Social Security: Was the money borrowed or stolen?

"... on that chart in emblazoned red letters is what has been taking place here, embezzlement. During the period of growth we have had during the past 10 years, the growth has been from from two sources. One, a large credit card with no limits on it, and, two, we have been stealing money from the Social Security recipients of this country."

-- Senator Harry Reid, D-NV, on Senate floor, Oct. 9, 1990 

His investors loved Bernie Madoff so long as the checks didn’t bounce.

So I guess it is understandable that a plurality of Nevadans are still complacent about the future of Social Security. The checks aren’t yet bouncing.

One of the questions in our latest Mason-Dixon Polling & Research survey asked: “Which one of the following statements comes closest to your point of view?”

A full 46 percent said allowing private investment is too risky and the current system should be left alone for now.

Only 41 percent said young workers should be allowed to “opt out” and open private investment accounts.

Another 13 percent were clueless.

Maybe they haven’t heard that one of Congress’ targets for spending cuts is Social Security. It is not because money paid in is already running short of covering the expenses, but rather because the money paid in and required by law to be used for future benefits has been stolen. Pilfered, purloined, pinched, pirated and pissed away.

In 1983 Congress changed the law and required Baby Boomers to pre-fund their retirement and put the money in a trust fund.

But Dr. Allen W. Smith, a professor emeritus of economics at Eastern Illinois University, points out in a recent column appearing in today's R-J that since then all Social Security funds except what was needed to pay current benefits have gone into the general fund and spent. The column is titled "Was the money borrowed ... or stolen?"

“Some like to say that the government just ‘borrowed’ the money during the time period when it was not needed to pay benefits,” Smith writes.

“But borrowing implies repayment, and no provisions for repayment have been made.  The government did not enact future tax increases that would automatically kick in when the Social Security money was needed.  Neither did they enact legislation that would end other spending programs once the Social Security money was needed so the money could be transferred to the trust fund. The government spent the Social Security money, pure and simple, without making any provisions for future repayments. The IOUs in the trust fund are not marketable, and they could not be sold to anyone even for a penny on the dollar.”

The FICA deductions from workers’ paychecks will no longer cover promised Social Security benefits in six years, he says.