November 28, 2003

Colin Powell's State Department had an "Unconditional Gift Fund" that's missing from the federal government's list of trust funds at the close of fiscal 2003. At the beginning of the year, this trust held $88.6 billion in special obligation nonmarketable bonds. Where did it all go?

Do you suppose that most of this went to buying a "coalition of the willing" in support of our invasion of Iraq? It would be consistent with the American way of buying friends from some sixty odd nations that most Americans have never even heard of.

More importantly, where did the actual cash come from? By definition, nonmarketable bonds can't be traded and are exactly the same as the holdings of the Social Security trust funds or other entitlements that account for 42 percent of the national debt. Debt that could be eliminated at the stroke of a pen or punch of a keyboard with no ill affect to anyone but the scam artists.

Heads of government, the Congressional Budget Office (CBO), and leading economists have already told us that if Social Security must ever turn to its trust for operating cash it would require (1) increased taxation (2) massive borrowing or (3) cutting benefits in order to cash-in these nonmarketable chits.

Since the State Department's Unconditional Gift Fund was in the same nonmarketable bond boat, we can safely assume that the money had to come from either of the same three choices or combination thereof.

We know that the Bush administration has not been raising taxes. Instead, it has been cutting income tax. So that option is out.

In fiscal 2003, the Bush administration did, however, run up the national debt an unprecedented $555 billion. The State Department's $89 billion gift money certainly could have been part of that borrowing.

But we also know that every State in the Union has been suffering shortfalls in promised money for education, housing, agriculture, and the other items of discretionary budgeting at the federal level. Add to this the fact that Congress and the administration allowed legitimate borrowing from investors to be suspended for 92 days between the time we hit the national debt limit of $6.4 trillion on February 20, 2003, and May 23rd when this limit was raised nearly one trillion dollars.

This unprecedented and unnecessary stall cost every State and local government untold hardship that still hasn't been recovered. Any part of the fed's discretionary budget going to the State Department's gift fund would only have increased this hardship.

No matter how you look at it, the American taxpayer is footing the bill. The $89 billion State Department "gift fund" was either cashed-in from current taxpayer dollars in the Treasury, thus taking it away from discretionary budget items, or it was obtained by borrowing and putting our children and grandchildren further in debt.

Not to change the subject, but haven't you wondered why, with all the commotion about prescription drugs for the elderly, the federal government hasn't even mentioned turning to its Medicare trust fund? The Medicare trust fund held $276 billion in nonmarketable bonds at the close of fiscal 2003.

The reason Congress critters don't think about using entitlement trusts is that they know that they're phony and the money would have to come from their budgets or borrowing. Forty-two percent of the national debt is bogus and could be eliminated tomorrow, but the scam artists would be subject to prosecution.

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