It is worth pointing out this is the same Alan Greenspan who, back in 1983, personally headed up a predecessor Social Security Reform Commission for then President Ronald Reagan. At that time Greenspan also predicted a collapse of the Social Security system. His recommendation back then in 1983, as today in 2004, was to ‘save’ Social Security by a radical overhaul. In 1983 that was accomplished by sharply increasing the payroll tax paid by workers that funds Social Security. Greenspan’s 1983 recommendations were quickly adopted by Congress. And over the past 20 years, both payroll tax rates and taxable income levels have continued to rise, to the present 12.4 % rate today on earnings up to $87,900 a year. The direct result of this 20 year rise has been to generate a surplus of $1.46 Trillion dollars in the Social Security trust fund.
Who Stole the $1.46 Trillion Surplus?
Over the last 20 years a Social Security surplus of $ 1.46 trillion was created and it’s again going broke, according to Greenspan, But with that much surplus, how can Social Security again be on the financial ropes? Is it because benefits were increased dramatically over the years? There have been virtually no significant increase in social security benefits the past 20 years. Could it be that millions additional ‘baby boomers’ were discovered hiding under the bed all these years, and will soon be retiring in the years ahead? Roughly the same ‘boomers’ who were born between 1945-1955, and were alive in 1983, are around today.
So where did all that money go? What happened to the $1.46 trillion Social Security Surplus?
What happened is the biggest financial scandal in U.S. history, the biggest swindle of American working class families, or any working class, anywhere in all of history. The magnitude of the scandal exceeds the $1 trillion bail out by American taxpayers of the corrupt Savings & Loan industry under Reagan and Bush I during the 1980s. The costs of the on going, three years of corporate scandals and rip-offs under George W. Bush are dwarfed in comparison.
The $1.46 trillion Surplus, paid for by workers to guarantee a minimum retirement, promised to them in 1983 in exchange for the record payroll tax hikes, has been sucked out of the Social Security Fund by administrations from Reagan to George W. Bush with the agreement of Congress! Not a penny of the $1.46 trillion remains in the Social Security trust fund. Only paper IOUs from Congress indicating the money is ‘owed’ to the fund.
Despite legislation passed in the early 1990s declaring a ‘lock box’ on the Social Security surplus, that entire surplus nevertheless has been permanently ‘borrowed’ every year and transferred to the federal government’s general fund to help reduce and offset chronic annual U.S. general budget deficits over the past 20 years. No sooner had politicians of both the Republican and Democratic Parties in Congress passed the ‘lock box’ resolution than they defied and ignored that same resolution.
Social Security’s surplus has been tapped every year to help cover accumulated general U.S. budget deficits totaling approximately $4 trillion dollars from Reagan through Bush—about $2.9 trillion of which have been due to tax cuts by Reagan and George W. Bush for the rich and their corporations, and the rest to pay for a doubling of military spending by Reagan in the 1980s, for the Bushes’ two Iraq wars, for Clinton’s war in Bosnia, and for the current War on Terrorism.
In other words, American workers and families have indirectly been paying with their wages and their retirement benefits for the Reagan-Bush tax cuts and wars of the last 20 years! If the $1.46 trillion ‘borrowed’ were restored to the Social Security Fund there would be a massive excess of funds today in the Social Security System—which could be used to help pay for a large part of the cost of universal health insurance for everyone in America!