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Social Security is Short of Funds Because
Politicians Spent It
Fund should have $3.7 surplus in 2018 from what baby
boomers have paid
March 21, 2005 – The reason the Social Security
Trust Fund is expected to start showing a deficit in about 2018, rather
than a surplus, is because the money paid in – primarily by the baby
boomers – has been spent by the politicians. When Al Gore proposed in
his campaign for President to create a “lock box” to protect these funds
only for Social Security, George W. Bush countered that he would do the
same. It did not happen. Like his father and President Clinton, he used
the funds for other government expenses.
"The baby boomers have contributed more to Social
Security than any other generation," says economist Allen W. Smith.
"They have prepaid the cost of their own retirement, in addition to
paying the cost of the generation that preceded them."
Smith points out that the baby boomers have kept
their end of the bargain, which was proposed by the Greenspan Commission
and enacted into law in 1983. "The higher taxes that were part of the
1983 'solution' to the baby boomer problem have generated the annual
Social Security surpluses anticipated so far, and they will continue to
do so until 2018," Smith said.
According to Smith, by 2018, the baby boomers will
have paid enough extra taxes to have generated a $3.7 trillion reserve
in the trust fund, which would be sufficient to pay full benefits until
2042 when the youngest of the boomers would be 78 years old.
"Our government should be thanking the baby boomers
for their extra sacrifice and special contributions," Smith continued.
"But instead, President Bush is trying to use them as scapegoats for the
government's failure to save and invest the Social Security surplus."
Smith says that when it became public knowledge in
2000 that President George H.W. Bush had initiated the practice of
spending Social Security surpluses for other programs, and that Clinton
had continued that practice, protecting the Social Security surplus
became a major campaign issue.
According to Smith, Al Gore promised to put all future Social Security
surpluses in a "lockbox" to be used only for the payment of Social
Security benefits, and candidate George W. Bush promised to do the same.
"More than $600 billion of Social Security surplus
has been generated since the 'lockbox promise' went into effect," Smith
said, "so there should be at least that much in the trust fund today.
But President Bush says the lockbox holds nothing but empty promises."
"How can this be?" Smith asked. "Bush's promises to
protect Social Security were clear and specific."
According to Smith, Bush stated in his radio
address to the nation on February 3, 2001, "My plan will keep all Social
Security money in the Social Security system where it belongs." And, in
his February 27, 2001 State of the Union address, Bush said, "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."
"Despite these promises, President Bush has been
raiding the trust fund since he took office," Smith said, "and he no
longer tries to conceal what he has done. In an effort to muster support
for his privatization proposal, he has been openly admitting to the
raiding of the fund."
Smith said that President Bush first publicly
acknowledged misusing Social Security money in a Washington speech on
February 9, 2005, in which he said, "The money-payroll taxes going into
the Social Security are spent. They're spent on benefits and they're
spent on government programs. There is no trust."
"There may be 'no trust' when it comes to Bush's
handling of Social Security money," Smith argued, "but there most
certainly is a trust fund. That fund is empty today because President
Bush has used the money to pay for tax cuts, the war in Iraq, and many
other programs. So, instead of trying to blame the baby boomers for
Social Security's current problems, Bush should stop spending Social
Security money on other programs and repay the money he has already
spent."
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