February 18, 2004

Tuesday, February 10, an article appeared in The Washington Times titled "Bush seeks $1 trillion debt boost" written by Patrice Hill that demonstrates the sort of reporting we are liable to see much too much of in the coming months.

The first paragraph states: "President Bush, saying the economic recovery is firmly in place, yesterday proposed adding $1 trillion to the national debt to fund the cost of shifting to a partially privatized Social Security system."

For some unknown reason, there's a picture of President Bush speaking at the SRC Automotive manufacturing plant in Springfield, Missouri on Monday, February 9th. God only knows why this picture is there because that speech doesn't make the slightest reference to what the author is talking about.

Later, this Washington Times article claims that: "The Social Security privatization plan has largely disappeared from Mr. Bush's speeches and budget blueprints, although it was a major campaign platform in the 2000 election. It was judged to be politically palatable at the time because it would draw on some of the government's large projected surpluses to finance transition costs from the current government-funded pension system ... But those surplus projections have disappeared and been replaced by record federal deficits ..."

"A major campaign platform in the 2000 election?" What a joke that is. Social Security was supposed to have been an issue, but somehow the candidates never got around to it. Instead of substantive debate, all we ever heard was one or two short statements by Bush about favoring "private accounts for younger workers" and at least one offhand remark that if the Thrift Savings Plan was good enough for the government, it ought to be good enough for America's workers.

Of course, once elected President Bush did appoint a commission to study the feasibility of these "private accounts," but the principles never signed off on a final report.

And obviously, the author of this Washington Times article hasn't the slightest clue about surpluses or where they come from. For instance, in fiscal 2000, the year of our greatest surplus to date, the $237 billion touted broke down as $87 billion from income tax overcharges and $150 billion ($149.8 billion) from entitlements like Social Security which led the pack with a surplus of $94.5 billion, due to payroll tax overcharges.

Patrice Hill would do well to find out precisely why the two Social Security trust funds, that we generally speak of as one, became 21 percent of the national debt.

In its nearly seventy years as the world's greatest implied insurance contract, Social Security has almost always generated more revenue than the supplemental retirement system needed in order to pay benefits to the retired and disabled, just like any good insurance plan. And the federal government has always pretended to "borrow" that surplus money while substituting bogus nonmarketable bonds in equally bogus trust fund debit accounts under the fraudulent "Intragovernmental Holdings" portion of the national debt. In other words, the government has always stolen what could have been contingency funds.

Instead, politicians tend to go ballistic when an entitlement must turn to its trust fund because it means they must either raise taxes, borrow from investors, cut benefits or discretionary spending, or any combination of these factors.

In 1982, after seven years in a row of shortfalls in payroll taxes due to recession, President Reagan appointed the Greenspan Commission to study Social Security reform. The final report was delivered in January of 1983 and was largely a wishy-washy compilation of actuarial data without any specific recommendations on "saving" the overall program.

In February of 1983, Bob Dole and Daniel Patrick Moynihan took it upon themselves to introduce a bill increasing payroll taxes far beyond what was necessary. Since these two had served on the Greenspan Commission, everyone felt that they must have the answer and the bill passed by March. We've been living with bigger and bigger surpluses ever since.

Last year, fiscal 2003, Social Security produced an $82 billion surplus ($81.8 billion), despite high unemployment (fewer workers paying payroll taxes) that was stolen by the government and spent elsewhere.

Twenty-two other entitlement accounts, including Military Retirement and the Federal Employees Retirement System (FERS), produced another more than $60 billion surplus.

All anyone has to do to check this out is to take the amount that the Social Security trust fund increases and subtract the amount paid that black hole debit account in annual interest. The figures are available from the U.S. Treasury's Monthly Reports and their reports of interest paid these accounts with no money involved.

It's not a hard thing to estimate, but apparently far beyond the reach of the mathematically challenged investigative reporters of our news services.

The real question for today is why Bush is asking for another trillion dollar increase to the national debt limit when we just raised it a trillion ($984 billion) last May, nine months ago. It was just about a week or two ago that John Snow, the Secretary of the Treasury, said that he wanted a similar increase by May of this year.

Is this merely a pre-emptive attempt to raise the government's self-imposed debt limit well ahead of November's elections? I don't think so.

At the rate Bush is adding debt, we aren't due to hit the present limit of $7.384 trillion until August. And the last time we hit the debt limit on February 22, 2003, the government was able to suspend borrowing for 92 days until May 24th and could have gone beyond that if the enormous interest due the Social Security trust fund had not been due in June.

I think this is more like a political threat Bush is issuing to the democrats. Recognizing that he's got a good chance of losing the election for a second term, Bush is telling the democrats to go easy in their attacks or he'll blow the whistle on a scam everyone inside the beltway is involved in. A scam that democrats and republicans are equally guilty of conducting. A scam that makes Enron, WorldCom, and all of the private sector crooks look like pikers.

After all, how much does it really cost to put Social Security's surplus in a real trust fund?

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