Tampa, Florida --As President Franklin Roosevelt signed the Social Security Act into law on August 14, 1935, he said the bill would guarantee protection for some 50 million Americans.
The program was funded through a payroll tax on all workers. At the time there were 16 workers for every retiree, but by 1983 economist Alan Greenspan saw dark clouds on the horizon.
According to Winter Haven Economics Professor, Dr. Allen W. Smith, Greenspan discovered there would be a solvency problem when the baby boomers started retiring.
Smith says Greenspan convinced President Ronald Reagan to double the payroll tax, which he said would raise more than $2.6 trillion by the time the boomers need it.
Up until 1983 each generation paid for the benefits of the previous generation, but the baby boomers were required to pay an additional amount to cover their own retirement.
But there is a big problem. Every time a worker gets paid money is taken out their check to pay benefits and the excess is put into a trust fund to cover the cost of baby boomers who are now starting to retire. However, as Oklahoma Senator Tom Coburn explained on the floor of the Senate, there is a dirty little secret most Americans are not aware of.
Coburn says under Democrat and Republican Presidencies and Democrat and Republican Congresses, they have all stolen money from the social security trust fund. The Oklahoma Republican says the money is gone and has been spent for another purpose.
Smith says it was supposed to be spent exclusively for Social Security, but the money from the social security tax hike went into the general fund. He says that money went into the pockets of rich people who got income tax cuts.
While the Social Security Trustee's Report says the trust fund will be exhausted in 2036, Smith says the money is already gone and social security is paying out more than it is taking in
He says while the official Social Security Web site says the money is not needed for benefits it is a lie. Smith adds if all this gets out he believe this will be a national scandal that will make Watergate pale by comparison.
U.S. Representative Kathy Castor from Tampa says she is very concerned about the problem. Castor agrees with Smith and says payroll taxes should not be used in general budget and must be set aside to pay socials security benefits. She says the problem has been politicians raiding the trust funds to shore up other parts of the budget. Castor says they should keep their hands off social security.
But people we talked to reaching retirement age, like Jackie Frank, have no idea how severe the problem is. When we told her there was no money in the trust fund all she could say was wow and then asked where did it go?
However, Congress can fix the problem with one major change to the law. Currently social security taxes are only collected on the first $106,800 people earn. That means a multi millionaire pays the same as someone earning $106,000. Smith and Castor says the cap needs to be lifted so that people who are millionaires are paying more on their social security,
Smith says, "If that change was made social security would be fixed for eternity and there would be enough revenue for decades and decades down the road."
But if that is not done those of us who expect to collect our full social security benefits when we retire may be getting much less than expected.