WINTER HAVEN, Fla., Feb. 25, 2011 /PRNewswire/ -- Economist and author Allen W. Smith, Ph.D. believes that former Fed Chairman, Alan Greenspan, bears a lot of responsibility for the Social Security funding problems that the nation faces today. Greenspan was instrumental in getting the 1983 payroll tax hike enacted into law, and he then watched silently as the Reagan administration siphoned the surplus revenue into the general fund, where part of it was used to replace the lost revenue resulting from the unaffordable Reagan income-tax cuts. Smith does not believe the tax hike could have been enacted, if the public had known that it would serve as a backdoor source of revenue for the general fund and be used to help fund the tax cuts and two wars. Smith believes that Greenspan had a duty to tell the American people that the government was using Social Security money to replace lost revenue from the Reagan income-tax cuts.
In 1987, President Reagan nominated Greenspan as the successor to Paul Volker as chairman of the Federal Reserve Board. Greenspan continued as Fed Chairman until January 31, 2006. Smith says we can only speculate on whether the coveted Fed Chairmanship represented, at least in part, a payback for Greenspan's role in initiating the Social Security surplus revenue. As Fed Chairman, Alan Greenspan was in an excellent position to watch the results of the 1983 payroll tax hike play out. He knew that all surplus revenue, generated by the 1983 payroll tax hike, continued to be diverted to the general fund, and replaced with non-marketable IOUs, by Reagan's successors. On February 25, 2004, Greenspan shocked the nation by calling for Social Security benefit cuts. The following day, Allen Smith appeared on the CNBC morning news to respond to Greenspan's proposal. Smith held his newly published book, "The Looting of Social Security" in front of the camera and said, "Alan Greenspan should be ashamed of himself for what he is not telling the American people." Several weeks later, Smith's book was mysteriously pulled from the market by some unknown entity.
Dr. Smith, author of "The Looting of Social Security" and "The Big Lie: How Our Government Hoodwinked the Public, Emptied the S.S. Trust Fund, and caused The Great Economic Collapse," says the government has been misleading the public for a quarter-century into believing the surplus Social Security contributions were being saved and invested, when in fact they were being diverted into the general fund and spent on whatever the government chose to spend them on.
SOURCE Ironwood Publications