Government Owes $2.7 Trillion to Social Security

By on May 23, 2013 in News, Retirement

The government has embezzled all surplus Social Security revenue, generated by the 1983 payroll tax hike, and spent the money on wars and other government programs. None of the money was saved or invested in anything.

Social Security is not broken, but at the moment, it is broke. The cost of paying full benefits in 2010 was $49 billion more than Social Security tax revenue for the year.  So the government had to borrow $49 billion (probably from China) in order to pay full benefits.  And the gap between the cost of benefits and Social Security tax revenue will get bigger and bigger in the years ahead.

The only reason the government has been able to keep the public from finding out about “the great Social Security theft,” for all these years, is because the AARP and the National Committee to Preserve Social Security and Medicare (NCPSSM) have cooperated with the Social Security Administration in their official talking points about Social Security. The AARP has the following statement posted on its website: —“Social Security will be able to pay 100 percent of benefits for the next 20 years.” The NCPSSM has this statement on its website:  “Social Security is projected to deliver full guaranteed benefits until at least 2033.”

But these statements are not even close to being true, and the leadership of these organizations know that they are deliberately misleading their members, and the public, with these false statements. Social Security doesn’t even have enough money to pay this year’s benefits without borrowing.

The government IOUs in the trust fund are not like the marketable U.S. Treasury bonds held by China and America’s other creditors. Those marketable bonds can be converted into cash at any time by selling them in the open market.   The IOUs in the trust fund are like a handwritten note that a bank robber might leave behind in the empty vault, stating how much money he has stolen.  The note tells the bank how much money is missing, but it won’t help the bank get the money back. Similarly, the IOUs in the trust fund are a record of how much Social Security money was taken and spent on other programs. But the IOUs are not marketable, and they cannot be converted into cash.  And the interest income, that the SSA claims the government is paying, is not cash interest.  It is in the form of more of the same worthless IOUs that the trust fund already holds.

The harsh fact is that Social Security does not have any cash reserves. That is why President Obama said that he couldn’t guarantee that Social Security checks would go out on time without a budget agreement, because “There might not be enough money in the coffers to cover them.”   The government owes Social Security $2.7 trillion, but the government is both unable and unwilling to repay the stolen money, at least in the short run.

The good news is that the Social Security System is not broken. It works well and has done so for the past 78 years.  The problem is that the United States federal government is badly broken, and no “fix” is upon the horizon. The only problem is that, Social Security does not have enough revenue to pay full benefits, and the government has stolen the cash reserves it is supposed to have in the trust fund.  If the government would enact legislation requiring the repayment of the stolen money, perhaps in installments over the next 30 years, Social Security’s short-term problems would be fixed.

Forget about that old propaganda statement the enemies of Social Security have been repeating, over and over, since Social Security was first created. It goes like this:  Social Security, in its present form, is unsustainable over the long run.  That is just a big lie that the enemies use as a weapon in their war against Social Security.  There is nothing basically wrong with the Social Security System, and it would not even be in the news today if crooked politicians hadn’t stolen $2.7 trillion of its money.

© 2016 Allen W. Smith, Ph.D.. All rights reserved. This article may not be reproduced without express written consent from Allen W. Smith, Ph.D..

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  1. hal says:

    NOV.10,2015
    Huckabee: It’s true that we’ve lied and stolen from people regarding Social Security. “But there’s one thing we haven’t told them: it’s their money… it’s not entitlement, it’s not welfare! This is money that people had confiscated out of their paychecks… Now, we’re going to blame the people. Today, Congress took another $150 billion away from Social Security so they can borrow more money!.. And they always say they’re going to fix this one day. No they’re not. It’s like a 400-pound man saying ‘I’m going to go on a diet, but I’m going to eat a sack of Krispy Kremes before I do… Let’s quit blaming the people on Social Security. Let’s quit making it a problem for them. It’s like them getting mugged, and then us saying we’re going to mug you some more, to get over it, get used to it. No, sir. We need to honor our promises . (moderator attempted to end his answer) – Let me finish, it’s the only time I’ve had a chance. Let me finish. This a matter, not of math. This is a matter of morality. If this country does not keep its promise to seniors, then what promise can this country hope to be trusted to keep? ”

    Christie: The only moral thing we can do is tell them the truth. “It isn’t their money any more, Mike, it’s stolen. It got stolen from them. It’s not theirs anymore. The government stole it and spent it a long time ago. (Huckabee: “But, Chris –“)
    So let’s stop fooling around about this. Let’s tell people the truth. For once let’s do that and stop trying to give them some kind of fantasy that’s never going to come true.” (writer’s question: Does that mean if a person steals from someone and spend it before prosecution, then no judge may require reparation?)

    Cruz: This recent bill passage illustrates the dysfunction in Washington. Republicans joined with “every single Democrat to add $80 trillion to our debt.” Yet, no problems were solved. Regarding Social Security, he believes both Huckabee and Christie are right. We must honor our commitments

    Huckabee: For one-third of those on Social Security, it represents 90% of their income. The government has no business stealing more” through “means-testing.” People paid into it and should receive it. “…
    __________________________________________________
    then tell what’s different between Bernie Madoff6 who sits in prison today for doing less than what the government has done to people on Social Security and Medicare in this country.” (applause) http://www.fedsmith.com/2014/0
    ____________________________________________________

    MEDICARE-GOOD OR BAD

    Huckabee: Because 85% of Medicare costs are from chronic diseases, “we need to declare war on the four big cost drivers because 80% of all medical costs in this country are chronic disease. We don’t have a health care crisis in America, we have a health crisis. And until we deal with the health of Americans and do what we did with polio when I was a little kid, we eradicated it… focus on the diseases which are costing us trillions of dollars: Alzheimer’s, diabetes, heart disease, cancer.”
    ____________________________________________________

    President Obama publicly declared war on Alzheimer’s disease in 2010.That’s when he signed a bill called the National Alzheimer’s Project Act (NAPA) into law. That created a huge nationwide task force of scientists and researchers.
    It involved millions in funding, and a green light for hundreds of new studies…It was great PR for Obama. Bumped up his approval ratings for a little while.But actually curing the disease? That was NEVER part of their plan.You see, by creating programs like NAPA, the government gets to control the flow of money used for research.Then they funnel that money into research that they KNOW will never lead to a cure.For Alzheimer’s disease, that means lots of studies on new prescription drugs, even though…
    Billions of dollars and decades of research into prescription Alzheimer’s drugs have completely FAILED to slow the disease, let alone cure it! See, NAPA – like all Big Government’s “wars on disease” – was really just a handout to Big Pharma, plain and simple
    You see, by creating programs like NAPA, the government gets to control the flow of money used for research.
    Government is not interested in curing disease it is not the same government that pulled together on a common cause to cure Polio,it is a government of greed and deceit and whats in it for me.
    when they stold our money for Social Security they made a big mistake because they reached inside our pockets worse than a common criminal and are damned and will never have a clear conscience and are nothing but scum in new suits.They picked the wrong pockets.

    ___________________________________________________
    The 1935 Act provided for “old age” or retirement benefits, aid to
    dependent children, disability insurance, and unemployment insurance. Payments were made in lump sums until 1940 when a monthly payment system was put into place. And, it was paid for by workers. Workers made contributions to a trust fund (“Fund”) from their paychecks to pay for the retirement and other benefits they’d need in the further.and thats what they’ll always be,they picked a fight with the wrong people

    The Social Security Board (SSB) was created when the President signed the Act in 1935. It remained that way until 1946 when it was renamed the Social Security Agency (SSA

    The Future
    According the most recent report from SSA officials, the costs of running the program will be more than what’s paid into the Fund starting in 2016. In addition, the Fund will be able to pay full benefits until the year 2037. After that, benefits will be reduced to 74% unless something is changed to lower costs, increase the money going into the Fund, decrease the amounts being paid from the Fund, or all three.

    Jim DeMint wrote in one of his books Now Or Never, “Raiding the Social Security Trust Fund was a precedent set in 1968 by another progressive president, Lyndon B. Johnson, to help pay for the Vietnam War.”

    The myth seems connected to LBJ’s proposal to move Social Security into the Federal budget. In short, yes LBJ recommended that the budget process should include the revenue and expense of Social Security. No, his recommendation did not actually move any money from Social Security. You might consider this distinction like filing a 1040 jointly with a spouse. While the 1040 form reports income and expense of both spouses, it does not move any money between accounts.

    -See more at: http://www.fedsmith.com/2014/0

    Beyond the denial of the Social Security Administration, Snopes dismisses the possibility. FactCheck rejects the possibility. All of these sources reach basically the same conclusion: the process which governs the movement of money hasn’t changed since 1939. When payroll taxes exceed the cost of benefits, the excess cash is invested in government securities.

    This is no different from a private pension buying government securities, only the government gives Social Security slightly better terms.

    Millions of people depend upon Social Security. The system has massive financial imbalances. Yet the nation conducts the debate in cliché and hyperbole such that the more you type the righter you are.

  2. ohiodale says:

    Anyone who thinks our federal government is better than Corporations are not living in reality. At least with Corporations you can stop buying their products and services. The only reason people, like the libertarians, republicans and liberals are concerned about social security is because the surplus is gone and they must pay it back. The American people are stupid. We should have been rallying around tax reform for the last 30 years. We needed to increase our tax revenues instead of stealing from Social Security. I am for the Bush tax cuts because they got us out of a recession. I am not for the part of the Bush tax cuts that cut he top 5%’s taxes. I am not for raising taxes on the bottom 95% also. We need to create jobs to bring up revenue. Remember Sanders and Hillary were in office when the Social Security theft was happening. Now they want to increase Social security taxes so they can steal some more.

  3. cooltoysrme says:

    LOTS OF PEOPLE GOT RICH FROM REAGAN AND HE WAS HAILED AS A GREAT PRESIDENT . I VOTED FOR HIM AND I REMEMBER WHAT IT FELT LIKE WHEN HE THRUST A KNIFE IN MY BACK AND IN TO THE BACK OF EVERY HARD WORKING AMERICAN .THE FEELING OF BETRAYAL SUCKS .NOW I WATCH BOTH PARTIES TAKE TURNS AT TWISTING THAT KNIFE IN OUR BACKS AND WHERE GOING FROM JUMPING IN TO BED WITH THE COMMIES TO BECOMING COMMIES AND BOTH PARTIES ARE EQUALLY RESPONSIBLE . THE AMERICAN PUBLIC IS TO BUSY ARGUING BACK AND FORTH OVER THE PAST ISSUES TO PAY ANY ATTENTION TO WHAT THEIR DOING TO TWIST THAT KNIFE TODAY . BUT MOST AMERICANS HAVE GIVEN UP ON OUR POLITICAL SYSTEM ALL TOGETHER AND DON’T VOTE AND WANT TO BITCH ABOUT THIS OR THAT WHEN THINGS HAPPEN THEY DON’T LIKE . THE POLITICIANS AND LOBBYIST HAVE THIS TWO PARTY SYSTEM DOWN TO A SCIENCE . THEY DON’T LET A THIRD PARTY IN THE DEBATES FOR A REASON . THE ONLY WAY THE PUBLIC IS GOING TO GET CONTROL OF THEIR COUNTRY AGAIN IS THREW A THIRD PARTY AND CIVIL DISOBEDIENCE . VOTE LIBERTARIAN SO YOU CAN GET THAT TASTE OF BETRAYAL OUT OF YOUR MOUTH .

    • ohiodale says:

      Before you start spouting your rhetoric, social security was being stolen since the late 60s not 1983. Every single president has used the social security surplus in the general funds. Reagan was a god president relative to the others we have had in my life time, especially the current and the last ones. The libertarians are all career politicians also, Cruz is a libertarian and is as shady as all the other career politicians. These people run on any tickets they think they can win. They are basically the same except they come across as supporting constituents in their parties just to get elected. We need to vote in someone rich who can campaign without taking a dime from special interest.

  4. ralbaii@aol.com says:

    When the revolt starts the politicians who stole socialist security for their pet projects will likely be hunted down by former socialist security recipients..

  5. Dorine Julianne Lester says:

    i think what belongs to the people should be given to the people, not be used for selfish reasons. You make a mistake you pay for it. Why should we pay for the governments mistakes.

  6. Oregonerd says:

    Some people die very soon after starting retirement. Id sure like to see stats on that! So what happens to that money? I want to know:
    Does it stay on SSs’ side of the books or not?

  7. Harlen says:

    Addendum to my first comment. Our Gov’t. is still carrying loans we made to foreign governments from World War I and II as assets on the books! THAT’S A FACT!

  8. Harlen says:

    How about AARP members join with the Spanish & Black voters (this is 85% of all voters) and kick both House & Senate members out of office, never to be elected to any public position now or in the future. We could take an AARP member who had the most profitable business and elect him/her to President, then go down the same list and elect Vice President and Secretary of State. That’s all we need. Then change Reagan’s law pertaining to borrowing from all gov’t. agencies to a 20 year pay-back system. Pass another law that makes any and all Corporations that exported our jobs outside the USA pay a 50% IRS tax on their gross revenues, until they bring those jobs back (it would force us to bring the majority of our troops back to cover the workforce), then it would drop to 30% on the gross of their revenues. No deductions whatsoever! We could pay back that $27 trillion in 10 yrs. and afford to increase retirement benefits. I exist on $1,046.00 per month! I’d like to see our politicians do that! Every time I think of politicians it reminds me of a quote ie; “No king is so great, as when he convinces his people that he is fighting for them, when in reality they are giving up their lives to save his throne!!!”

    • Larry Cook says:

      Especially Hillary, where she told the tale, that they were broke when they left the White House. REALLY? Broke when their monthly income exceeds that of most people’s annual income. They make close to 40,000 a month from her Senate pay, and his former President pay. Along with fees for speaking engagements. Which I did not add into the monthly income. REALLY?
      They need to try living on what a pensioner has to. The amounts of social security checks are barely enough to sustain one, let alone live. It was never intended to be anything more than an aid to retirement, not retirement in itself. But many of our older citizens depend upon it to survive.
      And this year, with on COLA, they lose more ground to inflation. Yes, fuel has dropped in price, but most retirees do not purchase huge amounts of fuel anyway. Inflation in other areas is increasing. And then we have Congress deciding it needs a pay increase? Their pay should be linked to job performance, and pay raises given only if our nation is healthy. And we all know it is not. Numbers can be read in many ways, but the bottom line is where the B/S stops. And our national bottom line sucks big time.
      We do not have a true budget, but some limited cooperation, to keep the wheels turning. A true budget would address such items as national debt, the borrowed funds, and have some sort of repayment plan, other than ”We will cross that bridge when it comes around.” A budget would be more like, you cannot spend money you do not have, and you must pay your debts. Then if you want that new bomber, fighter, etc, you plan for it’s purchase.
      My state requires you to have funds available, or do without. Some can be funded by bonds, but there is a plan to retire them. It stops the pie in the sky style of spending.
      I do support line item veto for the President, such as is practiced by many states. If the vetoed item is that important, a two thirds vote for it, after being vetoed, gets it passed. But we need to undo the practice of rider bills, make each bill-new law etc, stand upon its own merits.

  9. danielistical says:

    “*In 1983 Mr. Reagan and the 97th congress passed
    H.R. 4331, the Highway Revenue Act of 1981, this action allowed borrowing
    between Trust Funds, (Old Age, Survivors and Disability Insurance [Social
    Security], Federal Old-Age and Survivors Insurance Trust Fund, Federal
    Disability Insurance Trust Fund and the Federal Hospital Insurance Trust Fund)
    and became public law on 12/29/1981­, this was the beginning to the situation
    we find ourselves in today.

    “HOW ABOUT the U S Goverment pay back the 2 (two)$$$$
    Trillion plus that has been “borrowed ” from your and my Soc. Sec.
    since 1983 when Reagen changes laws protecting the American People from such
    actions by congress???

    we only owe China 1.16 Trillion

    • Larry Cook says:

      Actually it started with LBJ, if you take the time to check. That was the first time the fund was tapped. And several others have touched it as well. It is not just Reagan, but LBJ, Reagan, Clinton, and Obama. And once those that paid in, find out they are out in the cold, there may be heck to pay. Everyone needs to be checking their Social Security account, which can be done on line, and look for errors in income being reported, and go from there. And check on their future benefits. Although it is less a ”benefit” since we were forced to pay into it, than an entitlement. More than any other, except for the military retirement funds. Those too are earned.

  10. larm007 says:

    Embezzled is a pretty strong word. I have heard a number of times that the government ‘borrowed’ it and the the ‘government owes SS a huge blah,blah amount. Apparently it does. And citizens benefits should not be cut because of it. Time to slash military spending as far as I’m concerned….maybe if every soldier everywhere laid down his gun and went home. I know. PollyAnn-ish. If only moms, and kids, and wives could vote. Nonetheless, no wars and sustainable living for all should be our goal. Oh, that includes the preservation of Social Security. Call you Senator and Representative.

    • Larry Cook says:

      Agree with you on some of your comment. But I also know we must have some form of military defense, just in case. But the reason for the military, was to protect America and Americans, not to police the rest of the world. If we were more concerned with the current invasion going on inside America right now, we would demand our military be given the job of securing our borders. This is right up their alley. They are the best in the world, and taking care of our national security is their primary purpose. I could give two hoots and a holler less about Syria, Libya, Iraq, Iran, until they pose a true threat to our nation. Then it may be time to unleash our military might. But look at N. Korea, they have continued to test nuclear devices, develop missile systems etc, and all America and the UN does, is place sanctions upon them. That are being ignored and worked around anyway. Now we are making a gentleman’s agreement with Iran, and already there is hints of them not honoring said agreement. They instead of dismantling their cascades, that exist to separate high grade, weapons material from enriched U-234. And once they have materials, a device is no hard task. Most of the science is being taught in our own colleges etc. And they have more than taken advantage of that fact.
      Trust them I do not, but respect their abilities, I do. Unlike our government, I know first hand, having worked for almost a year with several Iranian engineers, and visited the country, in service of my Uncle Sam. And they are not stupid camel jockeys, but sneaky and devious. They would rather lie, than admit their shortcomings. And the present leadership is worse, because it leads by perverting a religious belief, into a hatred of other nations.

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