Why Does The Government Continue to Lie About Social Security?

Most Americans must be getting accustomed to hearing lie after lie from the two presidential candidates.  According to fact checkers, Clinton lies on average 28 percent of the time and Trump lies 80 percent of the time.  This is a sad commentary on how low our political parties and candidates have sunken.  But lies from government officials and agencies has become commonplace in our treasured American way of life.

All lies are bad, but some lies do more harm to the livelihood of American civilians than others.  Probably, the biggest lie, which most severely hurts millions of Americans, involves the true status of the Social Security system.  The harsh truth is that the government, over a 30-year period, has taken and spent every dollar of the $2.7 trillion in surplus Social Security revenue which was specifically earmarked for paying benefits to the baby boomer generation.  There are no plans to repay the money.  The money was taken without the knowledge, or the permission, of the public.

As the government transferred the Social Security money directly from the trust fund to the general fund, the money was replaced with non-marketable government IOUs.  These IOUs cannot be sold, or in any way converted to cash.  Essentially, they are worthless pieces of paper which serve as an accounting record of how much Social Security money was used for non-Social Security purposes.  They are not real bonds.  Yet the public is often misled to believe they are just like the “good-as–gold” marketable bonds held by China and our other creditors.  The surplus Social Security revenue was supposed to be saved and used to purchase marketable U.S. Treasury bonds, which would be held by the trust fund.  But all of the surplus Social Security revenue was taken by the government and spent for other government programs.  Thus, there are no bonds, or any other real assets in the trust fund.

If the government had not taken and spent the money, or if the government would repay the money, Social Security would be solvent.  Comptroller General of the GAO, David Walker, tried to make this point clear in January 21, 2005 statement.  He said: “There are no stocks or bonds or real estate in the trust fund.  It has nothing of real value to draw down.”

Most people don’t know that the government has spent $2.7 trillion of Social Security money for wars, tax cuts, or anything else that Congress chose to spend it on.  That is because “the great Social Security theft” has been kept secret from the public.

Tim Geithner, President Obama’s first Secretary of the Treasury, signed the Annual Social Security Trustee’s Reports. He played the biggest role in determining what was included in the Trustee’s Reports, and what would be excluded.  If anybody truly understands the true status of Social Security, it must be Geithner. Once he left government service, he was free to tell the truth, and he did in In his book, “Stress Test.”  Geithner said:

In treating Social Security like a slush fund, the federal government has borrowed, spent and vowed to pay back the $2.5 trillion or so “surplus” in payroll tax revenue it has siphoned out of Social Security. The money has been spent but the federal government has promised to pay it back.

The Social Security Administration’s official website also holds back information that the public needs to know but the government does not want known.  On March 16, 2011, Senator Tom Coburn (R-OK) admitted publicly that the government has stolen Social Security money.. Senator Coburn said during a senate speech:

Congresses under both Republican and Democrat control, both Republican and Democrat presidents, have stolen money from social security and spent it. The money’s gone. It’s been used for another purpose….

On April 5, 2005, President George W. Bush, gave a speech at West Virginia University at Parkersburg, that was unusually candid in describing the status of Social Security.  President Bush said:

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.

Bush’s words were consistent with the following words, which appeared in the official Summary of the 2009 Social Security Trustees Report:

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.

Both Bush’s statement in his West Virginia speech, and the excerpt from the 2009 Social Security Trustees Report were absolutely true, and are still true today.  But very few people know about these statements.  Bush’s West Virginia speech was not widely covered by the national media, and the Trustees Report is read only by a select group of people.

Nobody can refute the accuracy of the above statements, because they are absolutely true. Every member of Congress, and all high-level government officials, know the truth about the empty trust fund.  Why then can’t this crucial truth be known by everyone?  The government does not want the public to know about the Social Security fraud, and most of the media will not touch anything that they know the government does not want the public to know.  All journalists remember that when Dan Rather reported a story that the White House did not want reported, he got fired.  Most journalists try to avoid making the same mistake that Dan Rather made.

There are three living presidents who participated in the looting.  It all started with Reagan and The Social Security Amendments of 1983.  But Presidents George H.W. Bush, Bill Clinton, and George W. Bush are all guilty of raiding the trust fund and using the money for non-Social Security purposes. All of these presidents, and their Treasury secretaries, could spill the beans and tell the public the truth about the raiding of the Social Security trust fund.  President Obama did not have the opportunity to loot Social Security because the annual surpluses ended shortly after he took office.  But Obama is not totally innocent, because he knows the truth about the Social Security trust fund, and he has failed to share that truth with the public.  On July 12, 2011, during a stalemate between President Obama and the Congress over raising the debt ceiling, Obama said:

 I cannot guarantee that those checks go out on August 3rd, if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it.

If the $2.7 trillion, which was supposed to be in the trust fund, had been available, trust fund money would have been used, and the status of the general budget would not have been relevant. But there is no money in the trust fund, and the government IOUs cannot be redeemed if there is no money in the general fund.  So, with his July 12, 2011, statement President Obama made it clear that the trust fund is empty.

Former president Bill Clinton, as one of the four presidents who raided the trust fund, could easily explain Social Security’s deep financial problems and tell us what caused these problems. His 2000 budget proposal included the following warning:”The Social Security Trust Fund does not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

Former President, George W. Bush, the biggest Social Security looter of all, also knows a lot about what happened to the money in the trust fund.  In his first State of the Union Address on February 27, 2001, he made the following promise:

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.

Today, Social Security needs to have that money repaid to avoid benefit cuts.  I have devoted the past fifteen years of my life to researching and writing about what I call, “The Great Social Security Theft,” and also trying to publicize the Social Security fraud.  The American public is entitled to be told the truth about the trust fund.  If this story ever becomes common knowledge, I think it will be a scandal so big that it will make Watergate pale by comparison.

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.