March 19, 2004

Do you remember the uproar over President Bush's request for $87 billion to complete the invasion of Iraq and restore order? It was the subject of argument for months before the government went ahead and borrowed the money anyway? At the time, I wondered why President Bush was asking Congress for the money when he was on his way to running up the national debt a whopping $555 billion for the year anyway.

Well, there's another one that isn't getting any attention at all. This time, it pertains to one of the 119 trust funds that the government has set up for itself. A group of trusts that make up only about seven percent of the Intragovernmental Holdings portion of the national debt where 24 entitlements like Social Security hold the bulk, all the rest of our $3 trillion debt in this category.

At the close of fiscal 2001 and again at the close of fiscal 2002, the "Unconditional Gift Fund, State Department" held $89 billion ($88,638 million) in nonmarketable Treasury bonds that had been deposited there at no cost whatsoever. In my list of Federal Trust Funds, a list that separates the entitlements, this appeared as item #127 in 2002.

At the close of fiscal 2003, this unconditional gift fund was missing entirely, not even listed, although I continued to list it as item #126 with a notation that it was gone.

Not one to unfairly accuse the federal government of anything, I wrote the U.S. Treasury's office of public affairs asking them if not listing this trust fund had merely been a clerical error or, if not, where it went. No answer. Not a peep.

Remember that these "holdings" are all in nonmarketable bonds that just about everyone who knows anything about them tell us must be cashed-in by taking money from the Treasury's general fund that includes both current taxes on hand and honest borrowing from investors.

The next step was to ask my republican Senator Peter Fitzgerald who had already announced that he would not be seeking re-election. His office had me submit a formal letter to the good Senator phrasing the specific question of what happened to this trust fund.

I must admit a little bias here. For one thing, I knew that Senator Fitzgerald had at one time delivered a vehement and almost accurate speech on the Senate floor about the misuse of Social Security surpluses, a statement that you can read in my list of "Confessions" from the horse's mouth. I figured that since he was leaving, he might deliver one parting shot.

Secondly, I already had negative experiences with my democratic Senator Dick Durbin and my House representative Don Manzullo over other related questions.

Years back, when the Department of Transportation told the House Budget Committee that it was going to need all of the holdings in its Highway Trust Fund in order to repair the Interstate Highway system, I asked Senator Durbin where the money would come from when the $27 billion in nonmarketable bonds in this trust were cashed-in. Again, there are only two sources for the money, current taxes or money borrowed honestly on the bond market. I merely wanted confirmation of which source was used or what combination of both.

The only other option would have been to raise gas taxes. That didn't happen until a couple of years later when Vice President Gore pushed it through and the raise wasn't that much.

What I received from the good Senator was a manual on how to bid for highway construction and repair jobs that I gave to a friend in the road business. The booklet was listed as costing twenty-five dollars from the Library of Congress. His office then contacted me to ask if I was satisfied and I'm afraid I was not very nice in response.

The Manzullo story is longer. I met personally with the congressman in his Rockford office to discuss the double taxation involved with entitlement trust funds. At the close of this meeting he asked me to write it up as briefly as possible which I did as nine points in two or three pages.

His office responded to that with comments to the effect that Mr. Manzullo agreed to everything I was pointing out, but rather than a summary of the problem wanted to know what to do about it. So I told him that too under separate cover.

The response to my recommendations to stop stealing the money included the idea of wiping nonmarketable bonds from the books and, unfortunately, I was later told that Mr. Manzullo thought that would throw the honest bond market into chaos so I was henceforth left out in the cold.

You can take all of this with a grain of salt, but it's impossible to get a response from any politician in the federal government unless you are one of their constituents. They will only respond to people in their districts who might vote. Even then, you will be lucky to get more than a form letter response.

So what are we to make of the missing $89 billion?

You might well ask what the State Department is doing with a "Gift Fund" containing so much credit in the form of debt, especially so much in advance of the invasion of Iraq. None of the other departments have such an exorbitant fund.

My gut feeling is that this money went to buy the "coalition of the willing." I think it cost the American taxpayers $89 billion to put together sixty some nations we are told were in support of the illegal invasion of Iraq.

And I don't think we will ever know for sure. Remember, all they have to do is throw another fistful of nonmarketable bonds back into the account this year and—voila—we'll be right back where we started without ever knowing whether the trust was once exhausted or not.

In a perverse sort of way, you might even say that we're probably lucky they haven't used this fraudulent method of setting up more perks and expenditures but have so far managed to keep it within limits or amounts that hardly anyone notices.

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