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Bush is Selling a Trojan Horse, Says Author of 'The
Looting of Social Security'
Greenspan wrote plan in 1983 that was to save Social
Security
Dec. 15, 2004 - "President Bush is trying to sell
his privatization proposal as a plan to save Social Security, when it is
actually a clever scam designed to destroy the program that
conservatives have hated since its enactment in 1935," says economist
Allen W. Smith, Ph.D., author of the book, "The Looting of Social
Security: How the Government is Draining America's Retirement Account."
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Guest Opinion
A Warning for Social Security Reformers
By Bernard Wasow, senior fellow and
economist at The Century Foundation
Nov. 17, 2004 - While the administration is
preparing its drive to replace part of Social Security with private
investment accounts, an obscure government agency is planning to go to
Congress to ask for a bail- out. The Pension Benefit Guarantee
Corporation (PBGC), which guarantees private pension plans, just
announced that its net liabilities are double earlier estimates, more
than $23 billion.
More... 11/17/04*
Guest Opinion
Social Security Investment Accounts Would Be
Dangerous For Seniors
By David J. Roberts,
Associate Professor of Accountancy, DePaul University
Nov. 13, 2004 - Proponents of so-called personal
accounts (to use the more politically marketable terminology for what is
really partial privatization) typically argue that such accounts are
needed to save Social Security. But partial privatization would not
likely "save" Social Security, and would probably cause serious harm to
seniors and long-time participants in the current system.
More...
11/13/04*
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Smith argues that Social Security is not facing an
imminent crisis and that Bush is using scare tactics in an effort to
stampede the public into accepting his plan.
According to Smith, the Bush plan is a Trojan horse
with which Bush, Greenspan, and fellow conservatives hope to destroy the
current Social Security program before the American people wake up to
the fact that $1.5 trillion of Social Security money has been spent on
other things by the government, in violation of federal law, over the
past two decades, with more than one-third of the money having been
looted during Bush's presidency.
Smith says that Alan Greenspan was the chief
architect of a plan to fix Social Security that was enacted into law in
1983. That legislation increased payroll tax rates high enough so the
baby boomers would be required to prepay the cost of retirement benefits
for themselves, in addition to paying for the benefits of the preceding
generation.
The 1983 payroll tax increase has generated more
than $1.5 trillion in Social Security surplus, earmarked specifically
for funding the retirement of the baby boomers. Because of that tax
increase, the trust fund should today contain at least $1.5 trillion in
real liquid assets in the form of regular marketable Treasury Bonds just
like those bonds in which many private pension plans invest, but it does
not contain any marketable bonds.
According to Smith,
"Most Americans do not yet know about the 'theft' of the Social Security
money, and Greenspan and Bush would like to keep it this way. After all,
Greenspan, who supposedly fixed the baby boomer problem in 1983, has
kept silent while the last three administrations have spent Social
Security money as if it were general revenue. He knows that the
government has made no provision for repaying the money, despite the
fact that, beginning in 2018, the money must be repaid in order for full
benefits to be paid. By focusing the nation's attention on a proposed
privatization plan, the administration hopes to draw attention away from
the unlawful use of Social Security money."
According to Smith,
the surplus Social Security money has been spent and replaced with
non-marketable special-issue government IOUs that, unlike regular
marketable Treasury Bonds, have no real value and thus are not real
assets. These IOUs are nothing more than accounting entries that tell us
how much Social Security money has been taken by the government. They
are akin to a note that a bank robber might leave in the vault stating
the amount of money he took. When the Social Security program begins to
experience annual deficits in 2018, these so-called "bonds" in the trust
fund will be of no help, whatsoever, in raising additional funds to help
pay benefits.
According to the
2004 Social Security Trustees Report, Social Security will run massive
annual deficits in the years ahead. Table VI.F9 of the report reveals
that there will be annual deficits of $281.1 billion in 2025; $511.9
billion in 2030; $747.0 billion in 2035; and $959.8 billion in 2040.
Unless the government can come up with these massive amounts of money to
repay the money it has looted from the trust fund, Social Security
benefits will have to be cut. Privatization does nothing to change this
harsh reality. Instead, it is being used as a smoke screen to cover up a
crime against the American public that makes Enron pale in comparison.
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