THE BIG LIE: About the Social Security Trust Fund
THE LIE: "All revenue from the Social Security payroll tax is used to fund Social Security benefit payments. Surplus revenue, not needed to pay current benefits, is saved and invested for the payment of future benefits. The Social Security trust fund holds U.S. Treasury bonds that can be sold and used to pay for future benefits."
THE TRUTH: None of the Social Security surplus revenue has ever been saved and invested in Treasury bonds or anything else. All revenue, not needed to pay current benefits has been put into the general fund and used to pay for wars, tax cuts, and other government programs. Every dollar of the $2.5 trillion that is supposed to be in the trust fund has been "borrowed," "embezzled," or "stolen" by the government and spent for other purposes. The trust fund does not hold any real marketable government bonds or any other kind of real assets. It holds only IOUs in the form of "special issues of the Treasury." These are a gimmick, created by the government, to make the public think the trust fund holds "bonds" when it holds only IOUs. They are not marketable and could not be sold to anyone even for a penny on the dollar. They are nothing more than accounting devices.
THE CONSEQUENCES: All of the surplus revenue generated by the 1983 payroll tax increase was supposed to be saved and invested, in order to build up a large reserve to help pay for the increased benefits cost resulting from the retirement of the baby-boom generation. The Social Security fund has been running surpluses every year since 1985, and it will continue to run surpluses through 2016. However, beginning in 2017, the fund will run deficits that will get progressively larger every year. The purpose of the 1983 payroll tax increase was to build up a large enough reserve to cover the deficits that will occur after 2016. Each year, enough money was supposed to have been withdrawn from the reserve to supplement the inadequate payroll tax revenue so that full benefits could continue to be paid until at least 2037.
Instead of saving and investing the money, the government has used the Social Security surplus like a giant slush fund to pay for wars, tax cuts, and other government programs. Thus, beginning in 2017, the payroll tax will not generate enough revenue to pay full benefits, and there is no reserve to tap into. This means that, in 2017, and after, either Social Security benfits will have to be cut, or the government will have to raise taxes in order to pay full benefits. The government is so deeply in debt already that it is not realistic to think the government could borrow money from the public to repay the squanderd Social Security money.
WHAT OTHERS HAVE SAID ABOUT THE SOCIAL SECURITY TRUST FUND
"...the most reprehensible fraud in this great jambalaya of frauds is the systematic and total ransacking of the Social Security trust fund...in the next century...the American people will wake up to the reality that those IOUs in the trust fund vault are a 21st century version of Confederate bank notes." --Senator Earnest Hollings (D-SC) Speech on Senate Floor, October 13, 1989
"...On that chart in emblazoned red letters is what has been taking place here, embezzlement. During the period of growth we have had during the past 10 years, the growth has been from from two sources. One, a large credit card with no limits on it, and, two, we have been stealing money from the Social Security recipients of this country."--Senator Harry Reid (D-NV) Speech on Senate Floor, October 9, 1990
There are no stocks or bonds or real estate in the trust fund. It has nothing of real value to draw down."--David Walker, Comptroller General of the U.S. Government Accountability Office (GAO) Speech in Washington, DC, January 21, 2005
"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."--President George W. Bush, State of the Union address, February 27, 2001
"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."--President George W. Bush, Speech at West Virginia University at Parkersburg, April 5, 2005
Sept. 15, 2010