Dear Froma Harrop,
I have read several of your columns on Social Security over the past few years. You are a real champion for protecting Social Security as am I, and I respect you for your efforts to protect a program, which I consider to be the most successful and most popular program ever created by the United States government. I have been on a relentless mission to save Social Security for the past decade. I have written four books on the subject, appeared on CNN, CNBC, CNNfn, and more than 170 radio talk shows in my effort to alert the public to a little-known fact that threatens the future of Social Security for all of us. I have appeared as a co-speaker with James Roosevelt, Jr. (FDR's grandson) who said he agreed with 90 percent of what I said. I aggressively fought against President Bush's attempt to destroy Social Security, and I oppose the Heritage Foundation, the Cato Institute, and other right-wing organizations who would like to destroy the program.

I felt it necessary to provide the above information before announcing the title of my latest book so that I would not be put into the same category as the above groups. The title is, "THE BIG LIE: How Our Government Hoodwinked the Public, Emptied the S. S. Trust Fund, and caused The Great Economic Collapse. I would very much like to send you a complimentary review copy of the book if you will agree to read it.

Much of the content of the book has been posted on my website at www.thebiglie.net in order to make the information available to the public at no cost. I urge everyone who is concerned about the future of Social Security to visit the website to find out more about me and my efforts to save Social Security. I am currently trying to encourage college students to launch an organized effort to save the program for future generations. Not one penny of anyone's payroll tax contribution to Social Security is currently being saved to pay future benefits.

What can we do? We can ask President Obama to issue an executive order requiring the Secretary of the Treasury to immediately stop spending surplus Social Security revenue on general government and require that all future surplus payroll tax revenue be used to purchase "good-as-gold" public-issue, marketable Treasury bonds as should have been done under the past four presidents.

Allen W. Smith, Ph.D.
Professor of Economics Emeritus
Eastern Illinois University
ironwoodas@aol.com
www.thebiglie.net

Dear Ms. Harrop
I am a regular reader of yours who seldom agrees with your opinion pieces. However, when I started to read your recent article on President Obama's plan to give seniors a check for $250 to compensate for the lack of a “cost of living” increase (when there has been no increase in the cost of living), I thought that finally we have something to agree upon.
After a good start—the $250 per senior check idea is blatant political pandering of the sort I have come to expect from Democrats (not to mention that its total cost would be $13 billion—which the federal government does not have)—the quality of your analysis rapidly declined. Yes, it probably will have bipartisan support, as Democrats will demagogue any Republican opposition as evidence of a “lack of compassion” or “lack of concern” for seniors who are struggling on fixed incomes (never mind that at least a few of the seniors who would get the $250 check have other sources of income that put them is the middle or upper economic classes or that Social Security increases are supposed to adjust for increases in the cost of living).
Where your article really went downhill fast is when you said:
“It's been a conservative talking point that the Social Security trust fund doesn't exist; the government has spent the money.
Not quite. The Treasury bonds in the trust fund are real IOUs representing real money taken from real workers for more than 25 years. No matter what the federal government did with that borrowed money, it still has to pay it back.”
There is a huge flaw in your straw man argument. Surely you do not dispute that the excess Social Security “contributions” that were to be put into the “trust fund” have been spent as fast as they came in, do you? While I, a conservative, acknowledge that a Social Security “trust fund” exists, you, a true liberal, must also acknowledge that there is no actual money in that “trust fund”. So, your “not quite” does not dispute the irrefutable fact that “the government HAS spent the money”. It merely attempts to calm the fears that Americans have about the ability of the “trust fund” to pay future benefits.
Yes, the bonds in the “trust fund” are real IOU's representing real money taken from real workers for 25 years, but THAT “real money” is gone. And yes, the federal government “still has to pay it back.” (unless they vote—at their political peril---not to). But where will the federal government get the real money it will need in less than 10 years to pay Social Security benefits when benefits to be paid exceed Social Security taxes that are received?
The answer is the same place the federal government gets all money it spends: either from (a) increased taxes, (b) increased borrowing (more IOU's, but who will be lending the further huge sums when Uncle Sam is already in debt to the tune of over $10 TRILLION and rapidly rising?), (c) simply printing more money (with the danger of high inflation that accompanies that option), and/or (d) selling federally owned properties, such as the Grand Canyon, or selling naming rights to various federal buildings (how about the Jimmy Dean Sausage Capitol Building?).
So, what is the practical result of the existence of a Social Security “trust fund” holding IOU's that have to be paid back? ZIP, ZERO, NADA. The government would have to choose to do one of the above four options, WITH the trust fund. How is that any different than what the government would have to do WITHOUT the trust fund? Either way, in the absence of real money in the trust fund, the government will have to raise taxes, increase borrowing, print money, or sell assets. That is how members of Congress will “honor” the bonds in the trust fund. We all would have been better off if the Congress had constructed a giant mattress somewhere and put all the surplus Social Security money there until it is needed in a few years. If they had done that, there would be no need to resort to the unpalatable options described above.
Contrary to your reassurance that Social Security is a “clean program” and that the trust fund can “make up for any shortfall until 2039", there is the unaddressed problem of HOW Congress is going to raise the real money to honor all those trillions of dollars of bonds in the “trust fund.” I will look forward to your follow-up article on how THAT will be accomplished. The likelihood is that taxpayers will have to pay again for “surplus” funds that Congress spent from the trust fund.