Cassandra and the Myth of Social Security

By Dan Hagen

The Greeks had a myth about Cassandra, a beautiful Trojan princess to whom the god Apollo gave the gift of prophecy as part of his campaign to seduce her. But when she refused him, he added a curse: that her infallibly correct predictions about the future would never be believed by anyone.

Imagine that agony of that — always to be warning people of the danger ahead, only to have them laugh at you and march right into doom.

I sometimes think of Cassandra when I recall my Eastern Illinois University economics professor, Allen Smith. Although I didn’t major in economics, I took three elective classes with Smith during the 1970s because I admired the clarity of his teaching. And for decades now, like Cassandra, he has been warning Americans about what’s being done to Social Security.

In his new book, “Ronald Reagan and the Great Social Security Heist,” Smith details how both major political parties and the corporate news media worked to disguise the fact that Social Security “trust fund,” funded by the wages of American workers for 80 years, has been looted.

The book begins with a call Smith received in 2000 in his Florida home. CNN was on the other end, and wanted him on the air at 2 p.m. that day to talk about the threat to Social Security. The rest of his book details, with his customary clarity, just what that threat was and is — from economic malpractice and illiteracy through Fed chairman Alan Greenspan’s massive Social Security con job to today’s hidden agenda.

Greenspan, a disciple of the radical “free market” novelist and thinker Ayn Rand, pushed for a major increase in the payroll tax — a tax legally bound to be used solely to fund Social Security and Medicare — so that baby boomers, who represent a bulge in the U.S. population, could “prepay” their retirement security. In fact, the money was looted.

Smith noted that the national debt would be trillions lower today, and the Social Security trust fund would hold trillions more in 'good-as-gold' marketable Treasury bonds, if the Social Security surplus generated by the 1983 payroll tax increase had been used to pay down the public debt as intended.

Professor Emeritus Allen W. Smith

“The politicians betrayed the trust of the American people — especially the baby boomers who have contributed more to Social Security than any other generation,” Smith said. “In addition to paying for the retirement of the previous generation, the boomers were required to pay enough additional payroll tax to prepay the cost of their own retirement.”

 “As soon as the surpluses resulting from the 1983 payroll tax hike first began to flow into the Treasury, politicians from both political parties began using the money like a giant slush fund,” he said. “At that time, it would be at least 30 years before the funds would actually be needed for Social Security, so politicians developed the bad habit of ’temporarily borrowing’ the money and using it for non-Social Security purposes.”

“IF the government is able and willing to repay the $2.7 trillion of misused Social Security revenue, Social Security could pay full benefits for 20 more years,” Smith said. “But no provisions have been made for repaying the raided money, and I don't believe that many members of Congress have any intention of repaying the money, now, or ever.

“The government has managed to cover up the ‘theft’ of the money that was supposed to finance the baby boomers' retirement, and it is well known by most media that they might face a Dan Rather type of fate if they report the truth,” Smith said.

Intrigued? Outraged? You can learn more about the book at Smith’s web site, www.thebiglie.net.