It goes like this:
President Lyndon Johnson raids the Social Security Trust Fund to wage the Vietnam War
President Johnson created the `unified budget’ in the late 1960s to disguise the real cost of the Vietnam War.[6] [7] President Johnson did not want to ask for income tax increases to pay for several ambitious government programs of that era (the Vietnam War, the Great Society War on Poverty, the NASA Space Race).
The truth from the Social Security Administration:
So, to sum up:
1- Social Security was off-budget from 1935-1968;
2- On-budget from 1969-1985;
3- Off-budget from 1986-1990, for all purposes except computing the deficit;
4- Off-budget for all purposes since 1990.Finally, just note once again that the financing procedures involving the Social Security program have not changed in any fundamental way since they were established in the original Social Security Act of 1935 and amended in 1939. These changes in federal budgeting rules govern how the Social Security program is accounted for in the federal budget, not how it is financed.
LBJ didn’t raid any federal trust funds and wasn’t even in office when Social Security was “on-budget” from 1969-1985. (Not much in the SS trust fund in 1968 anyway. See page 7 of this Senate report.*) However, and this is very important to understand:
…those involved in budget matters often produce two sets of numbers, one without Social Security included in the budget totals and one with Social Security included. Thus, Social Security is still frequently treated as though it were part of the unified federal budget even though, technically, it no longer is.
Got that? Technically, whatever annual budget deficit number that’s tossed out by either political party and the news media is unlikely to be accurate. The truth, however, isn’t that difficult to obtain. If the National Debt goes up, the budget is in deficit and vice versa. Any guesses on the last time there was a surplus? (Hint: Clinton never delivered a surplus budget; not even once. So, perhaps Democrats should stop repeating that big fat lie.)
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*While the original Social Security legislation included a “trust fund,” the program was essentially a pay-as-you-go system. The “trust fund” was there for two major reasons. 1) To cover any short-term annual receipts shortfalls due to recessions. 2) To allow Congress sufficient time to recognize near-term problems and changes the public desired and enact necessary and reasonable adjustments. That mostly meant expanding coverage, increasing benefits, and raising the payroll take rate. It was the 1983 modification that expanded the “trust fund” concept for one generation, the “baby boomers.” Instead of being taxed in an amount to cover the retired “grannies,” “boomers” would pay extra to build a bank for their own “granny” days. That way the “baby bust” generation wouldn’t be unduly burdened by their parents. (And since lifespans were increasing, the retirement age was increased as well.) Once through the baby-boom-retirement-bubble, the pre-paid aspect of the trust fund was to be exhausted and system would revert to pay-as-you-go.
