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April 05, 2005 From its beginning, the federal government has been taking excess/surplus payroll taxes generated by the Social Security program and spending that money elsewhere. At first, the amounts were relatively small and could be written off as contingency funds that hardly anyone noticed and the government was expected to pay back. It was listed under “Federal Debt.” But in 1983, Senators Daniel Patrick Moynihan and Bob Dole changed all that. They sponsored a bill that passed within a month and turned this payroll tax mechanism into a much more lucrative source of “off budget” revenue for the federal government. They did so because all of Washington was panicked over the fact that Social Security had for seven years in a row turned to its trust fund for minor withdrawals that cost politicians dearly. Drawing down on an account that was a “trust fund” in name only meant that the politicians and bureaucrats had to either (1) increase taxes (2) borrow or (3) take the money from their budgets in order to cover the shortfall in payroll taxes. Since then, Congress and four different presidential administrations have enjoyed rising surpluses that have made Social Security a huge source of exponentially increasing revenue that the government has learned to depend upon, that politicians consider “their” money as though they earned it. It’s all reflected in the direct dollar-for-dollar increase of the Social Security trust funds (FOASI and FDI) plus interest added at no expense to the pirates. Today this accumulated amount is over $1.7 trillion in “unfunded liabilities” and accounts for more than 22 percent of the national debt. (see chart) In pure dollars contributed by workers making forced payroll taxes payments that have not been reduced despite a sour economy, these amounts add up to more than $384 billion pilfered in the last four years and despite a steady decline caused by unemployment during a sour job market. A situation that will pick-up once the job market turns around, if ever. (see chart) These amounts that democrats and some republicans are screaming bloody murder about possibly losing to what they deceptively call “transitional costs” were predicted by “testimony” of the Congressional Budget Office in 2001. They were predicted to reach $3.2 trillion by 2010 before the economy began to tank. In short, it looks very positive if these surpluses are diverted into “personal accounts,” if such accounts take this booty away from the Beltway Bandits and put it where it might at least have the opportunity to grow and belong to the American workers who contribute it. If 700 million workers each contribute $1,000 a year to Bush’s “personal accounts” it would eliminate the $71 billion surplus stolen last year and expected to reach that level again this year – and just like other years when this surplus went elsewhere, it wouldn’t disturb benefits to the currently retired or disabled one iota. But is this really what George W. Bush is talking about, or is his plan just another scam to increase government booty? What is Bush really talking about? In the end, the question comes down to whether the younger generations are going to trust a man and a government that has cheated every worker for ages and has admittedly told us all sorts of falsehoods in recent years on other vital subjects. Recent polls suggest that it is not going to happen. During the 2000 election campaign, George W. Bush got a lot of backing for personal accounts he merely mumbled about in debates where the subject of Social Security was always promoted as “an issue” but seldom made it to the floor except as a closing statement. Occasionally, Bush put it forward in terms of the Thrift Savings Plan where he said that plan was “good enough for them, but not for us.” He might have succeeded with his reform idea if he had done something about it in his first year in office, but instead he took on the schemes of the New World Odor henchmen with which he surrounded himself. And we ended up with all the lies about “weapons of mass destruction” and other falsehoods that led us into the Iraq quagmire. What he did manage to do in 2001 was to put the fox back in the chicken coop by appointed ex-senator Moynihan to co-chair the commission to study Social Security, a commission that was given express orders to find ways to implement the personal accounts idea and had about as much impact as the Greenspan Commission of 1982 that Moynihan himself participated in and went against or sidestepped its ambiguous actuarial recommendations. Bush also appointed Paul O’Neill as Secretary of the Treasury, a man who, on June 19, 2001 , let the cat out of the bag by publicly announcing that there was no money in the Social Security trust funds. A man who was hailed by the CATO Institute as a “politician finally telling the truth” and causing a furor in the media about the value of these trust funds without viable assets. A furor that lasted right up to the horrors of September eleventh. A furor that has today been forgotten by a media too lazy to review its own transcripts. The summer of 2001 brought us to the brink of unraveling the government’s scam. We got to the point of laughing at the accounts called “trusts” and hearing from multiple authorities that if the Beltway Bandits must ever turn to these trusts for money it would involve (1) raising taxes (2) heavy borrowing (3) robbing Peter to pay Paul from general taxes or any combination thereof. The same general fund raising options of our not-for-profit government at any time. The same situation we would be in if there were no fictional trust funds at all. But we never got to the final realization that these so-called trust funds involve much more than Social Security and that they serve a very definite and criminal purpose for the government. These so-called “trust funds” serve the explicit purpose of double taxing America ’s workers and the taxpaying public – getting people to again pay taxes that have already been paid once before but squandered by the government. It’s as ludicrous as if people walked into the Treasury with bags of money, plunked them down, and said: Here give me some debt – and don’t forget to add annual interest so I’ll have even more to pay you back. Today, we are back to square one and once again we have deceptive, deluded, naïve, or paid proponents of the government telling us things like how the Social Security trust funds will sustain the retirement system until 2042, 2041, 2052, or somewhere in the matrix and how it will be necessary to begin drawing down on these accounts in 2011, 2014, or 2018, so we better do something about it now. And we have President George W. Bush running around the country claiming that all ideas for Social Security reform are “on the table,” welcoming new ideas while accusing the democrats of not having any, and failing to explain any specifics of his own plan. If we take some of the recommendations of the 2001 Moynihan committee as a possibility, then we’re headed for an even greater trap than the one America ’s workers are in already. This plan allows younger workers to put part of their payroll taxes in investment accounts which sound pretty good at first glance. They are permitted to put $1,000 a year into these accounts and eventually up to 4 points of the 6.2 points they contribute today. The hooker sets in when upon retirement these workers find out that the money they contributed was really a loan from the government. After all, it was the government’s money that they invested and upon a worker’s retirement the government wants it back. This is what some are calling the “claw back” factor. The balance of any profits garnered over the years will belong to the worker but only in the form of an annuity, which means the worker will receive the annual interest from this annuity while the government sits on the principal. What a deal. Economists like Mark Weisbrot and others have commented on this in detail. The long and the short of it is that you would be better off taking fourteen percent of your payroll taxes and stuffing it in a mattress. Likewise, if politicians like George W. Bush had a bone of honesty in their bodies they would have done the same thing with Social Security and other entitlement surpluses long ago. More than three trillion of the national debt is a scam represented by bogus bonds in bogus trust funds of the entirely dishonest “Intragovernmental Holdings” side of the debt – all of which would have put us 100 percent ahead of the game if it had merely been stuffed in a mattress. Not invested
anywhere and certainly not permitting the government to spend your money
under the grand pretense of “borrowing” is just the beginning
of the action you can take. From that point forward, things should be
your choice.
Visit Ed Henry's own web site! Send a message to your elected representatives. Click here to start. Be sure to send a copy to Ed Henry.
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Borrow-holics Setting Records- Time For Honesty About Social Security Stop The Bleeding For Real Social Security Reform- Social Security Trust Already In Trouble The Real Crisis Of Social Security Comouflage Surrounding Social Security Boomer Myth - The Great Fear Story For Social Security First Things First - STOP Social Security's Bleeding Secrets Neither Political Cult Will Tell You Bush Put The Fox Back In The Chicken Coop Unfunded Liabilities - What They Are Job Market Reflected In Payroll Taxes $3.2 Billion A Day - $2.25 Million A Minute Go George Go - Keep Talking About Social Security Complete Archives for Ed Henry | ||||||||||||||
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