Social Security Trust Fund Holds No Marketable Treasury Bonds, Says Economist

Jan 14, 2005, 00:00 ET from Allen W. Smith

    WINTER HAVEN, Fla., Jan. 14 /PRNewswire-FirstCall/ -- Economist and author
 Allen W. Smith, Ph.D. has issued the following statement about the IOUs held
 by the Social Security trust fund:
     Most people seem to think the trust fund contains a large reserve of real
 assets that can be used to supplement payroll tax revenue when Social Security
 begins running annual deficits in 2018.  It is supposed to contain
 $1.5 trillion in marketable Treasury bonds -- purchased with tax dollars paid
 in by baby boomers to pre-fund their own retirement.  However, every penny of
 the $1.5 trillion has been "borrowed" (looted) by the government, and the baby
 boomers are now being made scapegoats to cover up the fraud.
     To facilitate this looting, the Treasury Department quietly stopped
 issuing marketable Treasury bonds to the Social Security trust fund -- a fact
 that few people know about -- before the large surpluses from the 1983 payroll
 tax increase began to flow in.  From that point on, the Treasury issued only
 "special issue" non-marketable bonds to the trust fund.  These special issues
 were created for the government trust funds only, and they are not at all like
 the regular marketable Treasury bonds held by private investors.  They are not
 marketable, they have no cash value, and they are not real assets.
     When Social Security begins to run deficits in 2018, the American people
 will be at the mercy of a greedy government that must begin repaying the money
 it has "borrowed" if full benefits are to be paid.  In order to do so, the
 government will have to raise taxes or borrow massive additional amounts from
 the public, because there is nothing of value in the trust fund with which to
 raise cash.
     The American people must demand that Bush immediately stop looting the
 more than $400 million per day of Social Security surplus money, and allow
 that money to be invested in marketable Treasury bonds.  Secondly, we must
 demand that legislation be enacted requiring that the $1.5 trillion of Social
 Security surplus that has already been looted be repaid and invested in
 marketable Treasury bonds.  If these two steps are taken, there will be no
 Social Security problem until at least 2042.
 
     Allen W. Smith, who has been crusading for economic education and sound
 government fiscal policy for nearly three decades, holds a Ph.D. degree in
 economics from Indiana University.  He is Professor of Economics Emeritus,
 Eastern Illinois University.  The author of several books, including "The
 Looting of Social Security: How the Government is Draining America's
 Retirement Account," (Carroll & Graf, 2004) and "The Alleged Budget Surplus,
 Social Security, and Voodoo Economics," Dr. Smith has appeared on CNBC, CNNfn,
 and more than 100 radio talk shows to discuss Social Security.
 
     CONTACT: Barbara Rugel (863) 206-4431 or Allen W. Smith (863) 206-4292;
 email: ironwoodas@aol.com
 
 Available Topic Expert(s): For information on the listed expert(s), click
 appropriate link.
 Allen W. Smith, Ph.D.
 http://www.profnet.com/ud_public.jsp?userid=350721
 
 

SOURCE Allen W. Smith
    WINTER HAVEN, Fla., Jan. 14 /PRNewswire-FirstCall/ -- Economist and author
 Allen W. Smith, Ph.D. has issued the following statement about the IOUs held
 by the Social Security trust fund:
     Most people seem to think the trust fund contains a large reserve of real
 assets that can be used to supplement payroll tax revenue when Social Security
 begins running annual deficits in 2018.  It is supposed to contain
 $1.5 trillion in marketable Treasury bonds -- purchased with tax dollars paid
 in by baby boomers to pre-fund their own retirement.  However, every penny of
 the $1.5 trillion has been "borrowed" (looted) by the government, and the baby
 boomers are now being made scapegoats to cover up the fraud.
     To facilitate this looting, the Treasury Department quietly stopped
 issuing marketable Treasury bonds to the Social Security trust fund -- a fact
 that few people know about -- before the large surpluses from the 1983 payroll
 tax increase began to flow in.  From that point on, the Treasury issued only
 "special issue" non-marketable bonds to the trust fund.  These special issues
 were created for the government trust funds only, and they are not at all like
 the regular marketable Treasury bonds held by private investors.  They are not
 marketable, they have no cash value, and they are not real assets.
     When Social Security begins to run deficits in 2018, the American people
 will be at the mercy of a greedy government that must begin repaying the money
 it has "borrowed" if full benefits are to be paid.  In order to do so, the
 government will have to raise taxes or borrow massive additional amounts from
 the public, because there is nothing of value in the trust fund with which to
 raise cash.
     The American people must demand that Bush immediately stop looting the
 more than $400 million per day of Social Security surplus money, and allow
 that money to be invested in marketable Treasury bonds.  Secondly, we must
 demand that legislation be enacted requiring that the $1.5 trillion of Social
 Security surplus that has already been looted be repaid and invested in
 marketable Treasury bonds.  If these two steps are taken, there will be no
 Social Security problem until at least 2042.
 
     Allen W. Smith, who has been crusading for economic education and sound
 government fiscal policy for nearly three decades, holds a Ph.D. degree in
 economics from Indiana University.  He is Professor of Economics Emeritus,
 Eastern Illinois University.  The author of several books, including "The
 Looting of Social Security: How the Government is Draining America's
 Retirement Account," (Carroll & Graf, 2004) and "The Alleged Budget Surplus,
 Social Security, and Voodoo Economics," Dr. Smith has appeared on CNBC, CNNfn,
 and more than 100 radio talk shows to discuss Social Security.
 
     CONTACT: Barbara Rugel (863) 206-4431 or Allen W. Smith (863) 206-4292;
 email: ironwoodas@aol.com
 
 Available Topic Expert(s): For information on the listed expert(s), click
 appropriate link.
 Allen W. Smith, Ph.D.
 http://www.profnet.com/ud_public.jsp?userid=350721
 
 SOURCE  Allen W. Smith