For Immediate Release
Office of the Press Secretary
April 5, 2005
President Participates in Social Security Conversation in West Virginia
West Virginia University at Parkersburg
Parkersburg, West Virginia
Excerpt:
"I have just come from the Bureau of Public Debt. I want to thank Van Zeck, Keith Rake, and Susan Chapman. Susan was the tour guide there at the Bureau of Public Debt. I went there because I'm trying to make a point about the Social Security trust. You see, a lot of people in America think there's a trust, in this sense -- that we take your money through payroll taxes and then we hold it for you, and then when you retire, we give it back to you. But that's not the way it works.
There is no "trust fund," just IOUs that I saw firsthand, that future generations will pay -- will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.
The office here in Parkersburg stores those IOUs. They're stacked in a filing cabinet. Imagine -- the retirement security for future generations is sitting in a filing cabinet."
Excerpt:
"I'm here to tell you those who've retired are going to get their check. Those who are near retirement are going to get their check. (Applause.) The system will not change in any way for people who have been born prior to 1950. And I'm going to keep saying it over and over again.
The problem is that the government is making promises to younger Americans that it cannot keep. And that's important for folks to hear. You see, Social Security was designed as a pay-as-you-go system, not as a trust system. Pay-as-you-go, you know, the workers will pay into Social Security through the payroll taxes, and then it immediately gets paid out. It gets paid out to pay for benefits; and if there's any money left over, it pays for a lot of other government programs."
(The preceding is from a speech by President Bush)
When Al Gore was a Presidential candidate, he promised to place Social Security in a "Lock Box".
I'm kind of dumb when it comes to the way government works so I didn't understand what Mr. Gore
meant by a "Lock Box" for Social Security.
When George W. Bush became President, he began campaigning for a system that would allow workers
to place a portion of their Social Security tax, aka FICA tax, aka payroll tax, into a private investment fund. That proposition was met by much public disapproval and eventually the proposition died from lack of support.
Both the Lock Box and the Private Investment proposals were misunderstood by most Americans because of a misunderstanding of how the Social Security tax is handled by the government.
All my adult life I've heard of the Social Security Trust Fund. Since no one ever explained to me what that particular term Trust Fund meant, I visualized it as a fund that consists of cash money that workers and employers pay into, each payday. I thought this money was used to pay Social Security benefits each month and the remainder was invested to draw interest and grow larger with the passing of time. I had also heard that Congress borrowed from that fund from time to time for some immediate government expenses, then Congress paid that money back to the fund, with interest. All those visualizations seemed reasonable to me.
So, I thought, why did Al Gore see the need for a Lock Box for Social Security money? Is some agency dipping into the Trust Fund and not paying it back?
And what was the motive behind President Bush campaigning for private accounts for each citizen to pay into? Doesn't the Trust Fund generate enough interest on its investments?
I determined to find what caused all the fuss about the Social Security Trust Fund. So I began a brief study of the subject and was I surprised. I found that all my visualizations about the Trust Fund were illusions. There is no such Fund as I have imagined for most of my 75 years.
To learn where your Social Security money is (or isn't), you can follow the links below to the Heritage Foundation for a good explaination.
Then, for good measure, below the links are excerpts from a speech by President George W. Bush on the subject. He saw the actual drawer which holds your Trust Fund -- uh, money?
the link.
http://www.whitehouse.gov/news/releases/2005/04/20050405-4.html
So if you have visualized your Social Security money resting safely in a Trust Fund and drawing interest as time flies, now you know. It's an illusion.
Yes, Al, we needed the Lock Box long ago. And I suppose most of us thought our money was safely drawing interest all these years just as if it were in a private account such as the remedy that President Bush suggested.
I hope you'll follow the links above to get the real story.
future taxpayers must repay."
October 5, 2007
