What You Need to Know About Social Security Reform

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Whatever happened toward the value and responsibility of "Deferred Gratification"...

Tom of AZ 7:09PM March 07, 2011

I first stumbled onto the great Social Security scam more than ten years ago while doing research for my first Social Security book, "The Alleged Budget Surplus, Social Security, and Voodoo Economics." On September 27, 2000, I appeared on CNN with anchor Lou Waters to discuss the newly published book. I tried my best to convince Waters that Social Security money was being spent for non-Social Security purposes, but he seemed more amused than interested in what I was saying, and he finally asked me, "Are you a voice crying in the wilderness?" As things turned out, I was a voice crying in the wilderness in 2000, and I continue to be such a voice a decade, and three books, later. Every penny of the $2.6 trillion in excess Social Security revenue, generated by the 1983 payroll tax hike, has been spent on whatever politicians chose to spend it on.
When my book, "The Looting of Social Security," was published in early 2004, I thought I was about to expose the Social Security scam and end the looting. On February 26, 2004, I was one of two invited guests to appear on the CNBC morning news to respond to Fed Chairman Alan Greenspan's call for Social Security benefit cuts the previous day. I used the occasion to hold my new book in front of the camera and say, "Alan Greenspan should be ashamed of himself for what he is not telling the American people." By doing so, I apparently drove the final nail into the coffin of my new book. Several weeks later, the book mysteriously disappeared from bookstores nationwide, and was listed as "unavailable" by Amazon.com. I tried to get my publisher to revert the rights to the book back to me so that I could publish it elsewhere, but the publisher refused. It would be 2008 before I would regain the rights to the book. An early review in the Boston Globe had hinted at the explosive revelations in the book, and someone, or some group, decided that the book should be pulled from the market. Allen W. Smith, Ph.D., Prof. of Economics, Emeritus, Eastern Illinois University, www.thebiglie.net

Allen W. Smith, Ph.D. of FL 7:06PM March 07, 2011

Raise both Medicare and Social Security taxes; adjust them to meet current/future needs. Quit haggling over niggling issues--who gets what, etc. Keep COLA or people (especially at bottom of scale) will drop into poverty status, need yet more fed/local gov services and support, financial, medical assisted living, etc. Raise SS tax limit beyond its current maximum.
Dump current IRS income tax system (creates more problems than it's worth--a virtual labyrinth), adopt universal sales tax with VAT considerations. Live within the society's REAL means and budget.
Bottom line is everyone--citizens and govt's--need to be taught lesson of reality: Live within one's REAL means, less on credit, return toward mandatory 10-20% down payment for home/auto. Re-legislate tax penalties to eliminate using homes as short term investment "flip", return to objective of having home as minimally mid to long term investment.
Eliminate and/or restrict ARM type loans.
Think twice about getting into near decade old "Police Actions" around the globe which further destabilizes/limit economic foundation and growth. These are not wars; they are "Gort" police actions that turn into wild goose and objective chases.
It's only been since citizens/gov't have become obscenely credit based society that we create the seeds of fiscal and individual chaos, living and acting monstrously outside fiscal means. Middle Class society is simply not middle class; it's lower/middle, upper/lower in reality. Finance pseudo-middle thru credit is fiction, pea under the shell methodology. Eventually must cave in just as easy credit brought about country 1929 stock crisis.
During hard times (war, econometric credit stupidity), avoid taking on entirely new programs (major health care overhaul) until society shows a proven effort to toward fiscally responsible, reasonably balance its budget, address national debt, winds down military machine.
Our problem isn't that which is a society's responsibility toward maintaining itself (universal medical care, modest pensions for majority of citizens); IT'S THAT WE SIMPLY DON'T WANT TO PAY THE PIPER, ADJUST LIFESTYLE TOWARD LIVING WITHIN ONE'S MEANS. We are supporting primarily a (non) middle class American Fantasy, not a dream.
The current generation will have to pay its own way, today to us, tomorrow for itself.
The bitter pill of permitting current generation/proposed future generation living beyond its means, tough to swallow. Current problem is 1/2 century ('70s-2010) "Life on Credit" in the making. Get used to it. (Housing, fiscal/financial crisis/recovery will go on for another DECADE…2007-2020 down the tubes, toward recovery. Is it really worth it?)
Class Is Dismissed.

Tom of AZ 6:30PM March 07, 2011

2 links, one undresses the Social Security issue, and fully explains what impact its had on middle class working Americans post 1983:http://www.slideboom.com/presentations/316207/Clem%27s-Engine-Repair-Plan And the plan that allows middle class working Americans, their families, and the communities they call home to prosper again: http://www.slideboom.com/presentations/316207/Clem%27s-Engine-Repair-Plan

pappyg of FL 5:56PM March 07, 2011

PLEASE KEEP SOCIAL SECURITY. PLEASE MAKE IT HARDER FOR THESE SO -CALLED PAYEE'S THAT STEAL OUR BENEFITS WHO ARE NOT RELATED TO US EVEN IF THEY ARE RELATED THEY STILL SHOULD HAVE OUR PERMISSION TO MAKE THEMSELVES PAYEE. THEY ARE CHARGING A COMMISSION ON OUR MONEY WIHOUT OUT OUR PERMISSION AND HOLDING THE MONEY SO WE CAN'T PAY RENT OR A MORTAGE. PLUS THE INTEREST WE WOULD EARN IF WE HAD OUR MONEY. PLUS THEY DO NOT PAY TAXES ON THE MONEY THEY EARN OFF OF US. SINCE WE THE BENEFICIARY HAVE TO PAY TAXES ON THE BENEFITS OF SOCIAL SECURITY WHEN WE DON'T EVEN HAVE IT. THESE SELF-MADE PAYEE'S SHOULD BE PUT IN PRISION FOR A LONG TIME. BECAUSE THEY ARE ALLOWED TO KEEP OUR MONEY IT HAS MADE A LOT OF US HOMELESS. PLUS IT SEEMS MANY WHO APPLY FOR OUR BENEFITS GET THE MONEY ON WHATEVER NAME THEY PUT SO OUR BENEFITS ARE PAID MANY TIMES OVER. STOP THE THEFT WHICH MOST LIKELY WILL REDUCE THE BUDGET. THERE SOULD BE SOMETHING SIGNED BY THE BENEFICIARY. ADD KNOWLEGEABLE COMPUTER PROGRAMERS AND CPA'S TO RUN IT TO STOP ALL THE DUPLICATION OF ONE'S BENEFIT.

DINE_SMITH of CA 3:39PM March 07, 2011

It should be noted that the annual Trustees Report, which this article calls the "gold standard of Social Security analyses" has proven spectacularly wrong in the past:
http://justfacts.com/socialsecurity.asp#financial-accuracy

James Agresti of NJ 3:32PM March 07, 2011

"Most proposals that raise the retirement age can only pay for themselves by reducing the relative level of benefits for early retirees."
Proposals to raise the retirement age intend to reduce benefits. They don't need to "pay for themselves."

AndrewDover of DE 1:37PM March 07, 2011

Give me the 50 years of payments in one large sum and I will invest my
own retirement.
I have $ 250,000 or more paid in now........ give it back, its MINE !

Grey Eminence of MD 1:14PM March 07, 2011

Selfish Republicans, under the pretense of financial responsibility, aim to divert as much of the treasury as possible to their wall street and military/defense industry benefactors. It's thievery, and Americans will not tolerate it. Recall the newly elected rightwingnuts.

R Sampson of AZ 12:47PM March 07, 2011

THE $2.6 TRILLION SOCIAL SECURITY SURPLUS IS GONE!
So much misinformation is being spread about Social Security today that almost nobody knows what to believe. The enemies of Social Security say that Social Security is going broke and needs immediate reform. Extremists on the other side of the argument claim that Social Security is just fine. They say that Social Security has a $2.6 trillion surplus in the trust fund that can be used to pay full benefits until 2037. As a scholar, who has been researching and writing about Social Security for more than a decade, please allow me to say that neither of the above claims is even close to the truth. Social Security is not going broke, and the $2.6 trillion surplus has all been spent for non-Social Security purposes.
Social Security is self-funded by the payroll tax, so as long as the payroll tax exists, Social Security cannot go broke. It may not always be able to pay full benefits, but it cannot go broke. For nearly 30 years, payroll tax revenue exceeded the cost of benefits. That money was supposed to be saved and invested in real, marketable U.S. Treasury bonds to build up a large reserve in the trust fund. But none of it was saved or invested in anything. Since 1985, the government has siphoned every dollar of the surplus revenue into the general fund and used it to finance tax cuts, two wars, and other government programs, replacing the money with non-marketable IOUs. These IOUs are simply claims against future tax collections. The only way the government can redeem them is by 1) increasing taxes, 2) reducing other government expenditures or 3) borrowing from the public.
The $2.6 trillion that was supposed to go into the trust fund was, instead, used for general government expenditures. Contrary to the claims of many, none of the money was invested in marketable Treasury bonds or anything else. It was all spent as general revenue, and once money is spent, there is nothing left to invest. The IOUs represent accounting records of how much Social Security money was spent for non-Social Security purposes, but they do not have monetary value in and of themselves. Prior to 1994, the IOUs consisted only of accounting entries, recorded in government ledgers or stored on computers. However, some members of Congress began to worry that someone might want to actually see the IOUs, so legislation was passed that required the physical printing of documents to serve as certificates of indebtedness, in addition to the accounting entry. Today, when a new IOU is issued, it is printed on a laser printer located at the Bureau of the Public Debt office in Parkersburg, West Virginia. The document is then placed in a fireproof filing cabinet. That filing cabinet is the closest thing to the mythical Social Security trust fund that exists.
Allen W. Smith, Ph.D.
Professor of Economics Emeritus
Eastern Illinois University
Website: www.thebiglie.net

Allen W. Smith, Ph.D. of FL 12:25PM March 07, 2011