Network News

X My Profile
View More Activity
Posted at 1:00 PM ET, 08/16/2010

Why Republicans hate Social Security

By Peter Galuszka

Happy Birthday, Social Security!

That's right! The federal program that has proven funding and comfort for millions of Americans in their old age is 75 today. Conservatives of all stripes HATE SS because it shows that the government can do some good. And plenty have fought Social Security through the decades, including my late grandfather, who was a minor Republican official and absolutely despised FDR. The program is so electrified with conflict that it has been called a "third rail"
in politics.

Now comes Paul Krugman, one of my favorite economist-columnists and I am sure, one of yours, too, with his assessment about the lies being spread about Social Security. I am trotting out the Nobel Prize winner because he raises points that, if true, kinda turn the "Boomergeddon" thesis upside down. His points:

Costs of Social Security are not unsupportable by the federal budget. SS has its own budget.

"The program won't have to turn to Congress for help or cut benefits, which the program's actuaries don't expect to happen under 2037 -- and there's a significant chance, according to their estimates, that that day will never come," write Krugman.
While it is true that a lot of Boomers will be applying for SS in the near future,

"Boomergeddon" might be slight exaggeration. Krugman says they will increase payouts from 4.8 percent of GDP to 6 percent of GDP. How much is that, in plain terms? Krugman says it is significantly LESS than the rise in post 9/11 defense spending which was considered such a non-crisis financially that Bush was able to go ahead with his tax cuts for the rich.

If I were Jim Bacon, I might be calling my publisher right now.

Continue reading this post by Peter Galuszka at Bacon's Rebellion here.

Peter Galuszka blogs at Bacon's Rebellion . The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Peter Galuszka  | August 16, 2010; 1:00 PM ET
Categories:  HotTopic, Local blog network, economy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Why I miss Metro board meetings
Next: D.C. voting rights: Time for Norton to go

Comments

"Now comes Paul Krugman, one of my favorite economist-columnists and I am sure, one of yours, too, with his assessment about the lies being spread about Social Security. I am trotting out the Nobel Prize winner because he raises points that, if true, kinda turn the "Boomergeddon" thesis upside down"

I'm so glad that you brought up Paul Krugman's views on Social Security. Krugman is also one of my favorite economists and columnists, and I agree with Krugman on most issues. BUT NOT ON SOCIAL SECURITY!

Krugman is a brilliant economist who has won a Nobel Prize in economics. But he is dead wrong about Social Security and he has been a major source of the misinformation on Social Security that is so prevalent in the media.

I have not won a Nobel Prize, but, like Krugman, I have a Ph.D. Degree in Economics from a major university, and I have taught economics at the university level for 30 years. I am in no way claiming to be in the same league with Krugman as an economist. However, I think my credentials as an expert on Social Security might be stronger than Krugman's. I have been doing extensive research on the subject for more than a decade, and I have published four books on Social Security. Krugman did not win his Nobel Prize for his knowledge about Social Security, and some of his public statements lead one to wonder if he has even done his homework with regard to the Social Security trust fund.

I have tried to communicate with Krugman by email, but he never responds. I have tried to post comments on his blog, but his censors refuse to allow the comments to appear for other readers to see. I have challenged Krugman to a public debate on Social Security but he does not respond. So I am going to respond to some of Krugman's statements about Social Security on this forum.

I have been struggling to get the message out about the Social Security fraud, for more than a decade, but most of the media refuse to report on the awful truth about the Social Security fraud. That changed last week when Allan Sloan broke the silence on the subject in his Washington Post column and referred to me and my book, "THE BIG LIE."

I hold no malice toward Paul Krugman. I agree with him on most issues and I think he does a lot to combat economic illiteracy through his excellent column. But that doesn't give him the right to spread misinformation about Social Security.

Posted by: ironwoodas | August 16, 2010 3:10 PM | Report abuse

In response to a column that Paul Krugman wrote on June 21, 2010, I submitted an op-ed article to the New York Times. They did not publish it, so I am taking the liberty of posting it here in installments.

Installment 1

New York Times columnist, Paul Krugman, is a brilliant economist who has won a Nobel Prize in economics, but he is dead wrong about the financial status of Social Security, and he has been misleading the public on this issue for far too long. His June 21 article is especially arrogant and naïve. Krugman denounces Alan Simpson, co-chairman of the deficit commission and accuses him of resurrecting “the old nonsense about how Social Security will be bankrupt as soon as payroll tax revenues fall short of benefit payments.” Krugman emphatically states, “And bear in mind what happens when payroll receipts fall short of benefits: NOTHING. No new action is required; the checks just keep going out.” Krugman has failed to do his homework on the subject, and he dismisses the work done by serious scholars, who are trying to alert the public to the urgent problems facing Social Security, as a “farce.”

I have not won a Nobel prize, but, like Krugman, I hold a Ph.D. degree in economics, and I taught the subject at the university level for 30 years. I have been researching and writing about Social Security for many years, and, for more than a decade, I have been trying to alert the public to the great Social Security scam that began during Ronald Reagan’s second term and has continued to this day. The government has “borrowed” or “embezzled” every dollar of the $2.5 trillion in surplus Social Security revenue, that was generated by the 1983 payroll tax hike, and used it to fund tax cuts, wars, and other government programs. The hard fact is that the trust fund holds no real assets. This was made abundantly clear by David Walker, Comptroller General of the GAO, in a speech on January 21, 2005. Walker said, “There are no stocks or bonds or real estate in the trust fund. It has nothing of real value to draw down.”

The Social Security trustees do not widely advertise the fact that the so-called “trust fund bonds,” are nothing more than non-marketable IOUs that have no monetary value, but they did acknowledge this truth in the 2009 Social Security Trustees Report. The admission was buried deeply within the report, where few people would read it, but it is an unconditional acknowledgement, by the trustees, that the IOUs in the trust fund do not provide any new net income to the Treasury. That single-sentence statement reads:

“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.”

Posted by: ironwoodas | August 16, 2010 4:20 PM | Report abuse

Installment 2

What the public (and apparently Paul Krugman) do not know is that the 1983 payroll tax hike, that was supposed to fix Social Security for decades to come, instead, laid the foundation for the greatest fraud ever perpetrated against the American people by their government. The 1983 Social Security legislation was designed to generate large surpluses in Social Security for the next 30 years. The surplus money was supposed to be saved and invested in marketable U.S. Treasury bonds, purchased in the open market, in order to build up a large reserve of assets in the trust fund that could be used to pay full benefits to the baby boomers once the payroll tax revenue fell short of the cost of benefits.

If the plan had been followed, the trust fund would today hold $2.5 trillion of “good-as-gold” marketable Treasury bonds that could be gradually resold in the open market by the Social Security trustees as additional money was needed to pay benefits. Unfortunately, the plan was not followed. When the first surplus Social Security revenue began to show up, during the second term of Ronald Reagan, politicians developed a bad case of “sticky-finger” syndrome. Since it would be 30 years before the surplus Social Security money would be needed for Social Security payments, the politicians just decided to bend the law a little and put the money in the general fund so it could be used for other things. By the time George H.W. Bush became President, the size of the annual Social Security surpluses had grown substantially, and Bush, who had promised not to raise taxes, wasn’t about to give up the Social Security money.

President’s Bill Clinton, George W. Bush, and Barack Obama, along with members of Congress, have continued this practice to this very day. Every dollar of the $2.5 trillion in surplus Social Security revenue, generated by the 1983 payroll tax hike, has been “borrowed” or “embezzled” by the government and used for non-Social Security purposes. As a result, after 2016, when payroll tax revenue will permanently fall below the cost of paying Social Security benefits, the government will be unable to pay full benefits without a tax increase, or substantial additional borrowing from the public.

Posted by: ironwoodas | August 16, 2010 4:26 PM | Report abuse

Installment 3

The surplus money, that is supposed to be in the trust fund, has already been spent by the government. None of it has been saved or invested in anything. The only way that full Social Security checks can keep on going out is for the government to repay the $2.5 trillion that it owes to the Social Security fund. No provisions have been made for such repayment, and it is far from certain that the money will ever be repaid. If the money is not repaid, Krugman’s bold assertion that “the checks just keep going out,” no matter what happens, has a value just about equal to that of the worthless IOU’s in the trust fund. Krugman states, “as long as Social Security still has funds in its trust fund, it doesn’t need new legislation to keep paying promised benefits.” How long has Krugman had his head buried in the sand? We learned more than five years ago from the Comptroller General of the GAO that the trust fund was empty. Did Krugman, who believes he knows the truth, the whole truth, and nothing but the truth, about Social Security, even bother to read the 2009 Social Security Trustees Report? If he did read it, what part of the statement, “Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury” does he not understand?

The big question that we should all be nervous about, is, Will the government default on its debt to Social Security? Those who say that the government cannot possibly default are confused about the nature of that debt. The government certainly can default if it chooses to do so.

The surplus Social Security revenue was supposed to be saved and invested in public-issue marketable Treasury bonds. These are the type of bonds that Bill Gates, the Chinese government, pension funds, and all other serious investors hold. These bonds are as good as gold, and they are default proof. Our government can never, and will never, default on any of its public-issue, marketable bonds because doing so would create panic in the financial markets and tarnish the reputation of the United States forever. So, if the trust fund held such bonds, the government could not default on them. But, unfortunately, the government did not invest a single dollar in such bonds. The government can default on its debt to Social Security because that debt is not in the form of real marketable bonds. If the government chooses to default on the Social Security debt, its action would have almost no impact on world financial markets, and most foreign leaders would view the matter as a domestic issue between the U.S. government and its citizens.

Posted by: ironwoodas | August 16, 2010 4:35 PM | Report abuse



Installment 4

Some people say, “BY LAW, the government has to pay me full benefits because of the FICA taxes that I have paid.” But they are wrong. One of the least known facts about Social Security is that, although the government does have a moral obligation to pay Social Security benefits to those who have earned them, the government does not have a legal obligation to do so. In a 1960 ruling by the United States Supreme Court, the court ruled that nobody has a “contractual earned right“ to Social Security benefits. Section 1104 of the 1935 Social Security Act specifically states, “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” According to the above strong language, Congress could do whatever it wanted to do with regard to changing, or even eliminating, Social Security. Some did not take the language seriously because they thought it was probably unconstitutional. However, in 1960, in the case of Fleming v. Nestor, the Supreme Court upheld the denial of benefits to Nestor, even though he had contributed to the program for 19 years and was already receiving benefits In its ruling, the Supreme Court established the principle that entitlement to Social Security benefits “is not a contractual right.” As a result of the 1960 Supreme Court ruling, the future of Social Security is totally in the hands of Congress and the President. They have the legal authority to amend any and all parts of the Social Security Act, as well as the authority to either increase or decrease Social Security benefits.

Some members of Obama’s fiscal commission will almost certainly advocate future cuts in Social Security benefits, even though Social Security has not contributed a dime toward the large budget deficits and the skyrocketing national debt. Much of the surplus revenue, generated by the 1983 payroll tax hike, was used to offset the lost revenue resulting from the large, unaffordable income tax cuts under Reagan and George W. Bush.

Posted by: ironwoodas | August 16, 2010 4:41 PM | Report abuse

Installment 5
To put it bluntly, the government stole the Social Security contributions of working Americans and used the money to finance tax cuts to the wealthiest Americans. It is not an exaggeration to use words like “stolen” and “embezzlement” to describe the Social Security fraud. Both words have been used by United States Senators in speeches on the senate floor in describing the Social Security scam. Excerpts from two such speeches are presented below.

“…the most reprehensible fraud in this great jambalaya of frauds is the systematic and total ransacking of the Social Security trust fund ..in the next century…the American people will wake up to the reality that those IOUs in the trust fund vault are a 21st century version of Confederate bank notes.”—Senator Ernest Hollings (D-SC), October 13, 1989

“…on that chart in emblazoned red letters is what has been taking place here, embezzlement. During the period of growth we have had during the past 10 years, the growth has been from two sources. One, a large credit card with no limits on it, and, two, we have been stealing money from the Social Security recipients of this country.”—Senator Harry Reid (D-NV), October 9, 1990

In addition to Senators Hollings and Reid, Senator Daniel Patrick Moynihan of New York also actively tried to expose, an end the Social Security scam two decades ago. Moynihan, who had been a strong supporter of the 1983 efforts to strengthen the Social Security system, was outraged that, instead of being used to build up the size of the Social Security trust fund for future retirees as was intended, the surplus was being used for general government spending. Believing that the American people were being betrayed and deceived, Moynihan proposed undoing the 1983 legislation by cutting Social Security taxes and putting the system back on a “pay-as-you-go” basis. Moynihan’s position was that, if the government could not keep its hands out of the Social Security cookie jar, the jar should be emptied so there would be no Social Security surplus for presidents and Congress to raid. But President George H.W. Bush, one of the chief beneficiaries of the surplus Social Security revenue, wasn’t about to give up his slush fund.

The Social Security scam has continued for 25 years with few Americans knowing about it. Although I have been actively trying to expose the fraud for more than a decade, most of the factual information reported in this article has not been widely reported by the mainstream media, leaving most Americans unaware that none of their Social Security contributions are being saved or used for future benefit payments.

Allen W. Smith, Ph.D.
Professor of Economics, Emeritus
Eastern Illinois University
Website: www.thebiglie.net
Email: ironwoodas@aol.com
Phone: 1-800-840-6812

Posted by: ironwoodas | August 16, 2010 4:46 PM | Report abuse

The Centrist Democrats and the Republicans are $creepy; $slippery; and $sleazy about money. Middle Class Americans that BELIEVE the Republican finance campaigns about socialism are putting a "gun to their own head". Any Middle Class voter that believes in the Republican finance campaign is deluded by a "get rich scheme" or a dream of someday...maybe..."winning the lottery". Free Market Capitalism is a fairy tale that has a ponzi pyramid scheme ending. TAKING CARE OF WORKING CLASS AMERICANS IS NOT SOCIALISM. However, TAKING EVERYTHING AWAY FROM THE MIDDLE CLASS is the Republican scheme. The 1% and 2% wealthiest Americans got their wealth by pealing the skin off the Middle Class Masses. Offshore Outsourcing; de-regulating business rules; removing ALL the taxes from the wealthiest...NO REPUBLICAN middle class person can believe that enabling the wealthiest 1% and 2% is in their best interest. It is not socialism that is the problem. It is more accurately defined as fraud; waste; abuse.

Posted by: ganttbarb | August 16, 2010 5:00 PM | Report abuse

Republicans don't hate social security; What I and many dislike about it is:
1) Its not funded on an actuarially sound basis - It would be much betteer to subject it to the same requirements that apply to private company pensions.
2) It has not changed with the times - the retirement ages are too young given the increases in the human lifespan since it was adopted. The age limits should be increased - and as one in my late 50s I would be impacted, but still support what it right. Make exceptions for (a) disable people, (b) those in physically demanding jobs that can't continue their job in their late 60s {bear in mind over half of US jobs are now in the service sector); and (c) those with special skills whose industries are dramatically impacted by change - since we all know most employers discriminate against people over 50 and are reluctant to hire and retrain that group. Otherwise, those able to work should keep working.
3) Apply the tax to all income, not just wages - yes its part "self-funded" - but the majority of benefits are akin to a welfare program for those who receive far more than they pay in - why should those on Wall Street or with rich dividend/interest income not share equally in this welfare program burden;
4) Impose a tax on imports so that foreign goods and domestic goods pay an equal share of the burden - when US made products have to bear the cost of a welfare program, but foreign made products do not, it only exacerbates the cost advantage of lower foreign wages, helping encourage even more US jobs to migrate abroad.
5) If the above were done, I'd accept an increase in the income subject to the tax, even though it would cost me.

Posted by: VirginiaResident2007 | August 16, 2010 5:04 PM | Report abuse

Peter, You maniac! You are deceived. Not all conservatives hate Social Security. I am conservative, and I am counting on Social Security (and Medicare) to provide the foundation of my retirement finances. I'm not part of that furtive cabal that wants to destroy Social Security. I want to protect it.

Social Security can be made actuarially sound with some minor tweaks... A small increase in the payroll tax... a modest increase in the retirement age for young people (who will be living longer)... a modest adjustment to the cost of living inflators.

Filling up the trust fund with enough money to pay out scheduled benefits for the next 75 years is not the reason we should experience fear and trembling.

The point that Krugman misses (and the previous commenter, Dr. Smith, elucidates) is that Social Security's only assets consist of IOUs, special Treasury notes, sitting in a filing cabinet in a government office in Parkersburg, W.Va. When Social Security needs the money, it will hand over the bonds to the U.S. Treasury and ask for repayment. Of course, the U.S. Treasury has no assets. Indeed, it is currently $13 trillion in debt, and will be $20 trillion in debt by 2020, by the Obama administration's own calculations.

By 2025 to 2030, the "Boomergeddon" of which you speak -- the day the federal government literally goes into default because no one will lend it any more money -- will be the day that the Treasury cannot make good on its obligations to the Social Security Administration.

In other words, Social Security is only as sound as the federal government. If the federal government goes broke, Social Security is in a world of hurt.

Jim Bacon
Publisher of the Bacon's Rebellion blog
Author of "Boomergeddon"

Posted by: jabacon1 | August 16, 2010 5:09 PM | Report abuse

THANK YOU
Allen W. Smith, Ph.D.
Professor of Economics, Emeritus
Eastern Illinois University
Website: www.thebiglie.net
Email: ironwoodas@aol.com
Phone: 1-800-840-6812
ironwoodas

Thank you so much for this work. I will try and help get the word out on this information by quoting this article and submitting "quotes" properly attributed to your work. Thank you again...Barb

Posted by: ganttbarb | August 16, 2010 5:25 PM | Report abuse

March 28, 2008, 4:57 pm
About the Social Security trust fund
I see from comments on an earlier post, plus some of the incoming links, that the whole “there is no trust fund, so the system will be in crisis in 2017″ thing is still out there. So I’m just going to reprint what I wrote about this three years ago:
Social Security is a government program supported by a dedicated tax, like highway maintenance. Now you can say that assigning a particular tax to a particular program is merely a fiction, but in fact such assignments have both legal and political force. If Ronald Reagan had said, back in the 1980s, “Let’s increase a regressive tax that falls mainly on the working class, while cutting taxes that fall mainly on much richer people,” he would have faced a political firestorm. But because the increase in the regressive payroll tax was recommended by the Greenspan Commission to support Social Security, it was politically in a different box - you might even call it a lockbox - from Reagan’s tax cuts…
…I don’t know why this contradiction is so hard to understand, except to echo Upton Sinclair: it’s hard to get a man to understand something when his salary (or, in the current situation, his membership in the political club) depends on his not understanding it. But let me try this one more time, by asking the following: What happens in 2018 or whenever, when benefits payments exceed payroll tax revenues?
The answer, very clearly, is nothing.
The Social Security system won’t be in trouble: it will, in fact, still have a growing trust fund, because of the interest that the trust earns on its accumulated surplus. The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That’s not going to happen. So legally, mechanically, 2018 has no meaning.

The above article by Paul Krugman has been widely circulated on the internet and it is possibly one of the reasons that so many people believe that Social Security is solvent for decades to come. I’m sure Krugman would not have written this if he didn’t believe what he was writing, so I don’t want to imply that he is being dishonest. But he could find out just how wrong he is about the status of the trust fund with just a little research on the internet. I have emailed him on more than one occasion and expressed my concern that he is spreading misinformation about Social Security and asked him to communicate with me so we could have a thorough —economist-to-economist—conversation about our very different views on the status of the Social Security trust fund. I posted a message on his blog expressing the same concerns and challenged him to debate me in a public forum, but of course my comment did not make it past his censors.

Allen W. Smith, Ph.D.
Website: www.thebiglie.net
Email: ironwoodas@aol.com


Posted by: ironwoodas | August 16, 2010 8:18 PM | Report abuse

Excerpt from Allan Sloan’s August 10, 2010 column, “Social Security, the trust fund and funny money”
“Let me show you in two different ways how useless the fund is. The first is a quote from the introduction to the 2009 Social Security trustees report, the second is the graphic by my Fortune colleague Robert Dominguez that accompanies this article.
Allen Smith, economics professor emeritus at Eastern Illinois University and author of "The Big Lie: How Our Government Hoodwinked the Public, Emptied the S.S. Trust Fund, and caused The Great Economic Collapse," spotted the 2009 quote, and it is telling.
It says: , "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."
In other words, the trust fund is of no economic value.”


I wanted to reproduce this excerpt from Allan Sloan’s column for two reasons:
1. It contradicts everything that Paul Krugman continues to say about all that money in the trust fund.
and
2. After ten years as “a voice crying in the wilderness”—a label given to me by anchor Lou Waters when I appeared on CNN on September 27, 2000—Allan Sloan, seven-time winner of the prestigious Gerald Loeb Award has come to see the validity of my message and has taken the bold step of quoting me and referring to my book, in his Washington Post column.

I am extremely grateful for Allan Sloan’s bold step of revealing the dirty secret about the trust fund that has been kept from the American public for so long. I hope that other journalists will follow his lead and provide the public with the crucial truth about the trust fund that they need to know and have a right to know. What happened to Dan Rather after he ruffled the feathers of the White House has, in my opinion, greatly reduced the effectiveness of the media in making the public aware of what is going on within the government. Some journalists seem to follow the policy of not reporting news that the government would not want reported.
During a recent conversation with an attorney and economist who used to work for the Federal Reserve Bank of New York, I was stunned when he voiced his opinion of why I was having so much difficulty in getting the media to report the awful truth about the trust fund. He said that some journalists in high places have been bought and therefore will not report certain stories. When I asked him who had bought the journalists, he responded by saying “people like Ben Barnanke and Tim Geithner.” I don’t know whether or not there is any truth to what the man told me, but he certainly seemed to believe it.
My question to Tim Geithner would be why was the strong statement, admitting that the trust fund IOUs had no value, that was reported in the 2009 trustees report, deleted from the 2010 report?

Posted by: ironwoodas | August 16, 2010 9:19 PM | Report abuse

Republicans are such hypocrites. They assert the new Health Care plan is unconstitutional because it mandates that private citizens purchase a service even if they do not want it.

Hello? Americans have been doing this for decades with Social Security and Medicare. It's the same concept and has proven not only Constitutional, but widely enjoyed by Americans. The same will eventually prove true for the new health care system.

Posted by: HillRat | August 17, 2010 9:06 AM | Report abuse

"What happens in 2018 or whenever, when benefits payments exceed payroll tax revenues?
The answer, very clearly, is nothing.
The Social Security system won’t be in trouble: it will, in fact, still have a growing trust fund, because of the interest that the trust earns on its accumulated surplus. The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That’s not going to happen. So legally, mechanically, 2018 has no meaning."--Paul Krugman

The 1983 Social Security amendments, with the big payroll tax hike, were designed to generate surplus revenue for about 30 years, at which point, the line would be crossed and Social Security would then run annual deficits. The plan was to save the surpluses from those first 30 years and build up a large reserve in the trust fund. Once we reached the point where the annual surpluses ended and the deficits began (now estimated to be 2016), the Social Security trustees would simply withdraw enough money from the reserve each year to supplement the inadequate payroll tax revenue. By doing so, full benefits could be paid until at least 2037. When we reach 2016, when the cost of benefits exceed payroll tax revenues, we can’t pay full benefits without a tax increase, increased borrowing from the public, or decreases in other government spending, because the $2.54 trillion that is supposed to be in the trust fund has already been spent by the government on other things. There is no reserve to draw down. Krugman claims that when that point is reached nothing will happen. He says that, far from being in trouble, Social Security will still have a growing trust fund because of the interest that the trust earns on its accumulated surplus. What Krugman doesn’t seem to understand is that the government has never paid any of the alleged “earned interest” in cash money. The government just issues more of the same worthless IOUs as the trust fund already holds and calls that “paying interest.”

I would like to hear Krugman’s explanation of the extremely revealing statement in the 2009 Social Security Trustees Report that Allan Sloan quoted in his column last week. It reads,

“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.”

This admission by the Social Security trustees makes it unmistakably clear that neither “interest payments” nor “bond redemption” provides any new net income to the Treasury. So where will the government get the money to make up the difference between benefit costs and payroll tax revenue after 2016?

Posted by: ironwoodas | August 17, 2010 11:25 AM | Report abuse

Paul Krugman, who has strong words for anyone who disagrees with his view of Social Security solvency, appears to have had his head buried in the sand for more than 20 years, when it comes to keeping up with what is happening to the surplus Social Security revenue. Consider the following quotations, which reveal that astute, high-profile officials have been warning about the raiding of the trust fund for more than two decades.


“…the most reprehensible fraud in this great jambalaya of frauds is the systematic and total ransacking of the Social Security trust fund…in the next century…the American people will wake up to the reality that those IOUs in the trust fund vault are a 21st century version of Confederate bank notes.”-- Senator Ernest Hollings of South Carolina, speech on the Senate floor, October 13, 1989

“…On that chart in emblazoned red letters is what has been taking place here, embezzlement. During the period of growth we have had during the past 10 years, the growth has been from two sources. One, a large credit card with no limits on it, and, two, we have been stealing money from the Social Security recipients of this country.”—Senator Harry Reid of Nevada, speech on Senate floor, October 9, 1990

“There 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 the GAO, January 21, 2005

“There is no trust fund, just IOUs that I saw firsthand that future generation will pay—will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.”—President George W. Bush, Speech at West Virginia University at Parkersburg, April 5, 2005

Millions of Americans have a lot at stake in the outcome of the Social Security debate. They deserve to hear the views of all Social Security experts, and anyone who takes such a strong stand on a particular view as Paul Krugman does, should be willing to publicly debate other experts who disagree. As I have emphasized in previous posts, I am a strong supporter of Social Security as we now know it. I am not out to destroy the program. I am out to save it by alerting the public to the fact that the government has looted and spent every dollar of the $2.54 trillion in surplus Social Security contributions made by working Americans over the past 25 years. The government must make provisions to repay the looted money. If that is done, Social Security will be totally solvent until at least 2037 without any other changes. I again challenge Paul Krugman to debate me in a public forum. He has a right to say anything he wants in his column, but he also has a responsibility to respond to those who disagree with him in some public forum. He needs to get rid of his censors and allow all comments that come in to be read by the public just like the Washington Post forums work.

Allen W. Smith, Ph.D.
Email: ironwoodas@aol.com
Phone: 1-800-840-6812

Posted by: ironwoodas | August 17, 2010 12:40 PM | Report abuse

Republicans also want to end abortion so that they can starve the resulting so-called "children" by taking away their food stamps.

Republicans - outdoing Satan at every turn since 1863.

Posted by: jiji1 | August 17, 2010 4:34 PM | Report abuse

Hating social security isn't a party issue. It's a fiscal one. I resent you trying to make this about party. Calling it anything remotely resembling a success is absolutely incomprehensible.

The dollars I've "contributed" to SS have been matched by my employer, yet it is highly unlikely that I will ever see any of those dollars again. Much less the dollars contributed by my employers. Even less likely I'll see any kind of return on that investment. Social Security is, and will continue to be, the worst investment of my lifetime.

Posted by: Denver303 | August 17, 2010 5:10 PM | Report abuse

Krugman does not deny what ironwoodas says. What Krugman says is that funds collected as social security payments cannot be converted to a covert payment of regular taxes by the stripping of benefits from those who paid the ss deductions. The bonds represent a debt from the regular tax fund to the ss fund, and must be paid. This is not a specious argument. It is regular tax payers who should be first in line to pay off the debts we owe, not the recipients of social security.

What the strippers of benefits from SS want is for old people to carry the can for the free ride afforded regular taxpayers, including especially the very richest, under the Bush presidency. It would be worse than disgusting to require a construction worker or a truck driver to keep at it until he is 70 - if he could find anyone to hire him.

Posted by: glenerian | August 18, 2010 10:31 AM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2011 The Washington Post Company