On Friday the 29th of July, 2011 during C-Span’s Washington Journal it was revealed that the Social Security Trust Fund has a surplus of $22 Trillion while various politicians have indicated there is only $2.6 Trillion in the trust. This is a difference of $19.4 Trillion and would indicate all the rhetoric of how Social Security is a ponzi scam, is going broke, needs to be overhauled or done away with all together is not true at all, but rather it is a robust federal run insurance policy for the American people to ensure their livelihood during retirement.
Below is a transcript of the pertinent discussion between C-SPAN moderator Susan Swain and Peter Coy, the Bloomberg Businessweek Economics Editor. Please Note how Coy was apparantly not expecting information of a 22 trillion dollar surplus.
SWAIN: Let me turn from that to the thesis of your cover story, which is “Why the Debt Crisis is Even Worse Than You Think.” It’s accompanied by this chart or graphic which I’d like to put on the screen which is the debt deluge in which you show what everyone is talking about and what everyone should be talking about which is the fiscal gap what’s this all about
COY: Fiscal gap is a different way of measuring out problems Everyone focuses on the national debt..which of course is important to focus on but, the national debt is backward looking it tells you what’s obligations have already accumulated
What it doesn’t tell you fully is the debt to come..or the obligations we are incurring now based on the way we’ve created formulas for social security, medicare and medicaid. If you look at those and you go out into the indefinite future.to make sure that there’s not some kind of accounting problem on the distant horizon..you find that the gap…between everything we expect to receive –tax revenue– and everything we expect to spend is $211 trillion …trillion dollars…stated in today’s dollars
SWAIN: So, what does Washington do with that?
COY: Well, what you do is what people have been talking about doing. You’ve got to tackle the entitlements because that’s by far the bulk of the problem. Entitlements of course being social security and medicare. You also have to tackle medicaid. You also have to deal with the outlying years. You have to create formulas that will be sustainable. And you have to figure out how to something about healthcare costs which are rising at a rate that’s unsustainable, presumably by changing the incentives. You know, this has been said on C-Span and elsehwere but it’s not just talk it’s like the economists that look at the longterm future say if that doesn’t happen things just kind of blow up. Even 212 trillion wouldn’t be enough.
SWAIN: Well one thing just to note..as you’re saying Social Security is part of the solution. In this illustration you have here…social security…taxes..is, uh…let’s see…one side is revenue and one side is debt. It shows social security in a surplus. Right? In what it receives….132 in versus 110 trillion? Am I reading that correctly? [Coy responds, "Yeah."] So, people might…who argue social security should be set aside…we’ve paid into, it it’s really solvent for right now. Why should that be part of the discussion?
[Transcriber's note: The left side of the chart (debt) reads, "Social Security $110 tn." The right side (receipts) reads "Social Security taxes $132 tn." (see mentioned chart)]
COY: That’s a…That’s a good point. The social security numbers are…the trust fund for Social Security is not the crucial issue. That’s why people say that Medicare is where the bigger problem…but, Social Security…um…[is] probably going to have to have a higher…um…retirement age..but, you know…funny thing…I think…I think that’s a good point you’re making there, and I’m going to go back and look at that more closely for next week’s story.
SWAIN: Well, thank you very much for outlining the concerns of the financial market, which you say right now are more muted than you expected, and for giving us some background on your cover story, “Why the Debt Crisis is Even Worse Than You Think,” as Washington continues to find a solution for the current debt ceiling. Peter Coy, joining us for Bloomberg Business Week, thanks for your time.
Peter Coy did not offer a correction like he told Swain he would, but rather repeated his call for Social Security benefit cuts and went further to state he viewed Social Security as a “Ponzi scheme.”
The 22 trillion surplus revealed by Susan Swain should carry Social Security far into the future, so why are politicians so eager to place it on the chopping block? The answers to this question will have to come from Washington, but we can go back to 1983 to reveal what might be motivating the politicians to now come after the federal insurance policy that Americans have been paying into starting with their first real jobs.
In mid 70’s it became evident that Social Security was facing a crisis, on May 12th 1981 then President Reagan with no prior attempt at Congressional support proposed a series of cuts among which would reduce benefits to those choosing early retirement, i.e.; a 30% cut to someone retiring at 62. AARP, the AFLCIO and many other interest groups successfully opposed Reagan who didn’t have the support of Congress or the American people.
Reagan countered by creating a bipartisan 15 member National Commission on Social Security Reform in September 1981 to come up with a plan to save Social Security by the end of 1982. In hindsight one has to wonder if this was really a plan to save Social Security or part of the now well known ‘starve the beast’ plan to be played out in the future. But I digress and that question will have to wait for another time.
This commission was chaired by Alan Greenspan, who had served on President Ford’s Council of Economic Advisors as Chairman and who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. The members of the commission where picked by Speaker of the House Thomas P (Tip) O’Neil (Democrat), Senate Majority Leader Howard Baker (Republican) and President Reagan (Republican), all of them chose both democrats and republicans.
Among other things the commission recommended the raising of the Social Security Payroll taxes, this would allow the lowering of the income tax rates since Social Security would now be funded entirely with its own tax. It should be noted that this new tax was a regressive tax, meaning the poor paid a disproportionate amount of their incomes into Social Security versus the rich and the income tax is a progressive tax rate where the poor would pay lower rates while the rich paid higher rates at least in theory.
In 1983 the government decided it would sell the excess Social Security monies taken in back to the government in the form of bonds and when the baby boomer’s started to retire they would raise income taxes on the rich to give the government the money to pay back the borrowed monies from the Social Security trust fund. The raising of taxes on the rich is scheduled to happen in 2018.
But apparently Washington at some point started taking money from the trust fund that was needed to keep Social Security solvent. This is evidenced when President Obama and Treasury Secretary Timothy Geithner both told the American people that they could not guarantee checks would go out to the disabled and elderly on time if the Aug. 2nd 2011 Debt deadline didn’t have an agreement on raising the debt ceiling. Either the money wasn’t in the trust to be drawn against or they were both lying.
In light of President Obama offering Social Security up for cuts, the hinting of things are far worse than they suspected, all the comments coming from Congress of a discrediting nature regarding Social Security, in particular Sen. Simpson’s remarks and insisting the Super Committee stick to the submitted numbers while considering cuts I think it can be concluded that Washington has decided they don’t want to pay the monies back they borrowed from the American people.
Our Government apparently thinks it’s alright to spend the monies of the sick and elderly, both present and future to finance tax cuts to the wealthiest, bailed out their buddies in corporations, tripled defense spending since the Greenspan Commission while waging two unpaid for wars and additional military operations in upwards of 120 countries. Who do our leaders think they are to spend the monies that so many are depending on in their retirement? If you don’t have money to spend it is never alright to take it when you don’t have intentions to pay it back!
Interestingly some of the Corporatist who have received our trust fund money have launched campaigns trying to discredit Social Security with their own money or should I say with our trust fund money they’ve been paid by our politicians who now seek to forever take what is rightfully the American peoples in lieu of the hard choices of reigning in their run away military spending and wars that the Corporatist profit hugely from.
Pete Peterson is one such Corporatist who has spent a billion dollars in his effort to discredit Social Security. There are many of them who are supported by corporate media in their efforts to smear the American peoples retirement insurance, social security, but yet where has the media been in exposing the truth of why they want to destroy social security? They have been largely non-existent in educating the American people in what’s been going on with our trust fund money and the intentions of not repaying the borrowed money so they can continue raping the lower 98% of wage earners to finance their corporatist wars as well as other projects.
We have the Federal Reserve lending money to banks at 0% interest while the banks turn around and buy government bonds earning 3-4% interest that comes straight off the top of America’s wealth further devaluing our Nation or they loan the money to small businesses and private citizens again making profits on usury while not paying any them self.
It is time we the American people demand an Audit of the Social Security Trust Fund, complete with monies taken in and monies taken out in any form. Along with detailed information how any monies taken out was spent, i.e.; to include government agencies & civilian agencies (both foreign and domestic) with detailed accounting of exactly how all monies have been used. As well as demand that all monies be repaid per original conditions of the Greenspan Commission or sooner if the need exists to keep our trust fund solvent. Further we demand that all proceedings in these matters be public and that Washington cease and desist from spending any further trust fund monies on anything other than Social Security Administration and payments to eligible retirees and those disabled as soon as possible until this audit of accounting has finished.
Washington needs to keep the promises made in 1983 by raising the tax rate on the wealthiest Americans and paying the other 98% of lower income Americans the money they borrowed and in some cases so frivolously spent to the benefit of their corporate donors!
I urge everyone reading to sign the petition, pledge to promote the petition on social media as often as you’re able encouraging all to join us. I have spent an incredible amount of time researching and collating this article, I can’t promote this petition alone, I need your help and this should be across party lines as we all stand to lose and the cover-up and deceit has been a bipartisan effort.
Thank you for taking the time to read and for joining me in taking our country back!
Recommended Reading & Research Sources:
1. a. C-Span Washington Journal (07292011) – Telephone lines were open for questions and comments on news of the day. Bob Cusack and Peter Coy spoke about debt and deficit reduction legislation that was withdrawn from confederation in the House late the previous evening. b. C-Span Washington Journal (08042011) – Peter Coy, Bloomberg Businessweek, Economics Editor discusses his recent Bloomberg Businessweek cover story entitled “Why The Debt Crisis is Even Worse Than You Think.”
2. Daily Kos – $22 trillion Social Security surplus revealed on C-SPAN
3. Democratic Underground – $22 trillion Social Security surplus revealed on C-SPAN
4. Sherrie Questioning All – Washington Journal – Social Security is very well funded – Peter Coy of Bloomberg calls it an entitlement and says cuts need to be made – but is set straight by truth in Video!
5. Sibel Edmonds’ Boiling Frogs Post – The Unanswered Question of “Social Security Surplus”
6. The Christian Science MOnitor – Social Security crisis? Not if wealthy pay their way
7. Social Security Online – a. Greenspan Commission: Report of the National Comission on Social Security Reform, January 1983. b. Research Note #20: The Social Security Trust Funds and the Federal Budget. c. News Release Social Security Board of Trustees: Projected Trust Fund Exhaustion One Year Sooner.
8. Forbes – What Happened to the $2.6 Trillion Social Security Trust Fund?
9. Mother Jones – Alan Simpson, Social Security Illiterate
10. AlterNet – Our Commando War in 120 Countries: Uncovering the Military’s Secret Operations In the Obama Era.
11. FAIR (Fairness And Accuracy In Reporting) – Pete Peterson’s Media Empire Conflicts are OK when you have an anti-entitlement agenda
12. Center For Economic And Policy Research – Tell Market Place, Peter Peterson Spent $1 billion of His Own Money to Cut Social Security.
13. Ratigan Blasts Banking Ties; “Corrupt Congress”