The $2.5 TRILLION Swindle: U.S. Rulers Plunder Workers’ Social Security to Fund Wars

In one of the U.S. ruling class’s biggest swindles in history on the backs of the working class, the rulers have plundered Social Security (SS) surpluses of $2.5 TRILLION and used the swag to finance every U.S. imperialist war from Vietnam to Afghanistan. Now they want to plunder it still more.

A recent NY Times front-page article (3/24) reported that for the first time in decades the annual money being paid out in Social Security (SS) checks will exceed the amount coming in from current SS payroll taxes. It said that continuation of this trend will cause the SS Trust Fund to go broke, on “a long, slow march to insolvency.”

Already Alan Greenspan, “architect of the plan to rescue” SS 27 years ago, is saying, “When the level of the trust fund gets to zero, you have to cut benefits.” (NYT, 3/24) Actually it was Greenspan’s“rescue plan” that helped steal the $2.5 trillion from SS’s surplus.

But this is not an “SS crisis.” Rather it’s a crisis of capitalism in which the rulers try to “solve” it at the workers’ expense, both on the battlefield where working-class troops bear the brunt of the fighting and dying — while killing masses of other workers — and at home as the rulers steal from the workers to fund the killing abroad.

Johnson’s Scam to Bail Out the Vietnam War’s Budget Deficit

This huge robbery of workers’ taxes began in 1968 when the U.S. imperialist invasion of Vietnam was in high gear. The Johnson administration’s war expenditures were spinning the Federal budget into bottomless debt. Until then all SS payroll taxes were set aside by law into the SS Trust Fund, separate from the general government treasury, to pay benefits to future retirees.

By then the Trust Fund was running a surplus — its income from workers’ payroll taxes was exceeding the amount paid out to retirees. So the Johnson gang figured out a shrewd trick to “balance the budget”: “fold” the SS surplus into what would now be called the Unified Federal Budget. Never mind that it was “illegal” to spend Trust Fund monies for purposes other than Social Security. “By law, Social Security is excluded” from the budget; “in practice, it is included.” (“The Federal Budget: Politics, Policy, Process”; Allen Schick, Brookings Institution, 1995) When it benefits the bosses, they always break their own laws.

This sleight-of-hand enabled Johnson to mask any deficit in federal spending generated by the enormous expenses of the Vietnam War. In “exchange” for stealing the SS surplus, the government would essentially give the Trust Fund paper “I-O-U’s,” notes equal to what it “loaned” from the Fund (plus interest). These notes became the “assets” of the Fund and laid the basis for what is now a $2.5 TRILLION debt owed to SS (NYT, 3/24). How it spiraled to that astronomical amount is still another story of the rich swindling the working class.

Greenspan-Reagan Plan to ‘Save’ the Baby Boomers’ Pensions Depletes Them Instead

By the early 1980s, with the Reagan administration’s military budget running wild, the federal deficit was skyrocketing. The Unified Federal Budget meant that any SS surplus — now part of this “Unified” Budget — could be used to pay for general operating expenses,  “everything from jet fighters to thumb tacks” (NY Times, 1/21/1990). So Reagan’s Greenspan Commission came up with the “solution” to save the Baby Boomer’s future pensions: jack up workers’ SS taxes.

The SS surplus began climbing sharply, recently running at $200 billion per year. “Since 1983, American workers have been paying more into Social Security than it has paid out in benefits….So what has happened to [those trillions]? The payments have all been spent.” (NYT, 2/20/2004)

But, “If the proceeds of that tax [hike] were simply revenues for the [“Unified”] federal budget,…then the tax was nothing more than a way to increase the share of the burden borne by working people.” (“Social Security’s Future,” NY Times, 1/31/1995)

And what is now $2.5 trillion stolen from the SS surpluses has been helping to pay for the “general operating expense” of every U.S. imperialist invasion since — from Grenada to Panama to Somalia to Yugoslavia to Gulf War I to Iraq to Haiti to  Afghanistan/Pakistan.

Clinton Budget ‘Surplus’ A Mirage

These SS surpluses turned Clinton’s federal budget deficit into a ballyhooed “surplus” of $70 billion. As the NY Times then editorialized (11/9/1998), “the Government’s current budget surplus is a mirage. Last year’s budget surplus — about which both the President and the Republicans crowed incessantly — was due to a big surplus in Social Security. The rest of the budget showed a deficit of almost $30 billion.”

This highway robbery falls even more heavily on black and Latino workers. Because of centuries of inherited racist discrimination, their net worth (accumulated assets) was reported recently at one-tenth of the rest of the U.S. population. Therefore, they’re even more heavily dependent on Social Security pensions to survive any retirement years.

And with all the racist attacks on undocumented immigrants as “stealing from the economy,” the fact is that they pay SS taxes but get exactly zero SS pensions. They contribute hugely to a “Unified Federal Budget” which is then used to raid, jail and deport them while trying to cajole their youth into the military to fight and die in U.S. imperialist wars.

Actually, it was a communist-led, fiercely militant working-class movement that won Social Security for our class during the Great Depression. But it made the fatal error of not tying this fight to the one for revolution, enabling the ruling class to use its state power to whittle away and reverse hard-won gains. Today, as U.S. rulers, led by Obama, wage war abroad and destroy livelihoods at home, it’s clear they’re our class’s main enemy.

The past and coming Social Security swindle is nothing new for U.S. rulers. The bosses rob us every day of our lives, exploiting us at work while laying us off for long periods of unemployment. There’s only one way to end these horrors: building the PLP to a point where we can lead a workers’ revolution for communism, a society run by the working class that, once and for all, would smash capitalism’s exploitation, poverty, racism and wars for profit. J

War-bent Rulers’ Retirement ‘Reform’: Work Till You Die

Obama’s Afghan surge, costing $1 million per soldier per year, is gearing up for a major battle in Kandahar. Meanwhile, Social Security (SS) is starting to take in less than it pays out (see adjoining article). But according to the rulers’ Peterson Institute, “Ironically this is a good thing for America. [!] These types of problems are never dealt with politically unless the president and Congress have to. Now they do.”

This Institute boasts board members Standard Oil heir David Rockefeller, British Petroleum boss Tony Hayward, Chevron CEO David O’Reilly, GM chairman and Exxon Mobil director Ed Whitacre, and Saudi billionaire Hutham Olayan.

These direct beneficiaries of U.S. wars in Iraq and Afghanistan seek anti-worker “comprehensive Social Security reform, including gradual increases in the retirement age and an alteration [downward] of the benefits formula” (Peterson director C. Fred Bergsten in “Foreign Affairs,” November/December 2009). In essence, the cash-starved war-makers want workers either to die before they can collect from SS or to collect far less than they put in.

Obama Healthcare May Fall Short of Rulers’ War Needs

The rulers hope Obama’s new health plan will free up funds for their war machine but fear it won’t. Max Boot, a fellow at the Council on Foreign Relations, U.S. rulers’ leading foreign policy think-tank, is worried “about the impact of ObamaCare on….’our’ global power. The United States currently spends… [for] ’defense’ $661 billion in fiscal year 2009….But that’s a pittance compared to what we spend on…Social Security, Medicare and Medicaid….almost 35% of the budget, compared with 17% for ‘defense.’” (Wall Street Journal, 3/25/10). Boot complains that this outlay saps U.S. rulers’ power to kill enemies. 

He warns his ruling-class masters that before they can wage the larger regional and global wars they need, they must first slash Social Security, Medicare, and Medicaid. “[I]f we are looking at major threats to our global standing, we should not look at China, Iran or Russia. We have met the enemy and he is us — specifically, our ‘insatiable’ demand for entitlement spending.” Look out Social Security!