HOW THE GOVERNMENT HAD BORROWED AGAINST THE SURPLUS IN THE SOCIAL SECURITY SURPLUSES
The Republican Tax Plan Threatens Social Security
Future Budget Surpluses Are Based on Taking Money from Social Security (This is what was being made public back then)
This is what has been happening for the last quarter century according to Craig Steiner who writes conservative economic and political commentary at http://www.CraigSteiner.us and is the Secretary of the Douglas County Republican Party.:
- Social Security Surpluses. For a quarter of a century, Social Security has been taking in more money in taxes than it has been paying in benefits. The "extra" money each year was the Social Security surplus.
- Social Security Loans Surplus to Government. Social Security has been required by law to loan its surplus each year to the Federal Government.
- Social Security Gets Government IOUs. The Federal Government has been taking that money and giving Social Security IOUs in return.
- Federal Government Spends the Surplus. Having given Social Security IOUs for its surplus, the Social Security money is then pooled in the government's general fund and spent on whatever priorities Congress had that year. This has allowed the government to spend more money than it otherwise could without borrowing money in the bond market and without raising taxes. It's just been spending our retirement, so to speak.
- Trust Fund = IOUs. The reality is that $2.5 trillion "trust fund" is nothing more than $2.5 trillion in IOUs owed to Social Security by the Federal Government. But the government doesn't have $2.5 trillion to pay it back.
Now we've reached the beginning of the days of reckoning. Instead of collecting too much money each year, Social Security isn't collecting enough. In theory that'd be ok, for awhile, since it supposedly has $2.5 trillion in its trust fund. But the problem is the Federal Government spent that trust fund.
Quoting Charles W. Jones
International President Emeritus of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, and Helpers, AFL-CIO:
“Did you all catch this, I realized that George W. Bush, Commander in Chief, was spending at
record levels, he and his Dad had the highest budget busters on the books, but did you all
realize that he's also borrowing against the social security money?
Democrats and many independent budget analysts note that overall revenues have barely climbed back to the levels reached in 2000, and that the government has borrowed trillions of dollars against Social Security surpluses just as the first of the nation's baby boomers are nearing retirement.
The budget surplus exists only because the federal government has been borrowing money from Social Security since 1983, when Ronald Reagan began the practice in order to hide his deficit spending. Since then, $647 billion has been borrowed from Social Security's trust fund to pay for the ordinary expenses of government. The CBO projections that show a budget surplus over the next ten years are based on the government borrowing another $1.6 trillion from Social Security.
As we all know, you can't keep borrowing from your retirement fund forever. One day, you're going to retire, and that money has to be there for you. The $647 billion already borrowed will have to be paid back some day. So will the $1.6 trillion in projected future borrowings. There are only two ways to repay those loans: higher taxes and lower benefits. Higher taxes for you and your children. Lower retirement benefits for you and your children.
The GOP tax plan uses your Social Security retirement funds to pay for tax cuts that mainly benefit people who do not rely on Social Security when they retire. According to an analysis of Gingrich's tax plan by Citizens for Tax Justice, 60 percent of the advantages from the tax cuts will go to the two percent of Americans who earn more than $200,000 a year.
All this was already abundantly clear back in those days. Now the Republicans are saying that the Social Security funds are running out, that it is unsustainable and that it needs reform…mainly in the form of PRIVATIZATION. They have testicular fortitude these Republicans…they raid the Social Security piggy bank and when it is empty they want to turn it over to private, greedy Wall Street types.
If I may respectfully suggest, not so respectfully to these assholes that they should put back the moneys they raided from Social Security…they should do that even before we pay our creditors…I am not so keen on seeing the Chinese being paid back before our seniors are…and I am even less inclined to even contemplate the privatization of Social Security.
Some other countries have tried…like Chile only to find out it was a dismal failure. The private companies administering those retirement accounts were charging outlandish fees and eating up any of the profits that were being generated. When people in that country found out what was going on, they protested in unison and the Chilean government had to backtrack real fast.
Can anyone imagine what would have happened to Social Security if President Bush would have been successful in privatizing it when he did? The Stock Market crash and the economic crisis would have totally wiped out all of our senior’s retirement moneys…and now they are back again; proposing the same fucking thing…Like I say…it takes testicular fortitude.
SOURCES: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x2718339
http://www.boilermakers.org/resources/commentary/V37N5
http://denver.yourhub.com/Denver/Stories/Opinion/Politics/Story~856057.aspx