AP writer, Stephen Ohlemacher, sent shock waves throughout the nation this week with his story, “Social Security to start cashing Uncle Sam’s IOUs.” Social Security has been running large surpluses ever since the enactment of the 1983 payroll tax hike, and was projected to continue running surpluses until at least 2016. Instead, Ohlemacher reports that the cost of Social Security benefits will exceed payroll tax revenue by approximately $29 billion this year, because of the severe recession which has reduced payroll tax revenue at the very time that many unemployed Americans have been forced to retire early.
What it all boils down to is that, in order to pay full benefits this year, Social Security will have to come up with an extra $29 billion to supplement the inadequate payroll tax revenue. Where will that money come from? It will have to come from increased taxes or from borrowed money. “Wait a minute!” some readers will say. Hasn’t Social Security been receiving surplus revenue ever since the 1983 payroll tax hike? Isn’t there supposed to be approximately $2.5 trillion in the Social Security trust fund? The answer to both questions is yes. But there is a problem. Every dollar of that surplus Social Security revenue has already been spent by the government. Much of it went to fund wars in Afghanistan and Iraq. The rest has been spent on other government programs.
The American people were not supposed to find out about the great Social Security scam for another six years, and the government was hoping to continue to receive surplus money from the Social Security contributions of working Americans for at least that long. But the inevitable day of reckoning has come, six years sooner than anybody expected, because of the severe recession. And the government of the United States has been caught with its hand still in the empty Social Security cookie jar.
For more than a decade, I have been trying to expose the Social Security scam just like Harry Markopolos was trying to expose the Bernie Madoff scam. But nobody would listen. If anyone deserves credit for helping the government to keep its dirty secret for so long, that honor should go to the AARP and the NCPSSM. I have been members of both organizations for years and I have tried very hard to get their cooperation in exposing the fraud. But they have refused to have anything to do with me. Instead, they have continued to bombard their members and the public with misinformation. They have argued that the trust fund is full of “good-as-gold” U.S. Treasury Bonds that could be used to pay full Social Security benefits until at least 2037 without any changes. In reaction to Olemacher’s AP story, Barbara Kennelly, president of the NCPSSM, responded with the following words, “Good luck to the politician who reneges on that debt. Those bonds are protected by the full faith and credit of the United States of America. They’re as solid as what we owe China and Japan.”
I believe Barbara Kennelly to be among the strongest and most honorable defenders of Social Security. I think she truly wants to save Social Security, as we now know it, which is the same goal that has motivated me to make so much effort for more than a decade. I have tried to convince Ms. Kennelly that I was trying to save Social Security by exposing the truth about the trust fund, but she wouldn’t even consider the possibility that the government has been looting the trust fund all these years. I requested the opportunity to discuss this issue with her, either in a face-to-face meeting, or through telephone conversations, in the hope that we could work together toward a common goal. She ignored my requests and refused to communicate with me in any way.
It has been clear for quite some time that the trust fund contained no real assets. David Walker, Comptroller General of the GAO, stated on January 21, 2005, “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 finally acknowledged the empty trust fund by saying, “There is no trust fund, just IOUs that I saw firsthand that future generations will pay