March 11, 2005

The following is an excerpt from a speech called “Social Security Saved” that Daniel Patrick Moynihan delivered to the John F. Kennedy School of Government at Harvard University on March 16, 1998 .

"On January 3, 1983 , Robert J. Dole, Senate Majority Leader, published an article on the op-ed page of The New York Times, entitled "Reagan's Faithful Allies." It seemed that many people thought Congressional Republicans weren't giving the President the support he needed and deserved. Not so, Senator Dole said, we are with the President and there are great things still to be done. Then this: 'Social Security is a case in point. With 116 million workers supporting it and 35 million beneficiaries relying on it, Social Security overwhelms every other domestic priority’.... That day I was being sworn in for a second term in the Senate. I had read the article and went up to Senator Dole on the Senate Floor and asked if he really thought that, why not try one last time? (They had just spent a year on the Greenspan Commission that went nowhere) And he did think it. A year of listening to Myers had altered a lifetime of Republican dogma. We met the next day. The day after that Barber Conable was brought in, a Republican who both understood and believed in Social Security. On January 15th, 13 days from our first exchange, agreement was reached at Blair House and the crisis passed...Social Security was secure for the time being. Indeed, the payroll tax generated a considerable surplus which we have lived off ever since, and will continue to enjoy for yet a few years.

Within a month, Congress passed and President Reagan signed a bill raising payroll taxes over the next seven years to the present level of 15.3 percent. An increase that was not the recommendation of the actuaries and statisticians of the Social Security Administration in Baltimore and an increase responsible for the hundreds of billions the government has “enjoyed” ever since. (See chart of recent years)

This was the increase in payroll taxes that is largely responsible for the $1.7 trillion in debt now held by so-called “trust funds,” a debt that can be redeemed only by raising taxes on the very people who provided the surpluses in the first place. This raise will come as a tax increase or by borrowing, and borrowing is nothing more than a tax on the future of the same public. The result is double taxation plain and simple with interest added at no expense to the pirates who blew these surpluses elsewhere.

Debt is debt folks, it doesn’t buy anything. Yet, Bush and company are telling you that it will somehow sustain Social Security until 2042 or 2052 depending on whose projection you accept. All while the pirates continue to “enjoy” payroll tax surpluses such as the $71 billion from last year. Thanks to Senator Moynihan.

This same 1983 fast tracked Moynihan bill raised the age of full retirement from 65 to 67 over a twenty-four year period beginning in 2003 and taking full effect in 2027.

This is the same man today's politicians laud and praise as "Mr. Social Security" as well they should since he was responsible for bringing them enormous surpluses to "enjoy."

This is the same man who shortly before he passed away (God rest his soul) recommended reducing payroll taxes, probably out of guilt.

This is also the same man that President George W. Bush appointed to chair his Committee on Social Security in 2001. A committee that Bush charged specifically with the duty of coming up with methods to implement his “personal accounts” plan.

So far, we have little to go on except this 2001 committee report and the fact that Bush’s plan seems to be a take-off on the Thrift Savings Plan that his father helped implement in 1987 for government employees. It’s all further complicated by the fact that the primary members of the committee never signed off on a final report and what we have is a draft put together by the grunts. The Interim Report was better.

Neither Bush’s personal accounts nor an imitation of the Thrift Savings Plan would do anything to solve or even address the Social Security problems that Bush himself claims to be so urgent, a dwindling ratio of contributors to beneficiaries, people living longer, and so forth. All of which are actuarial matters that Social Security’s Chief Actuary says are not difficult to overcome. The Social Security Administration has adjusted variables like this 49 times during its 70 years of success (See table).

The Thrift Savings Plan is similar to a 401(k) investment program that many employees in the private sector already have. It offers several options for investment, one of which is investment in the stock market managed by Barclay Bank of Great Britain . Another is investment in U.S. Treasury securities which is absolutely ridiculous for America's workers since it’s the taxpaying public that must redeem these investments and amounts to betting against your own ability to redeem your own money with interest added and with a heavy percentage going to the government for the privilege. What some are referring to as the three percent compounded “clawback” seems be just another scam.

Investments in the stock market are the subject critics latch onto and claim would only enrich wealthy brokerages. Another crazy debate that, if we were talking about the surpluses the Beltway Bandits have been “enjoying,” would be enough for Social Security to buy its own seat on the Exchange and not pay commissions to anyone.

In fact, the Social Security surpluses that have been malappropriated by the Beltway Bandits and spent elsewhere are probably sufficient for the “supplemental” retirement system to set-up its own bank and perhaps even compete with the Federal Reserve. Can you imagine Social Security as our Central Bank? Alan Greenspan can. That's why he is not to be trusted either even if you can wade through his enigmatic verbage.

The real question is – who in their right mind would trust the federal government with investments of any sort? These are politicians and bureaucrats that can’t even live up to the honest requirements of a trust fund and the public already pegs these people at the integrity level of used car salesmen.

You’ve got to be a little whacky to believe that “volunteering” for any scheme politicians come up with is going to result in anything secure and profitable. They’ve already proven themselves worse than Enron.

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