President Lyndon B. Johnson signs the SOCIAL SECURITY ACT of 1965 into law, establishing Medicare and Medicaid,
which Republicans have sought to undermine, sabotage and eventually
undo ever since. Claims that the fund is running out of money are a
cover for the looting of the fund that Republicans (and Congress in
general) have carried out, beginning with Ronald Reagan who with the
help of Alan Greenspan, pulled off one of the greatest frauds ever
perpetrated against the American people.
The Social
Security Amendments of 1983 laid the foundation for 30-years of federal
embezzlement of Social Security money to use the money to pay for wars,
tax cuts and other government programs. The payroll tax hike of 1983
generated a total of $2.7 trillion in surplus Social Security revenue.
This surplus revenue was supposed to be saved and invested in marketable
U.S. Treasury bonds that would be held in the trust fund until the baby
boomers began to retire in about 2010. But not one dime of that money
went to Social Security.
The mechanism,
which allowed the government to transfer $2.7 trillion from the Social
Security fund to the general fund over a 30-year period, was the
brainchild of President Ronald Reagan and his advisers, especially Alan
Greenspan. Greenspan played a key role in convincing Congress and the
public to support a hike in the payroll tax. A few years later, Reagan
appointed Greenspan to become Chairman of the Federal Reserve System.
Since Greenspan’s new job was one of the most coveted positions in
Washington, many observers have wondered whether or not this appointment
represented, at least in part, payback for the role Greenspan had
played in making vast sums of new revenue available to the government.
President Reagan
and his advisors knew, from the very beginning, that the government
would soon face a severe cash shortage. Budget Director, David Stockman,
had deliberately rigged the computer at the Office of Management and
Budget to generate bogus revenue forecasts in an effort to convince
Congress to enact Reagan’s unaffordable proposed tax cuts. When Stockman
first fed the data from Reagan’s economic proposals into the computer,
he was shocked. The computer forecast that, if Reagan’s proposals were
enacted into law, massive budget deficits would loom ahead for as far as
the eye could see.
Social Security
was definitely not “teetering on the edge of bankruptcy” in 1981 as
Reagan claimed in his letter to Congressional leaders. The 1983 National
Commission on Social Security Reform, headed by Alan Greenspan, issued
its “findings and recommendations” in January 1983. The Commission
accurately foresaw major problems for Social Security when the baby
boomers began to retire in about 2010. But that was nearly two decades
down the road. In addition to the long-term problem of the baby boomers,
the Commission found a possible short-term problem for the years
1983-89. Nevertheless, Reagan set out to convince a gullible public that
Social Security was his chief focus.
There is no way
that anyone who knew Reagan’s record would accept his claim that Social
Security was his highest priority. He had always wanted the program
eliminated, or at least privatized.
Reagan’s scare
tactics worked. Congress passed the Social Security Amendments of 1983,
which included a hefty increase in the payroll tax rate. The tax
increase was designed to generate large Social Security surpluses for
the next 30 years. The public was led to believe that the surplus money
would be saved and invested in marketable U.S. Treasury Bonds, which
could later be resold to raise cash with which to pay benefits to the
boomers. But that didn’t happen. The money was all deposited directly
into the general fund and used for non-Social Security purposes. Reagan
spent every dime of the surplus Social Security revenue, which came in
during his presidency, on general government operations. His successor,
George H.W. Bush, used the surplus money as a giant slush fund, and both
Bill Clinton and George W. Bush looted and spent all of the Social
Security surplus revenue that flowed in during their presidencies. So we
can’t blame the whole problem on Reagan. Reagan was the one who figured
out a way to use Social Security money as general revenue, and his
successors just followed his example.
The most recent
tax cuts under the Trump Administration continues this subterfuge. If
republicans can create enough of a deficit they can lie that "the only
way to make up for the deficit" is to cut Social Security, Medicare and
Medicaid.
Keep your eye out for this kind of lie. And keep your hand on your wallet.