From the editor:
For the record, TREA Senior Citizens League (TSCL) has considered filing a class-action lawsuit on behalf of the nations' seniors.  At one time TSCL consulted with legal advisors concerning the feasibility of filing such a suit on behalf of seniors affected by the Social Security Notch.  Legal counsel held little hope of success, citing the Supreme Court ruling in Flemming v. Nestor.  Under that ruling the Court found that workers and retirees have no legal ownership over their Social Security benefits.  Instead what they have is a political promise that can be changed at any time, by any amount, for any reason.  TSCL concluded the best way to protect Social Security benefits is not in court-but in Congress-by changing the law.

According to the General Accounting Office, under current law when the revenues paid in to the Social Security Trust Fund exceed what is needed to pay benefits, they are invested in Treasury securities.  The money is then used to meet the current cash needs of the government.  Those Treasury securities are an asset to the Trust Fund, but a claim on the Treasury, in other words, an IOU. 

Even though Members of Congress may refer to "the shameful theft of funds from the Social Security Trust Fund," no law is broken by using those funds.  "Misappropriation" however, is an excellent choice of words, especially when one does not agree with some of the more questionable "appropriations" upon which our hard earned taxes are wasted (such as Pork projects). 

It is important to note that those Treasury securities, the IOUs in the Trust Fund, are not uncollectible.  Those securities are redeemed out of federal revenues which come from taxes, borrowing, or cutting other government spending (which could include cutting benefits).  The U.S. government has never defaulted on its debt obligations, but the government has cut benefits in the past and is likely to do so again.

The crux of the problem lies in finding an equitable plan to redeem those IOUs in order to continue to pay benefits without placing an onerous tax burden on future generations, and without cutting benefits to current retirees or those nearing retirement.  Some government borrowing may help in the short term but the debt service on the interest for such borrowing still must be paid for out of tax revenues.

Most Enron employees are quite likely relieved to at least have their Social Security to fall back upon.  But there's no doubt in my mind that if enough U.S. voters fully understood what's happening to their Social Security, the outrage would make Enron look like a tea party.

April 2002