Here at the AMAC Foundation’s Social Security Advisory Service we deal with misconceptions about Social Security nearly every day. These largely include simple misunderstandings about how Social Security works – for example, rules on how benefits are calculated, including retirement benefits, survivor benefits, and, especially, spousal benefits. Misunderstanding of the rules is not at all surprising, since Social Security is an exceedingly complex program with over 2,700 rules explained in over 100,000 internet pages of information on Social Security’s expansive website – www.socialsecurity.gov.
Some misunderstandings are easily corrected
But if someone makes a Social Security decision based on a misconception of how the program works it could affect them, financially, for life. Which is why we strive so hard to educate seniors, especially those who contact us directly for guidance and those who read our nationally syndicated “Ask Rusty” articles about Social Security. As the old saying goes, “an educated consumer is our best customer,” so we try hard to correct all misunderstandings about how Social Security truly works. In this way, we help seniors make prudent decisions on when to claim benefits. The AMAC Foundation’s free SS Advisory Service expertly guides everyone who contacts us – even those who harbor misconceptions about Social Security – to achieve a prudent claiming decision. In this way, we can mitigate the damage caused by misunderstanding Social Security’s rules and render the misconception benign. Correcting this category of misunderstood rules is relatively easy, but there is one Social Security myth which has taken on a life of its own.
One myth is especially pervasive
This myth doesn’t really hurt those who come to us for personal guidance about their benefits, but it is a pervasive belief that creates much angst for many Social Security beneficiaries – the belief that politicians have “raided” the Social Security Trust Fund. This myth suggests that various politicians have, over the years, used (“stolen”) Social Security money for one nefarious purpose or another. And the most pervasive version of this myth is that President Lyndon Johnson took the money from the Social Security Trust Fund and moved it to the general U.S. Treasury account. Here’s how that story goes:
Poor LBJ – The most pervasive myth of all
Poor LBJ. Faced with the increasing costs of the Viet Nam war, and a scant money in the general U.S. Treasury to cover it, Johnson saw that the Social Security Trust Fund reserves were not being reflected in the Government’s regular budget report. This was because, from the program’s inception in 1935, Social Security funds were always reflected outside of the general U.S. Budget, because the SS money was viewed as separate and reserved only for Social Security’s purposes. But the cost of the war in Viet Nam was causing considerable financial anxiety in Congress and also with the American public, so LBJ saw an opportunity to improve his standing with both. He did that by altering the way the Social Security Trust Fund reserves were shown on the Federal Budget, essentially reflecting the SS reserves as assets in his “Unified Budget,” thus masking his deficit spending for the war. In other words, the Government’s “bottom line” on the balance sheet looked better because Social Security reserves were included as assets.
Dispelling the pervasive myth
But no actual transfer of Social Security money ever took place. This was simply accounting “sleight of hand” by LBJ to mask the costs of the Viet Nam war. It essentially put Social Security assets “on budget” so they were included and made the Government’s balance sheet look better, but no Social Security money was ever taken. This practice of reflecting Social Security assets as “on budget” was reversed by Congress in 1990, so that the Social Security Trust Fund reserves are, once again, held “off-budget” and do not appear on the Government’s balance sheet.
To reiterate, no Social Security money was taken by LBJ, despite the insistence of one reader who claims to “have been there when it happened” (presumably working for the U.S. Government at the time). Other myths similar to the LBJ story have claimed that President Kennedy used Social ‘Security reserves to start the Peace Corps., and that President Reagan used SS money to fund his Strategic Defense Initiative (SDI). None of that is true. When explaining this, I’ve been accused of being a “government shill” and of “working for liberal CNN,” neither of which are true. What is true is that we have carefully researched and reported the facts and we aren’t swayed by legends born on (and perpetuated on) the internet.
Dispelling all myths
Here at the AMAC Foundation we have carefully researched every allegation that Social Security money was stolen for any purpose and found all such claims to be false. Similarly, those who believe that Social Security’s current financial issues could be solved by the government just “paying back the money they stole” are, quite simply, barking up a wrong tree. No Social Security money has ever been stolen, so there’s nothing to pay back.
Here at the AMAC Foundation, we have a team of NSSA accredited and highly experienced, AMAC-certified Social Security Advisors who can answer all your questions about Social Security, including any myths your may have heard. And the best part is, because we are a non-profit 501(c)3 corporation, our advisory service is completely free. Simply call us at 1.888.250.2622 or email your questions to us at SSadvisor@amacfoundation.org. And, as a bonus, you may also find our special and unique Social Security website – www.SocialSecurityReport.org – helpful to better understand Social Security, and to view other articles about Social Security myths.
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