Pay More Through Sneaky Tax Increases - By Ed Henry -- Price of Liberty

01/06/09

Pay More Through Sneaky Tax Increases
By Ed Henry

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April 19, 2004

With teacher layoffs and schools closing all over the country, the Bush administration is borrowing money like there's no tomorrow, debt to heap on the shoulders of children who will probably not have the wherewithal to pay it off by working in America's future rice paddies.

The national debt went up $555 billion last year. Six months into this year, fiscal 2004, the national debt has already gone up $347.8 billion with half the year still to go. We are well on the way to a debt increase of $700 billion this year, an election year.

You can double check these figures for yourself at the U.S. Treasury Bureau of Public Debt's web site "The Debt to the Penny and Who Holds It." While you're there, you might also notice that in the first eight days of April the debt has gone up another $30 billion.

Notice that honest contractual sales of Treasury securities to "Investors" both foreign and domestic (what the government calls "Debt Held by the Public") went up $51.3 billion during March while, overall, the debt total only went up $39.1 billion making it look like part of the debt was actually paid down. Entitlements or what the government deceptively labels "Intragovernmental Holdings" went down $12.2 billion.

Don't go jumping up and down and shouting "hurrah for the government" or mistakenly thinking that the Beltway Bandits paid down part of the national debt, because they didn't—you paid it. And it was the second time you paid for the same thing.

Here's why

Twenty-four different entitlement trust funds account for the great bulk of debt in this "Intragovernmental Holdings" portion of the national debt. These trusts have grown like Jack's beanstalk because of surplus/excess tax payments the Beltway Bandits have robbed while pretending to merely "borrow" them or claiming that they "invested" your money in junk bonds without your permission or awareness which amounts to the same thing.

Taxpayers bought this debt just as surely as if we walked into the U.S. Treasury, plunked down bags of billions, and said: "Here, give me some debt." Last year, fiscal 2003, we gave them $82 billion in Social Security surplus payroll taxes alone—all money that was spent elsewhere while the pirates deposited nonmarketable bogus bonds in phony trust funds so that we could pay again later, plus interest. Now, they are cashing-in some of those bogus double taxation holdings. It's all part of the Pay-It-Again Sam scam, an absolute rip-off.

In March, the only thing that happened differently was that there were not enough new surpluses to overshadow the draw downs, the double taxation plus interest that they continually charge us.

On April 13, 2004, the U.S. Treasury published its Monthly Report for March. Table #8, "Trust Fund Impact on Budget Results and Investment Holdings as of March 31, 2004," details Receipts and Outlays. Here's the way it broke down in March:

The "Hazardous Substance Superfund" is a real trust fund, not a bogus entitlement trust. It comes from fines leveled against polluters and holds real cash. Taking this real trust out of the list leaves us with $5,591 million or $5.6 billion from entitlements. Surplus money that the government stole and spent elsewhere.

Subtract the $5,591 million from $17,759 billion and what do you get? You get $12.2 billion of course, the amount that shows in the first national debt table above as a reduction in debt under Intragovernmental Holdings.

The important thing to grasp here is that the American taxpayers paid $17.8 billion or 31 percent more in double taxation than shows in the national debt reduction figure for March, 2004. The $12.2 billion that did show its head in the national debt figures during March was there only because the surpluses generated by Social Security and other trust funds were not sufficient to cover it up.

In other words, the tip of the iceberg showed its ugly head above water in March 2004 and it did so because so many trust funds are drawing down on the holdings.

In other months preceding March, many entitlement trust funds were also being drawn down, but did not show in the overall debt picture simply because surpluses exceeded draw downs. All "draw downs" are double taxation plus interest.

So far this year, six months into fiscal 2004, the following entitlement trust funds have been drawn down the following amounts:

These are only the entitlements that I keep track of. You can view their monthly tallies at http://www.uncle-scam.com/. If we added in the smaller trust funds that are being drawn down the above total would probably be close to $59 billion.

The Unemployment Trust Fund has been in trouble for 12 months in a row. Receipts have not been enough to cover benefits and extended benefits to the currently unemployed. So far, every taxpayer in the country has been replacing excess taxes once paid by employers but stolen by the Beltway Bandits and spent elsewhere. This so-called trust once held $92 billion in bogus bonds. Today, it holds only $32.7 billion. That's $59 billion in double taxes plus interest that we've paid a second time in the last few years.

Any month when one of the 24 entitlements has a shortfall, any month where receipts are less than payouts, the money to make up for the shortfall comes from either (1) current taxes in the Treasury's general fund (2) borrowing honestly from investors (3) cutting benefits or budgeted programs or any combination of these three. You can verify this from the horse's mouth.

The sad truth is that this is exactly the same thing, the same choice, the government would have if there were no entitlement trust funds at all, if they didn't exist. The only difference is that they would probably need legislation to raise taxes or borrow where this way they can sneak in increases by pretending to cash-in bogus bonds that, like the entire national debt, only taxpayers can redeem.

What's really different this year is twofold. First, a great many of the entitlement trust funds are being drawn down. And secondly, the amounts of surplus generated by overtaxation in payroll taxes, gas taxes, harbor fees, and so forth, are not what they once were. In fact, these surpluses are declining rapidly.

Again, these are only the major entitlements that I follow in detail. If we added in Veterans Life Insurance, Railroad Retirement, Harbors, and the smaller funds (there are 24 in all), this total would probably be closer to $54 billion.

Significant is the fact that payroll taxes towards Social Security have merely generated $27 billion in the first six months of this year. If this continues, the pirates will end up with only $54 billion to steal when the goose that lays the golden eggs has generated much greater surpluses in the past. Last year, the surplus was $82 billion and the years prior to that produced a greater larder.

Coupled with the fact that the Unemployment Trust Fund is producing no monthly surpluses at all and is being drawn down continuously, the drop in payroll taxes for the Social Security national supplemental retirement system is further indication of the job situation in America. Joined with "outsourcing," layoffs, and people taking jobs at lower pay scales, we have a better indicator of the economy than the hopeful garbage politicians and the media try to force-feed us.

You might also note that the government's own retirement system, the Federal Employees Retirement System (FERS), is in the same position as many corporate pension plans. See the New York Times article "$80 Billion Pension Bill is Approved by the Senate" of April 9, 2004.

The lavish pension plans that the government has promised its employees has finally come home to roost. Like the corporations that haven't the money to cover these promises, the largest employer in the nation, the federal government, has other ways to handle the problem. They let you the taxpayer cover their extravagances. For the last six months, you have been paying the $14.6 billion shortfall in the Federal Employees Retirement System. Too bad corporations don't have taxpayers to back them up.