New Book : The Big Lie Released

"The Social Security trust fund is empty," says economist Allen W. Smith, Ph.D. in a new book to be released August 1 by Ironwood Publications. "THE BIG LIE" chronicles the economic policies of the past 28 years, with special emphasis on the period between the presidential election of 2000 and the great economic collapse of 2008. The book focuses heavily on government economic malpractice. Smith says that mainstream professional economists were ignored, and shut out of economic policy-making, during 20 of the past 28 years, and policy was based more on ideology than on sound economic principles.
Despite the fact that Social Security has been running budget surpluses ever since the payroll tax increase of 1983, the government has not saved or invested any of that surplus revenue, Smith reports. Instead, the Social Security surplus has been used as a giant slush fund to pay for tax cuts, wars, and other government programs. "Every dollar of the approximately $2.5 trillion that is supposed to be in the trust fund today has been 'borrowed,' 'embezzled,' or 'stolen' by the government and spent on other programs," Smith writes. According to Smith, the money should have been used to buy public-issue, marketable U.S. Treasury bonds, in the open market, which could then have been resold whenever needed to raise cash for benefit payments. However, Smith says that none of the surplus money was used to buy marketable, public-issue bonds, or any other type of real asset. It was all spent, and thus none of it is invested in anything. "You can spend money or save and invest it," Smith says. "But, once you have spent it, there is nothing left to invest."


Smith says that, in order to make the public think the trust fund held "bonds," the government created a special type of IOU called "special issues of the Treasury" to replace the money it spent. "These so-called 'bonds' are not real bonds at all," Smith says. "They are a gimmick, created exclusively for, and held only by, the trust funds. They are not marketable, and could not be sold to anyone, even for a penny on the dollar. They serve only as an accounting device to keep track of how much the government owes to the Social Security fund."


Because all the Social Security surplus revenue has been spent on other things, Smith contends that the government will not be able to pay full Social Security benefits after 2016 without raising taxes or finding some other source of supplemental funding. "These surpluses were supposed to be saved and invested in order to build up a large reserve fund that could be tapped into to supplement the inadequate payroll tax revenue during the years after 2016," Smith reports. "Since the Social Security surplus revenue was not saved, and since no provisions have been made for repaying the looted Social Security money," Smith says, "after 2016, there will not be sufficient Social Security revenue to pay full benefits." Smith argues that the misuse of Social Security revenue, over the past quarter-century, is probably "the greatest fraud ever perpetrated against the American people by their government."


Allen W. Smith, who holds a Ph.D. degree in economics from Indiana University, is the author of seven books and was a college economics professor for 30 years. He has appeared on CNN, CNNfn, CNBC, and more than 170 radio talk shows. Dr. Smith has waged a personal campaign against economic illiteracy and government economic malpractice for more than 30 years. For the past decade, he has been screaming out the warning that our economy was headed toward the type of calamity that finally struck in 2008.