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THE GREAT SOCIAL SECURITY SCAM: SOCIAL SECURITY TO BUST THE BABY BOOMERS' RETIREMENT, EXPLAINS FORTUNE 500 CEO

 /NOTE TO EDITORS: The following release is the first of three sidebars to CL004, Government Debt, Social Security Shake U.S. Fiscal Stability, moved earlier today./
 CLEVELAND, Nov. 11 /PRNewswire/ -- In the paperback edition of the bestselling Bankruptcy 1995, Harry E. Figgie, Jr. and economist Gerald J. Swanson, Ph.D., detail the "cruel hoax" being perpetrated on every member of the Baby Boom generation who is counting on receiving Social Security benefits upon retirement.
 According to Social Security's own projections, by the year 2002 the system will be holding more than $1 trillion worth of the federal government's IOUs.
 "How would a Baby Boomer like to receive a non-marketable government bond instead of a Social Security check?" asks Swanson. When the Baby Boomers start collecting their benefits, there will be far fewer workers paying into the system than today, thanks to the Baby Bust of the 1960s and 1970s. The government won't have the money to redeem its own IOUs, Swanson says, and it will very likely find it difficult to borrow the needed funds because our creditworthiness on international markets will have been destroyed by the size of our debt.
 Figgie and Swanson have a straightforward solution: change the law.
 "We must 'reinvent' Social Security as we know it and require by law that workers establish individual retirement accounts," Figgie suggests. "A separate welfare program, financed with general tax revenue, could be established to benefit widows, orphans, the disabled, and others who cannot work."
 With an IRA, Figgie contends, an individual would be able to finance as much as or more than the moderate retirement income that Social Security provides. The $2,000 annual IRA contribution limit should be eliminated or made much higher.
 "The amount added to private savings and investment every year would be one of the biggest economic stimulus packages in the history of the world -- without requiring one cent in new taxes," economist Swanson says. "It would go a long way toward eliminating the downward trend in plant and equipment expenditures this country has experienced in the past."
 How does the "Great Social Security Scam" work?
 -- Huge Social Security tax increases were mandated by a change in the law in 1983, when the government recognized the need for a temporary period of Social Security surpluses in order to accommodate the future retirement benefits of the large population of Baby Boomers.
 -- The surplus funds generated by that tax increase -- that is, the amount of tax money paid into Social Security each year that exceeded the amount needed to pay that year's benefits -- were supposed to accumulate in the Social Security trust fund to cover the future benefits of the Baby Boomers.
 -- After the tax increase was imposed, however, the President and Congress began borrowing those surplus funds to hide the true size of their annual spending deficits. The money that was supposed to remain untouched in the system was instead used to purchase nonmarketable Treasury securities that served to cover up Washington's profligate deficit spending.
 -- These securities are, in effect, IOUs from one part of the government to another. They are placed in the trust fund instead of cash. The money that is "invested" in those securities is then used by the government to pay for a portion of its current operating expenses. That, in turn, reduces the amount of money the government has to borrow on the open market by selling Treasury bonds, bills and notes. But it does not truly reduce the size of the deficit. For example, Washington reported a 1992 deficit of $290.2 billion. But accounting for money borrowed from Social Security and other trust funds, the actual deficit amounted to $403.7 billion.
 -- Thus, the deficit appears smaller than it really is -- while the Social Security trust fund is being drained.
 -0- 11/11/93
 /NOTE TO EDITORS: Free graphic to accompany this story is available immediately to any media with telephoto receiver or electronic darkroom (PC or Macintosh) that can accept overhead transmissions. To retrieve the graphic, call 214-416-3686.
 GRAPH TITLE: Long-range Ratio of Workers per Social Security Recipient.
 CAPTION: Social Security originally operated with a ratio of 50 workers to every retiree. The system currently receives tax payments from only 3.2 workers for every person receiving benefits. By the year 2025, fewer than two workers will pay in for every beneficiary taking out./
 /CONTACT: Cheryl Brady or Gary Wells of Dix & Eaton Incorporated, 216-241-0405, for Harry E. Figgie, Jr./


CO: Harry E. Figgie, Jr.; Bankruptcy 1995 ST: Ohio IN: PUB SU: PDT

AR -- CLFNS5 -- 3037 11/11/93 07:32 EST
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Publication:PR Newswire
Date:Nov 11, 1993
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