Social Security
Real Security or Insecurity?

OK. But, what about the lock box?

"The Social Security and Medicare Safe Deposit Act of 1999" creates a lock box to protect the Social Security Trust Fund from Washington spenders. It sets aside the entire $1.8 trillion surplus in the Social Security Trust Fund to provide retirement security for three generations of Americans.

The lockbox puts that money off-limits legally. The Social Security Trust Fund will be removed from federal budget calculations. For the first time in more than 60 years, the Social Security trust fund will no longer be a "slush" fund for wasteful government spending.

But, OMB director Mitch Daniels has revealed that proposals for Social Security lock boxes are a sham. Daniels explained "There is no box. There is no mattress. Paul O'Neill doesn't have a hole in the backyard where this money goes…what's unfair is to mislead the American people into thinking this money's in a box somewhere. It isn't. That box has nothing but promissory notes in it."

Is this confusing? Is this unbelievable?

Your representatives in Congress have been supporting this fictitious Trust Fund for too many years. It's time for a change.

Interesting Quotes

David S. Koitz Education and Public Welfare Division February 1, 1999 Although the Social Security system is now running surpluses of income over outgo, its board of trustees projects that its trust funds would be depleted in 2032 and only 73% of its benefits would be payable then with incoming receipts. Although the system's income is projected to exceed its outgo through 2020, the point at which Social Security taxes alone (ignoring interest paid to the trust funds) would fall below the system's outgo is 2013. Since interest paid to the funds is simply an exchange of credits among Treasury accounts, it is not a resource for the government -- only the system's taxes are. Hence, it is in 2013 that other federal receipts would be needed to help meet the system's costs. At that point, if there are no other surplus receipts, policymakers would have three choices: raise taxes, cut spending, or borrow the needed money. Honorable Dan Miller, M.C., Florida Testimony Before the Subcommittee on Social Security July l0, 1997 of the House Committee on Ways and Means But if the benefits are so much better, why aren't more Americans opting out of Social Security like the people of Galveston? The reason is that Congress passed a law in 1983 which prohibited the American people from following the Galveston County example. In other words, the American people were forced to participate in a low-yielding retirement program which supposedly funded a Social Security Trust Fund. But Is there a Social Security Trust Fund? American workers pay 15.4 percent of their income to provide Social Security for themselves and their families in retirement. But, each American does not have his own special account where his huge payroll tax contribution is stored. Social Security does not invest the majority of the money it collects each year. Instead, 90% of annual payroll tax receipts are paid out as benefits to current social security recipients. This pay-as-you-go system does not allow for the accumulation of wealth. Social Security's rate of return is 2.9 percent compared to 9.3 percent in the private market. Simplified this means that a 50-year old person has to contribute $1,000 to get $1,900 worth of benefits at age 75. In a private market, that person would only have to invest $206 to get the same benefits. While I am not advocating that the government invest Social Security dollars in the private market, I do believe individuals should have the option for the greatest return on their retirement savings - particularly since this savings is compulsory. The obvious lack of return has been acknowledged by the Social Security Trustees in their report which offers three options for reform. David Brinkley This Week with David Brinkley (ABC News) August 16, 1992 [To President Bush:] You mentioned Social Security. The trust fund consists, increasingly, of IOU's sent over by Congress, which keeps spending the money. Lars-Erik Nelson Newsday March 5, 1995 . . . [A] s this week's debate over the Balanced Budget Amendment should have shown, Social Security taxes are being used to offset the federal budget deficit. The Social Security trust fund is operating in surplus, taking in $70 billion more this year than it is paying out. The extra revenues are used to buy Treasury bonds that finance the general operating costs of government. Such use of Social Security revenues, as Sen. Daniel Patrick Moynihan (D-N.Y.) once said, is theft.... By making the deficit appear to be $70 billion smaller than it actually is, this "embezzlement" of your FICA contributions (a word used by the late Republican Sen. John Heinz of Pennsylvania) also reduces pressure to increase income taxes on wealthier Americans. Editorial The New York Times March 18, 1991 If Congress had acted responsibly, it would have used the trust money to lower the deficit, thereby pumping billions into private capital markets, or to finance public investments. Either choice would have sparked economic growth and raised the income of future taxpayers which is the only way Congress can lighten the burden of paying future retirees. But what Congress did instead was to use the trust funds to pay ordinary bills. The Treasury has borrowed from the trust, in effect masking a high and rising Federal deficit. Senator John Heinz of Pennsylvania has labeled these loans "embezzlement," but his accusation is hyperbolic. Come 2020, Congress will have to raise taxes to pay off the loans. Ultimately, taxpayers, not the trust fund, protect future retirees. Editorial USA Today May 30, 1996 "Should Social Security go private? . . . Its trust fund is a fraud used chiefly to mask the size of the federal deficit . . . Social Security surpluses now are spent immediately on other federal programs. The trust fund's assets that opponents to change count on are nothing but a pile of federal IOUs. Boomers will have to depend on the generosity of workers to pay thousands more in taxes. Or of lenders to loan the government trillions of dollars at reasonable rates. Or they'll see their benefits slashed a third." Speaker Newt Gingrich Nationally televised address April 7, 1995 In fact, the money the government has supposedly been putting aside from the Baby Boomers' Social Security taxes is not there. The government has been borrowing the money to pay for the budget deficit. The Social Security Trust Fund is simply IOUs from the U.S. Treasury.... [Social Security] would be fine if the government would stop borrowing the money. Senator Ernest "Fritz" Hollings (D-South Carolina) Congressional Record April 24, 1991 The truth is that the Social Security Trust Fund has already been stripped bare. There is no trust and no fund. It is a lot like the S&Ls. The savings and loans had a lot of real estate on the books, a lot of property, a lot of shopping centers, a lot of deposits, and everything else, until you looked inside and found out there was nothing there. The assets were mostly on paper.... Meanwhile, the Social Security cupboard is bare.