The Looting of Social Security: How the Government Is Draining America's Retirement Account

by Allen W. Smith

Book Overview

Every cent generated by the 1983 Social Security tax increase--money ostensibly earmarked and saved for the retirement of the baby-boom generation--is gone, spent by our government. But most Americans... This description may be from another edition of this product.

• Format: Paperback
• Language: English
• ISBN: 0786712813
• ISBN13: 9780786712816
• Release Date: November 2003
• Publisher: Basic Books
• Length: 256 Pages
• Weight: 0.75 lbs.
• Dimensions: 0.7" x 5.5" x 8.3"

Customer Reviews

The problem started with the Kennedy-Johnson tax cuts

Smith is correct that counting the social security trust fund surplus as part of the federal government's general revenue ,in order to mask the size of the budget deficit, is dishonest .Although Smith correctly mentions that it was President Johnson who started this practice,he doesn't emphasize it sufficiently,in my opinion.Johnson implemented Kennedy's mistaken and misguided tax cut plan(similar to the error filled tax cut plan of Warren Harding and Andrew Mellon in 1922) of 1964 at precisely the same time that he was planning massive increases in federal spending to fight the Vietnam War and the War on Poverty.Johnson started the practice of including the social security surplus in the federal budget revenues to hide and mask from the American people the size of the budget deficits he was creating.[It will be noted her that J M Keynes was an opponent of deficit financing.Deficit financing is part of the functional finance approach of the American Keynesian-Neoclassical Synthesis economist Abba Lerner.Keynes expressed severe disagreement with Lerner's approach in 1944.Nor was Keynes in favor of income tax cuts.The only tax Keynes would cut would have been the social security tax for workers only].The Reagan and Bush presidencies have simply copied the approach of Kennedy-Johnson but on a much,much larger and much more damaging scale,increasing the national debt by a factor of 9.Smith should have stated the problem in the following fashion:The deficit finance problem of excessive tax cuts ,combined with excessive spending and borrowing,was started by Liberals and then greatly exacerbated by the Supplyside-Libertarianism of the Reagan and Bush Presidencies.It is time to return to the safe,sane,and sound fiscal and monetary policies of the Eisenhower Administration.

Mostly I agree, but the terminology bites

This book, THE LOOTING OF SOCIAL SECURITY by Allen W. Smith, Ph.D., has a lot of facts right, but it is incredibly stupid to call something a gigantic fraud when everyone knows that it is going on, people are powerless to stop it, and people will vote for politicians who promise to give everyone tax cuts whenever it looks like the government will have some surplus. Smith knows that real surpluses are extremely rare; according to facts listed in the Social Security Chronology on pages xi through xiv, only two years since The Budget Enforcement Act of 1990 made it illegal to include Social Security in calculating budget deficits and surpluses had an on-budget surplus. Those years were 1999 and 2000. Accounting trickery is not something that most people comprehend when it is applied to something larger than a lockbox, and the subtitle, How the Government is Draining America's Retirement Account, requires knowledge of quantities that are beyond comprehension, unlikely to be paid in any year in which they are due, because the only amount that is associated with that drain is the gigantic national debt, which had grown to more than 4 trillion dollars by the end of the first time a Bush had been president. Smith is not fond of tax cuts, which he believes are likely to intentionally create a financial crisis to force benefit cuts that most people would not support. 1999 and 2000 were extraordinary years, at the peak of a business cycle and with the lowest unemployment in 30 years, and the national debt of more than 6 trillion dollars in 2001 was not actually growing, but would never shrink unless real budget surpluses and payroll taxes designated for social security funds could be used to reduce that debt. Some households in 1999 had already received a $40,000-plus average tax cut compared to the percentage of income the richest one percent paid in 1977, when rates were higher but incomes were actually lower, due to an almighty dollar that was losing value in the instability race with interest rates that dooms all comparisons eventually. $40,000 won't seem like much next year, but in 1999 the entire average before-tax income of the middle fifth of households was projected to be $38,700 per household. If most of those people aren't making more than that now, they are probably borrowing more money than ever, as the expansion of credit keeps the economy going, and they will really need more money when interest rates rise. That tax cuts are such a big issue politically tends to show that America is tending toward plutocracy, which you can look up in the dictionary or in the index of this book. Smith even uses this point of view to explain Iraq. "President Bush talks of bringing democracy to Iraq and other countries. Is he really . . . Or is it plutocracy that he really wants to impose on foreign nations?" (p. 165). More than a year ago, Peter G. Peterson, President of the Concord Coalition, was complaining about a $10 trillion projected deficit swin

The disastrous impact of these cavalier practices

In The Looting Of Social Security: How The Government Is Draining America's Retirement Account, author Allen W. Smith draws upon his background in economics to reveal how ever single penny generated by the 1983 Social Security tax increase (specifically intended to deal with the anticipated social security financial shortfalls when the "babyboom" generation reaches retirement age) has been spent in a scandal that will make the Enron and Worlcom debacles look like a day at the beach. This wholesale pillaging of the Social Security Trust Fund is an horrific fraud that is the complicit result of actions taken by Ronald Reagan, George H. W. Bush, George W. Bush, and collaborative members of the federal congress. Smith reveals what the disastrous impact of these cavalier practices will have on the retirement experiences for millions of Baby Boomers unless immediate and draconian actions are taken to abort the looting and restore fiscal soundness to this soon-to-be bankrupt fund. If you are a member of the baby boom generation, then you need to read Allen Smith's The Looting Of Social Security -- and do it before the November presidential elections come around again.

The truth hurts?

Smith is absolutely correct in his main contention, which is that Bush II paid for his tax cuts by using the Social Security surplus. This is all the more appalling when you consider that Social Security is a regressive tax (it only applies to the first $85,000 of everyone's income, including Bill Gates), while the Bush II tax cuts mostly benefit the rich. David Cay Johnston makes a similar point in his excellent book, Perfectly Legal. And can anyone doubt that the right wing will use this to bolster its claims that Social Security is "broke," paving the way for privatization or other ways to dismantle it? I see from reviews here that the freeper attack dogs are nervous about this line of argument. Sadly, their (his?) understanding of economics does not match their (his or her?) passion. Yo, Reader from California: anyone who reads reviews for a book such as this knows that it's not the "Democrats' fault" that the Reagan and Bush II tax cuts led to deficits. Reagan wanted his huge increase in military spending, and Bush II enjoys a Republican House and Senate. And Micsca (are you the same person as "Reader" -- same state, same posting date, same dogma): your vaunted increase in tax revenues several years after the Reagan tax cuts was due merely to a growing population and workforce. Yet the tax cuts caused revenues to be lower than they would have been. Which Smith clearly explains and which you would know if you had actually read the book. Why bother to spin such nonsense to an educated audience? [Note -- the poster(s) referred to above appear(s) to have edited his(their) post to change the posting name and location.] As for the rants about supply side economics, I have a degree from one of the 10 best graduate schools in this country, and supply side economics is dead. The only "data" showing that it works come from nordic countries that had marginal tax rates over 70% -- not our country at all. Brookings and other economists have pointed out that the Bush tax cuts make up the same percent of our economy (GDP) as would be required to fix both Social Security and Medicare. Drag corporations back from their overseas tax havens (the 35% statutory rate is a joke), and where's the problem? The book was a little repetitive, but I give it 5 stars because I revile these freeper "assassination" attempts.

A history of economic malpractice

It is very difficult to navigate toward clarity on economic issues based on the information given in the media. Books recounting the full picture in slow motion have an advantage over the soundbite versions that clearly don't sink in. Disinformation tends to succeed, and as the author points out, basic economic education being a scarce commodity, even journalists and politicians themselves are confused, an important point to remember. It's a fact of life that even a well-educated person must reckon with his proneness to being disinformed and this appalling short account of history of the Social Security crisis since 1983 is a more than useful expose of the sorry history here. Beyond that tale which has been told before, mostly in vain, it is also a cutting expose of the current monumental swindle going on with the Bush manipulations of the budget and deficit, also with a clear fingerpointing at the blunder/lie behind Clinton's myth of the budget surplus that handed the Bush gang a golden opportunity to front their conservative sabotage. Clinton's dose of sanity rescuing the system from the Reagon/Bush disaster got frittered away in one stroke by the new round of the voodoo artists, right in front of our eyes. The sheer impudent and premeditated brazenness of the tactics takes one's breath away, and it is no surprise we have been treated to near flood of books about the Bush Lies. The saddest thing is that voters can't grasp their own self-interest.It is good that while partisan in one way the author clearly traces the onset of 'voodoo economics' as far back as the Johnson presidency, and in telling the whole history of this and Reaganomics he brings out something we don't always notice, that competent economists have documented in some alarm every stage of the whole business, only to be shunted aside by presidents listening only to their political advisers. The portrait of the future of Social Security and the future deficit is very alarming and one is left baffled at these politicians in their malevolence. A contract with America ought to read 'a contract on America' as in mafia hit language. The book is slightly repetitive, perhaps written in a hurry, but very much worth reading. In most fields malpractice is an indictable offense. Apparently presidents are to be an exception. Enough's enough.