that it was President Johnson who started this practice,he doesn’t emphasize it sufficiently,in my opinion.Johnson implemented Kennedy’s mistaken and misguided tax cut plan(similar to the error filled tax cut plan of Warren Harding and Andrew Mellon in 1922) of 1964 at precisely the same time that he was planning massive increases in federal spending to fight the Vietnam War and the War on Poverty.Johnson started the practice of including the social security surplus in the federal budget revenues to hide and mask from the American people the size of the budget deficits he was creating.[It will be noted her that J M Keynes was an opponent of deficit financing.Deficit financing is part of the functional finance approach of the American Keynesian-Neoclassical Synthesis economist Abba Lerner.Keynes expressed severe disagreement with Lerner's approach in 1944.Nor was Keynes in favor of income tax cuts.The only tax Keynes would cut would have been the social security tax for workers only].The Reagan and Bush presidencies have simply copied the approach of Kennedy-Johnson but on a much,much larger and much more damaging scale,increasing the national debt by a factor of 9.Smith should have stated the problem in the following fashion:The deficit finance problem of excessive tax cuts ,combined with excessive spending and borrowing,was started by Liberals and then greatly exacerbated by the Supplyside-Libertarianism of the Reagan and Bush Presidencies.It is time to return to the safe,sane,and sound fiscal and monetary policies of the Eisenhower Administration.

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