The Money Is Gone!
Security does not have $2.7 trillion stashed away for paying benefits, as so many people believe.
Social Security cannot pay benefits for another 20 years, as is often claimed.
Social Security does not have enough money to pay full benefits, even
for 2014, without borrowing money from China or another of our creditors.
The Social Security trust fund is empty. The only thing it
holds is non-marketable government IOUs which cannot be used to pay benefits, and cannot be converted into cash.
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 GAO, January 21, 2005
“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
George W. Bush, Speech at West Virginia University at Parkersburg,
April 5, 2005
Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income
to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions
in other government spending or additional borrowing from the public."--Summary
of the 2009 Social Security Trustees Report
“Congresses under both Republican and Democrat control, both Republican and Democrat presidents,
have stolen money from social security and spent it. The money’s gone. It’s been used for another
purpose.”—Senator Tom Coburn (OK) Senate speech, March 16, 2011
“Let's look at what's driving the problem. 10,000
baby-boomers like me retiring, every single day. 70,000 this week. 3.5 million this year. And it's not like there's money
in Social Security or Medicare. The government, over the last 30 years, have spent it all.”—Speaker of the House, John Boehner, on ABC’s This Week
, October 6, 2013
How It All Started
The Social Security Amendments of 1983 laid the foundation
for 30 years of government embezzlement of Social Security funds. When President Reagan signed that legislation into
law, with great fanfare, on April 20, 1983, his comments gave the impression that he thought it was a proud day for
But, instead of being a proud day for America,
it turned out to be a day of shame for the United States. The money was used to pay for wars, tax cuts for
the rich, and other government programs. None of the surplus revenue went to Social Security.
From the very beginning, Reagan and his advisors had
no intention of saving and investing the new revenue for the retirement of the baby boomers. They needed additional
general tax revenue, and an increase in the payroll tax would be much easier to enact than higher income taxes. Also,
the potential to get vast amounts of revenue was much greater with a payroll tax increase than from an income tax increase.
The baby boomers, the largest generation of Americans who ever lived, were already making large contributions to the Social
Security fund. Like all previous generations, prior to 1983, the boomers were being required to pay the full cost of
benefits paid to the previous generation. But, the proposed new legislation would hit the boomers with a double whammy.
In addition to paying for their parents’ benefits, the new law would require the baby boomers to also pay enough additional
taxes to prepay the cost of their own benefits. This would generate a potential gold mine of surplus revenue that could
be tapped and used for other purposes.
The 1983 legislation
was sold to the public, and to Congress, as a long-term fix for Social Security. With the help of Alan Greenspan, Reagan
was a super salesman, who could have sold almost anything to the public—even a scam. And that’s exactly
what he was selling. Reagan intended to use the surplus Social Security revenue to replace revenue lost because of his
unaffordable income tax cuts. Instead of being set aside for the retirement of the baby boomers, as was the intent of
the legislation, the extra Social Security revenue was deposited directly into the general fund just like income tax revenue.
None of the $2.7 trillion in additional Social Security
revenue was ever saved or invested in anything. The actual surplus money was replaced with non-marketable government
IOUs, which cannot be converted into cash or used to pay Social Security benefits.
It would have been bad enough if only Reagan had looted Social Security money.
But George H.W. Bush, Bill Clinton, and George W. Bush all followed in Reagan’s footsteps and spent all of the Social
Security surplus revenue for non-Social Security purposes, just like Reagan.