Now that some real economists are weighing in on Social Security "reform", a couple of startling truths are beginning to emerge. Well, at least one is startling. The other is pretty much common knowledge now, or least should be.
First, the real eye opener. Over a 45-year period, Social Security outperformed the Dow Jones. Yeah, that's right. It actually earned more money than a similar amount invested in the stock market would have earned. So says MIT graduate Stanley Logue, who actually did the analysis:
"To his surprise, the Social Security investment won out: $261,372 versus $255,499, a difference of $5,873.
"It's an astonishing finding. The DJIA represents blue-chip stocks.
Social Security invests in US Treasury bonds. Over long periods of
time, stocks have consistently outperformed bonds. So, you would think
that Logue's theoretical stock investments from 1950 to 1994 would have
surely outpaced the return on government bonds. "The fact that they didn't illustrates one of the hard truths about stock investing: Timing matters." The second truth is the untruth of the privatizer's claim that Social Security is teetering on the brink of catastrophic insolvency. According to free lance journalist Gene Lyons, "But here’s what Bartlett, Bush and the think-tank
spokesmen actually mean when
That's what economist Allen W. Smith says, too: " 'The current Social Security crisis is the direct result of the greatest
fraud ever perpetrated on the American people by their government,' "
says economist Allen W. Smith, Ph.D., author of The Looting of Social
Security: How the Government is Draining America's Retirement Account,
(Carroll and Graf, 2004) According to Smith, who has been researching
Social Security funding for the past five years, " 'The problem began
with President George H. W. Bush who used Social Security money as if
it were general fund revenue from day one of his presidency. The
practice has continued ever since, so the $1.5 trillion in Social
Security surplus revenue generated by the 1983 payroll tax increase,
and earmarked specifically for funding the retirement of the baby
boomers, is gone.' " Smith explains the fraud in this short article for Dissident Voice: " Every cent of the $1.5 trillion Social Security surplus generated by
the 1983 payroll tax increase-earmarked specifically for funding the
retirement of the baby boomers-has been spent by the government, in
violation of federal law, as if it were general-fund revenue. The money has
been replaced with non-marketable special-issue government IOUs that, unlike
regular marketable Treasury Bonds, have no real value and are thus not real
assets. These IOUs are nothing more than accounting entries that tell us
how much Social Security money has been taken by the government. They are
essentially worthless until and unless the government, at some future time,
chooses to enact huge tax increases, or borrow massive additional amounts of
money from the public, to repay its debt to Social Security." Remember the 2000 Presidential campaign and the discussion of a "lockbox" for Social Security? Well, that's what Al Gore was talking about, preventing the outright theft of money earmarked for America's retirees. George W. Bush agreed. He promised to protect the "$2.6 trillion
of the Social Security surplus for Social Security, and for Social Security
alone."
they say Social Security’s going broke: They
mean that the trust fund has been
looted fair and square, that everybody who’s
been paying those increased payroll
taxes since 1983 has been successfully swindled
and that the U.S. government
need not honor those special issue Treasury bonds."
Here's what he actually did:
" During Bush's first term, $509 billion of Social Security surplus was generated by the payroll tax, and every dollar of it was spent for non-Social Security purposes. Most of it was used to fund Bush's unaffordable income tax cuts."
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