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01/06/09
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February
25, 2004 No issue has so many long standing lies, misinformation, disinformation, cover-ups, and flagrant spin stories surrounding an insurance program that has worked well for almost seventy years and operates on less than one percent of its annual budget. Of course, the system has some actuarial flaws that need attention, things like African American workers having separate longevity crises or women not always getting fair treatment, but the first and most important problem lies in the federal government's mismanagement of contributions and can be stated simply as follows: STOP STEALING THE MONEY How hard would it be to put the surplus payroll tax money into a real trust fund? Real trust funds are already "lock boxes." Real trust funds would mean that the government can no longer play its fraudulent "borrowing" con game. It would get rid of the "Pay-It-Again, Sam" phony trust fund scam. Keep this in mind—the cost of setting up a real trust fund is negligible and there are probably honest lawyers that would do it pro-bono. The only healthy problem would be working out where the trustees would be allowed to invest assets. And the only thing we would have to prohibit would be investing in U.S. Treasury securities since they can only be redeemed by the same taxpaying public making the excess contributions. In no case should we be buying back our own money. On the other hand, Patrice Hill of The Washington Times led off a recent article with the report that: "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." How's that for a wake-up call? The first thing the public must understand is that surpluses are not gone. They are just hidden in different accounting systems that the Beltway Bandits choose to use when convenient to them, things like the "Unified Budget" versus "Over Budget" accounting where surpluses are under "off budget" revenue. Last year, fiscal 2003, even with high unemployment Social Security produced an $82 billion surplus, a surplus that the government took and spent elsewhere. (See: Chart) The second thing the public must understand is that many in government want you to believe that budgets and federal economics are complex subjects when in reality they are not. We are talking about money, greenbacks, wampum, gidas, cash you can count, what you either have or you don't have, what's there or isn't there, finances where the old adage "follow the money" applies. It's your sweat equity and it's not any different than your household except that the numbers are huge. When you hear a politician or anyone in government start off with statements about how complicated federal finances are, you are usually in for a con. He or she would like you to believe that it takes a PhD to understand what's about to be said when you should realize that if they can't explain it in simple everyday language they are either conning you or don't understand it themselves. Thirdly, many of the arguments, even Supreme Court decisions, that the pirates will use in regard to Social Security are belied by the fact that they are doing exactly the same thing to at least 22 other entitlements at the same time. In other words, if the same argument doesn't apply to Military Retirement, Federal Employees Retirement (FERS), gas taxes for highways, airport and harbor taxes, and others, then there's something wrong with the argument and a high probability that you are being lied to. (See: Trust Fund list) An entitlement is something you paid for and you are "entitled" to receive the goods or services you paid for. Forget all the crap you are being fed about the supplemental retirement system being socialist, welfare, "pay as you go" or the younger generations supporting the elderly when it may not be there for them. After almost seventy years of success, Social Security is the granddaddy of all implied contracts and definitely an insurance program. If you think that Prudential, Hanover, and other private sector insurance companies are not paying benefits out of sales to new customers while investing profits, then you must be blind to the skyscrapers they're building and the salaries and bonuses they're paying. What's more, as a not-for-profit organization, even the federal government is pay-as-you-go without any huge cash reserves with the single exception of the Thrift Savings Plan which is a real trust fund (See: Item #154 of the sixteen real trust funds managed by the government). What makes the federal government different is its constitutionally authorized and almost unlimited ability to borrow. To borrow by selling U.S. Treasury securities that you, the taxpaying public, are required to redeem. The Bush Plan for Personal Accounts If it's good enough for the younger workers, why isn't it good enough for everybody? What difference would it make if a 64 year old (or is it 66 now?) only participated for a week, or even one day, before retiring? His or her only real gripe would be that it didn't start sooner. Investing surpluses is a great idea, but is that what the Bush plan is talking about? The Cato Institute, the right wing think tank, claims that half of the younger worker's payroll taxes can be invested and that would certainly seem to cut into benefits for today's elderly. If it's the surplus that allows this, then that's another misuse of funds. If we consider that the fiscal 2003 Social Security surplus of $82 billion were divided equally amongst 139 million workers, that would mean each worker contributed $590 that did not amount to anything but buying more debt—debt that next year will have interest added to it. Is this scam to continue? It's this scam that is ludicrously unjust. Most importantly, by limiting reform to personal accounts only for entry level workers the government will still get the lion's share of any surplus generated. Has anyone figured out how much these beginner workers will be making and how much they will be paying in payroll taxes? Does it include new immigrants getting amnesty? Personal accounts are not a new idea. Every American worker already has a personal account. It's recorded under income tax, specifically on the W-2 forms every taxpayer files.
If Social Security were "privatized" or, more properly, if a real trust fund were set up in the private sector (who can trust the government?) access to these IRS records would be essential. Worst of all, if the Bush plan is modeled after the Thrift Savings Plan for federal employees that his father helped set up in 1987, then it is going to cause inflation. The government's Department of Personnel may have time to fiddle with at least three optional investment categories for each employee and allowing them to switch back and forth at will, but companies in the private sector generally do not. Instead of periodically submitting payroll taxes in one lump sum, private companies would now have to report each worker individually and let employees make changes at will. The amount of bookkeeping and paperwork will become enormous and force every company to raise prices. Are you ready to pay for this? Or do you think they'll "outsource" the effort to India and cause the loss of even more jobs at home? Have you ever seen one of the annual reports from the big pension houses like TIA-CREF or SURS and the thousands of places they invest retirement money? Even Milton Friedman doesn't tell them where to invest his contributions. Why should a real trust fund do it any differently? Keep track of who contributed how much (the IRS forms) and let them benefit proportionately in the profits. The purported expense for "transitional costs" is a joke. Related Articles Double Taxed and waiting for Godot So You Think You've Got A Trust Fund With Your Uncle Sam, by John Attarian U.S. Treasury Cheats with Phony Trust Funds Visit Ed Henry's own web site!
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Credibility Gap -- Bush Vs. Reality Prescription Drugs, The Scam Continues U.S. Treasury Cheats With Phony Trust Funds Democrat Amnesty Plan Tops Crazy Bush Plan Poor George - Systemic Intelligence Failure Social Security & Debt, The Battle Of Trust Begins What's The Rush? Count Votes By Hand Wartime Debt. Can We Afford It? Complete Archives for Ed Henry | |||||||||||||
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