Ronald Reagan and the Great Social Security Heist

The Great Social Security Heist
The Impending Social Security Crisis
The Big Lie
Allen W. Smith, Ph.D.
The Looting of Social Security
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Allen W. Smith, Ph.D.
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The money’s gone! Social Security doesn’t have $2.7 trillion stashed away for paying benefits, as so many people believe. It cannot pay benefits for another 20 years, as is often claimed. In fact, Social Security does not have enough money to pay full benefits, even for 2014, without borrowing money from China or another of our creditors. How can this be? Wasn’t Social Security fixed by the Social Security Amendments of 1983, which included a large increase in payroll taxes? That’s what we were told at the time. President Reagan signed that legislation into law with great fanfare on April 20, 1983. With his comments at the signing ceremony, Reagan gave the impression that it was a proud day for America. But, instead of being a proud day for America, as Reagan implied, the day the new legislation was signed into law, turned out to be a day of shame for the United States. The Social Security Amendments of 1983 laid the foundation for 30 years of government embezzlement of Social Security funds. The money was used to pay for wars, tax cuts for the rich, and other government programs. The payroll tax hike of 1983 generated a total of $2.7 trillion in surplus Social Security revenue. This surplus revenue was supposed to be saved and invested in marketable U.S. Treasury bonds, which would be held in the trust fund until the baby boomers began to retire in about 2010. But not one dime of that money ever made its way to the Social Security trust fund. 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. 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. But 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 nonmarketable 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. This book is a must read for all who care about the future of Social Security and the integrity of their government.

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On September 27, 2000, Dr. Allen W. Smith appeared on the CNN afternoon news to discuss his newly published book, The Alleged Budget Surplus, Social Security and Voodoo Economics.  This marked the beginning of of Smith's thirteen-year-long campaign to alert the public to the fact that the government was taking money from Social Security, depositing it into the general fund, and then using the revenue for other purposes, as if it were general revenue from the income tax.  The money taken from Social Security was replaced with non-marketable government IOUs, that could not be used to pay benefits, and could not be sold,or in any other way, converted to cash.  Smith thought that once he reported that the government was embezzling Social Security money and spending it for other things, there would be a public outcry, and the looting would come to an end.  But that did not happen. The government continued to keep the big dirty secret from the public.

On February 25, 2004, Alan  Greenspan launched a verbal bombshell which set off anger, and some degree of panic, throughout the nation.  He called for cutting Social Security benefits for future retirees because, in his words, "We are over committed  at this stage.  It is important that we tell the people who are about to retire what it is they will have."  Dr. Smith was furious over Greenspan's double-crossing of the baby boomers.  Greenspan had helped President Reagan push the payroll tax hike of 1983 through Congress, which was supposed to provide enough surplus revenue to fully fund the retirement of the baby boomers.   Twenty-one years later, after two decades of government embezzlement of Social Security funds, Greenspan was pretending that the surplus revenue had never existed and advocating cutting Social Security benefits to future retirees who had already prepaid the cost of their own benefits. The following day, Dr. Smith was one of two invited guests to respond to Greenspan on the CNBC morning news.  That interview was recorded and is the second video below. 

A month later, on March 22, 2004, Smith was interviewed by "The Dollans" on CNNfn.  This interview makes up the third video in the series below.  By viewing the videos, you will see that Allen W. Smith was making the same arguments in 2004 as he made in his 2000 interview on CNN.  Ten years later, as we enter 2014, Dr. Smith continues his effort to expose the great Social Security theft.  But the Social Security program is in much deeper trouble today than ever before.  The last surplus year was 2009.  In 2010, Social Security transitioned from 30 years of annual surpluses to permanent deficits.  The cost of paying full benefits in 2010 exceeded Social Security revenue by $49 billion.  The government had to borrow $49 billion from China, or one of our other creditors, in order to pay full benefits in 2010.  The deficits will become larger and larger in the years ahead, meaning that unless their are benefit cuts or tax increases, the government will have to borrow more and more for Social Security.  This is not possible without large increases in the debt ceiling, which seems unlikely in the current political climate.  The only thing Social Security has is its annual tax revenue.  It does not have a bunch of money stashed away that it can draw down.  All of the $2.7 trillion that is alleged to be in the trust fund is gone.  It has been spent for other purposes.  Yet. government officials and the AARP continue to tell the public that Social Security has enough money to pay benefits for 20 more years.  These statements are deliberate lies to try to keep the big dirty secret from becoming public knowledge. The government does not even have enough money to pay full benefits in 2014, without borrowing money.     

View video of three Social Security interviews with Dr. Allen W. Smith on national TV



Mainstream Media Outlets Have Been Reluctant to Report a Story Which the Government has Kept Secret from the Public for 30 Years 

 I have  continued my relentless campaign to expose the Social Security theft to this day, using any media outlets that were available.  The looting of the Social Security surplus is sometimes reported on editorial pages, but it never makes it into the mainstream news.  For that to happen, the President of the United States, or perhaps the Secretary of the Treasury, would have to hold a press conference, or issue a press release, stating specifically that all the Social Security surplus had been spent for other purposes, leaving the trust fund without any current liquid assets.

Although specific members of Congress have stated publicly that Social Security has no reserve money, these statements are never widely reported by the mainstream media.  On March 16, 2011, Senator Tom Coburn (R-OK) made the following statement during a Senate speech:   "Congresses under both Republican and Democratic control have stolen money from Social Security and spent it.  The money's gone.  It's been used for another purpose." On October 6, 2013, House speaker John Boehner said on ABC television, "It's not like there is money in Social Security...The government, over the last 30 years has spent it all."  Such statements would have been headline news during the Watergate era, when reporters engaged in active investigative reporting.  But there is little investigative reporting today.  When Dan Rather, a highly respected Journalist, was fired because he reported a story that the White House did not want reported, a powerful message was sent to every journalist in America.  If they valued job security, they had better be careful not to report anything the government did not want reported. Talk radio is still an area where almost anything can be discussed, and I have done more than 200 radio interviews. I have also appeared on a few local TV stations where daring investigative reporters try to cover the news not being covered by the mainstream media.  


On June  2, 2011, I appeared on WTSP, Channel 10, in Tampa.  Investigative reporter Mike Deeson interviewed me and also showed a clip from Senator Coburn's statement on the stealing of Social Security money.  It was a daring report of the true status of Social Security, and Mike tried to get it carried by as many other stations as possible.  Please click on the link below to view the Tampa video.  

View video of WTSP investigative reporter, Mike Deeson's interview with Allen W. Smith