You have been robbed.
There was a state a number of years ago that entered a financial agreement with some of its employees. However well intentioned this might have been, the state did not have the money to meet its new commitment.
Without consulting the teachers, the legislature decided to take money “temporarily” from the state’s teacher retirement account, an account that teachers paid into through payroll deductions, making it their money, claiming they would pay the loan back based on projected tax revenues.
However, when those revenues came in, the legislators looked on it as extra money, a bonus if you will, that they could spend on favored projects.
For decades the loan from the teacher retirement account went unpaid, and after a number of years the state announced that the teacher retirement account was heading toward insolvency.
Had they paid the loan back, not only would the account have had its principle, but over the years it would have accrued compounded interest as well.
It was becoming insolvent solely because the state did not repay its obligation.
The solution was to alter the retirement formula so that instead of having a teacher’s age and years of teaching equal 80, it was revised so that age and experience had to equal 90.
When politicians invented a crisis in education so as to solve a problem of their own invention and imagination, thereby getting re-elected, they began to claim that one of the failures in the system was the number of old teachers who, obviously, were not as energetic, enthusiastic, and creative as younger ones could be. They looked for ways to drive the older teachers out at a lower retirement rate so as to protect the retirement system that was still waiting for the loan to be paid back.
The state in effect not only stole from the teachers whose payroll deductions had paid into the retirement account, but then sought to further steal from them by forcing many to take a retirement at a lower rate of pay that kept the money they deserved in the account to accrue interest for the younger teachers.
Teachers were punished, and continue to be, not for anything they did, but for what was done to them.
Ronald Reagan warned the American people that Social Security was in deep financial trouble. On April 20, 1983, he signed a bill to deal with this
He claimed at the signing that “This bill demonstrates for all time our nation’s ironclad commitment to social security. It assures the elderly that America will always keep the promises made in troubled times a half a century ago. It assures those who are still working that they, too, have a pact with the future. From this day forward, they have our pledge that they will get their fair share of benefits when they retire.
Today, all of us can look each other square in the eye and say, ‘We kept our promises.'”
Then on another occasion he said,
“We promised that we would protect the financial integrity of social security. We have. We promised that we would protect beneficiaries against any loss in current benefits. We have. And we promised to attend to the needs of those still working, not only those Americans nearing retirement but young people just entering the labor force. And we’ve done that, too.”
However, the Social Security Amendments of 1983 allowed for Social Security funds, paid from the paychecks of working Americans to support them in their old age while not having that money in their pockets while they worked, to be used to pay for wars, tax cuts and other government programs.
Just as with the teacher retirement swindle that was supposed to be repaid with future revenue, even though the payroll tax hike of 1983 generated a total of $2.7 trillion in surplus Social Security revenue that should have gone into the Social Security account, something that would have helped the baby boomers and kept the account solvent, the money was used to, among other things, offset revenue loss due to corporate tax breaks and the payroll tax cuts that established Reagan as a great hero of the people.
He gave with one very visible hand while pick-pocketing the workers with the other, well hidden one.
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He began his assault on Social Security with a lie:
“As you know, the Social Security System is teetering on the edge of bankruptcy…in the decades ahead its unfunded obligations could run well into the trillions. Unless we in government are willing to act, a sword of Damocles will soon hang over the welfare of millions of our citizens”.
It was not teetering on any edge. It was sound.
Reagan proffered a pre-planned excuse for the 1983 National Commission on Social Security Reform.
By the end of Reagan’s presidency, any increased revenue that was supposed to go into Social Security was actually gone, having been spent on general government operations.
By 2010, when the baby boomers began to retire in large numbers as was predicted as the reason to shore up the Social Security account, but simply brought in money spent on other things, the United States had to borrow $49 billion from China.
Had the $2.7 trillion that would have been there been left in the Social Security account, first as principle and additionally as interest on it, this foreign debt would not have been necessary.
In 2000, when Al Gore talked about a “Social Security Lockbox” he became the butt of jokes.
George W Bush even stated on May 15, 2000,
“Social Security is the single most successful program in government history…For years, politicians have dipped into the trust fund to pay for more spending. And I will stop it.”
After he was “elected”, Bush insisted that
“To make sure the retirement savings of America’s seniors are not diverted in any other program, my budget protects all $2.6 trillion of the Social Security surplus for Social Security, and for Social Security alone”, and, “We’re going to keep the promise of Social Security and keep the government from raiding the Social Security surplus.”
But, during his presidency he spent every cent of the Social Security surplus revenue on big tax cuts for the rich and wars.
Bush spent a total of $1.37 trillion of Social Security surplus, $192.2 billion of it in his last year alone.
That was our money that we put aside for our old age and counted on interest to augment.
Interestingly, he used the missing Social Security funds that were bringing the program to insolvency because he had raided the account as the reason the country needed to accept his plan for privatization.
Just like that state I mentioned earlier should have paid back the money taken from teachers, and Reagan worshippers should have put misused money back into the Social Security account, along with the interest that would have been accrued over the years, the money and interest lost through Bush’s theft should have been replaced. That way there would be no Social Security funding problem for at least the next 25 years.
And that is why there will be no COLA increase in 2016.
They already spent our money, the money we paid in and were counting on.