Social Security: A Decade of Deceit

During the 2000 presidential election campaign, everyone seemed to know that the trust fund was being looted.  It became a major campaign issue, and there was a lot of media coverage.  Al Gore promised to end the looting and put the Social Security surplus money in a lockbox if he were elected president.  Not to be outdone by Gore, George W. Bush acknowledged that the Social Security money was being misused, and he promised to end the looting, if he was elected president.  Even Senator John McCain acknowledged the looting during a Senate speech on March 21, 2000.  McCain said,  “…both parties must stop raiding the Trust Funds to waste retirement dollars on more government spending. We must face up to our responsibilities, not as Republicans or Democrats, but as elected representatives of the American people with a common obligation to protect their interests.”  Since both Gore and Bush were acknowledging the looting and promising to end the practice, it appeared that, no matter who became the next president, the era of the looting of Social Security would soon come to an end.

In addition to promising many times during the campaign that he would not raid the Social Security trust fund, George W. Bush made additional pledges after he was sworn in as President.  In his first State of the Union address, delivered on February 27, 2001, Bush said, “To make sure the retirement savings of America’s seniors are not diverted in any other program, my budget protects all $2.6 trillion of the Social Security surplus for Social Security, and for Social Security alone.” Four days later in his national radio address to the American people, Bush said, “We’re going to keep the promise of Social Security and keep the government from raiding the Social Security surplus.”

Once Bush became president, he reneged on his promise to protect Social Security, and he spent all of the approximately $1.5 trillion in surplus revenue that came in during his eight years in the White House.  But the American people have not been widely informed about Bush’s breach of promise.  It is understandable that, with the 911 terrorist attacks, two wars, and many other major news stories, the looting of Social Security would be pushed to the back burner. However, with the current economic problems, and proposals to cut Social Security benefits in the news today, the story of the awful truth about the Social Security trust fund should be front and center, but it is not.

Although I have been screaming from the rooftops for the past decade in an effort to expose the Social Security scam, my efforts have not been welcomed by the news media, by the AARP and the NCPSSM, or by the United States government.   I thought I would get the message out when my book, The Looting of Social Security, was published by a New York publisher in 2004, but that book became the victim of foul play.  I dared to publicly challenge Federal Reserve Chairman, Alan Greenspan, on national TV, when I appeared on CNBC on February 26, 2004.  I held a copy of the book in front of the camera and said, “Alan Greenspan should be ashamed of himself for what he is not telling the American people.”

Several weeks later my book was censored and removed from the market by someone, some organization, or possibly some government official.  With such a major effort to keep the public from finding out about the looting, I was dumbfounded when President Bush openly admitted it in February 2005.  Bush’s campaign to partially privatize Social Security was not going well, so his advisors apparently decided that they needed more ammunition with which to convince the public that Social Security was in trouble.

On Wednesday February 9, 2005, President Bush openly admitted that surplus Social Security revenue, generated by the payroll tax, is spent on other government programs.  President Bush’s exact words, as quoted in the official White House Press Office’s news release, were: “Some in our country think that Social Security is a trust fund—in other words, there’s a pile of money being accumulated.  That’s just simply not true.  The money—payroll taxes—going into Social Security are spent.  They’re spent on benefits and they’re spent on government programs.  There is no trust.”

On the following day, during a speech in Pennsylvania, President Bush said,  “Now one of the myths about Social Security is there’s a pile of money sitting there accumulating …That’s not the way the system works.  Every dime that goes in from payroll taxes is spent.  It’s spent on retirees, and if there’s excess, it’s spent on government programs.  The only thing that Social Security has is a pile of IOUs from one part of government to the next.”

This was a clear admission by the President of The United States that all Social Security surplus money had been spent and that the Bush administration was continuing to spend Social Security money each and every day.  The president was verifying everything I had been saying for the past four years.  I expected that the president’s acknowledgment would make the Social Security trust fund fraud the leading news story the following day, but it was barely covered by the media.

Today, five years after President Bush publicly acknowledged that the Social Security money was all being spent by the government, most Americans do not have a clue that this is happening.  Why is that?  Is there some kind of pact between the government and the major news media to keep the awful truth about the trust fund a secret?  Were journalists so intimidated by what happened to Dan Rather when he covered a story that the White House did not want covered that they have become too cautious in exercising their freedom-of-the-press rights?  I don’t know the answer to the awesome puzzle.  All I know is that the Social Security trust fund has been routinely and systematically raided for the past 25 years under five presidents and their Congresses. Nothing changed after the 2000 presidential election, but the major news media, who widely reported the looting in 2000, are not reporting it today.

I have repeatedly contacted CNN, and all the other major news networks, in recent months and I have submitted numerous op-ed pieces to the large newspapers trying to get this story out.  Now with the deficit commission recommendations for cutting Social Security benefits, the story is more important than ever. The American people deserve to know that, beginning in 2015, Social Security will be unable to pay full benefits unless the government begins repaying the looted money.  The government has made no provisions for repaying the money it owes to Social Security and is trying to find a way to avoid having to repay the money.

The American people were officially told by the Government Accountability Office (GAO) on January 21, 2005 that, “There are no stocks or bonds or real estate in the trust fund, It has nothing of real value to draw down.” In the Summary of the 2009 Social Security Trustees Report, a single sentence, buried deeply within the report, spills the truth about the so-called “trust fund bonds.”  That sentence reads:   “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.”

The President of the United States has said,  “Every dime that goes in from payroll taxes is spent.  It’s spent on retirees, and if there’s excess, it’s spent on government programs.  The only thing that Social Security has is a pile of IOUs from one part of government to the next.”

When will the public be told the truth by current government officials?  When will journalists begin asking public officials the tough questions, that cry for answers, about the true status of the trust fund? The hour is late.

Dr. Allen W. Smith is a Professor of Economics, Emeritus, at Eastern Illinois University. He is the author of seven books and has been researching and writing about Social Security financing for the past ten years. His latest book is Raiding the Trust Fund: Using Social Security Money to Fund Tax Cuts for the Rich. Read other articles by Allen, or visit Allen's website.

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  1. Deadbeat said on December 4th, 2010 at 10:08pm #

    Why are we still getting this MISLEADING rhetoric from Mr. Smith? If you repeat the same argument over and over again I guess it “must be” true?!

    Social Security is NOT BROKE and the trust fund was NOT “stolen”. The money was borrowed and is due. The politician do not want to pay the money bank and are trying to find the LIES to convince the public thatl they won’t get the money back.

    Mr. Smith is promoting a kind of RIGHT-WING anti-government hyperbolic rhetoric onto Social Security that is extremely misleading. Is there some “truth” to it — Yes. But is it accurate — NO.

    We’ve been through this discussion already. See the discussion under this article …

    Obama and the Social Security Time Bomb