Pedro's Podium: Opening the Lock Box

How old are you? Do you plan to retire? Just how socially secure do you feel? Well I'm in my 50s and I don't really have any retirement plans and never expect to see Social Security. I believe that many of the thinking people in this country feel the same way. I have an IRA and a separate retirement plan, but I fear that the Federal Government will soon confiscate these and put those funds into the Social Security Fund to cover their lack of being able to control spending.

The financial crisis in this country continues. For years there have been many who have been warning of Social Security and the threat it poses to our country. There have been those within the beltway that say that there is no problem and that the Social Security Trust Fund has enough money to last for years. The main problem that I see with this statement would be the true structure of that “trust” fund. I don’t believe there is or may have ever been such a think as a Social Security Trust Fund. A few years ago the American people were promised by Al Gore that he was going to protect Social Security by putting the money collected by the government in a lock box. I truly believe that Mr. Gore is a fool, an idiot, evil, or all of these in one package. There can not be a Social Security lock box.

For many years we have been told that Social Security was well financed and that each year it collected more money then it was paying out. We were told that it could one day run out of money so we had to make adjustments to “keep it solvent.” The one part that really never caught my attention—until the other day—was that every time there is talk of cutting government spending politicians run to the nearest microphone to decry cuts hurting the retired. I always seem to think that this was services.

I had heard for years things said that never hit me until the other day. I heard a report on cutting spending. The report was talking about discretionary and non-discretionary spending. The report said that the majority of the budget consisted of non-discretionary spending, which could not be touched. The lion share is Medicare, Medicaid, Children’s Health Insurance Program (CHIP), and Social Security. That is when I stopped what I was doing and thought wait a minute: Why is Social Security part of the budget? If there really is a Social Security Trust Fund: Then why are the payments made from the US Treasury? The only answer I could think of would be that the whole thing has been a scam.

From The Center on Budget and Policy Priorities: Policy Basics: Where Do Our Federal Tax Dollars Go? “20 percent of the budget, or $708 billion, will pay for Social Security, which provided retirement benefits averaging $1,117 per month to 36 million retired workers (and their eligible dependents) in December 2009. Social Security also provided survivors’ benefits to 6.4 million surviving children and spouses of deceased workers and disability benefits to 9.7 million disabled workers and their eligible dependents in December 2009.”

The way we were lead to believe that this occurred was that the taxes were collected, Social Security payments were made, and all excess funds were “invested in Treasury Bonds.” If this were true then those payments would not be part of the Federal Budget. They would be part of the budget of the Social Security Administration. The fact that the Treasury pays and the Congress allocates the funds means that we were mislead.

Year after year Social Security Taxes have been collected and put into the general fund. These taxes have been used to cover deficit spending for 100 years. Under the name of retirement insurance our money has been collected to supplement Congressional spending.

It has been purposed that the government should confiscate all 401Ks, IRAs, and private retirement funds and use them for the Social Security Trust Fund. The justification would be that since all of that money was exempt from taxes, the government has the right to take 100% of it to “save” Social Security. They say that all of those funds will be credited to your “account.” Which as I see it, will only be put into the general fund to be spent for whatever Congress wants to spend it on.

So it is clear that there is no Social Security Lock Box or Trust Fund. There is nothing but lies and a government spending out of control. Soon this whole scheme will fall apart and those depending on the government to keep promises will find that there is no money to fulfill them.

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These lies make the situation even worse than simply that there is not enough money to cover Social Security payments. It also means that since the government has co-mingled these taxes and become addicted to it, with the current financial situation and the retiring “Baby Boomers” the situation is even worst then what we are told. With chronic low employment and a exploding retired population, budget deficits will continue to increase unless we gain the courage to sever Social Security from Congressional control, cut other entitlements, and cut spending.

So yes Mr. Gore must have been lying when he said that he was going to put the excess proceeds from Social Security into a lock box. As a former Congressman he knew the truth and that to do such a thing would require a real trust fund and not a false tale with ledger entries instead of actual investments.

The idea of privatizing the system has been demonized by politicians for years. There are problems with the old system and any attempt to save it or change it. But we must understand that the addiction to spending is deep in Washington and politicians are not going to give up the income from the SSI tax. But we must have a grown up discussion about the future of this country and the abuses of the past that have created the corruption. Our futures depend on us making the hard decisions and act in the best interest of our children and the country, not just our own selfish wants.