June 06, 2005

You’ve all heard about the crisis facing Social Security. It’s the basis for the entire debate over how and why to change the system now. We are told that at some time in the future, distant and not so distant, Social Security will have to rely on its trust fund in order to pay full benefits promised to retirees. Unless changes are made now, the supplemental retirement system will go progressively deeper and deeper in doo-doo until it finally, according to George Bush, goes broke or at least cannot pay more than eighty percent of benefits.

Since the whole Intragovernmental Holdings (IH) portion of the national debt is composed of 143 trust funds in the same boat as the Social Security trust funds, holding nothing but “special obligation” Treasury bonds, all we have to do is look at one of the other entitlements already in trouble.

The Federal Employees Retirement System (FERS), the second largest trust in IH:

The following tables are taken directly from the U.S. Treasury's Monthly Statement and provide a running account of activity month to month and year to year. Annual interest is paid against the previous year's closing balance and half is paid in December, half in June. The interest rate is taken from the Bureau of Public Debt and is the average for the year. As a result, there may be small discrepancies in the amount of interest paid the trust with no money involved but by simply depositing more bonds.

Pay particular attention to the month of September, the close of the government's fiscal year. The September influx of bonds does not come from interest or unusual employee contributions, although the regular monthly contributions from employees is included in this September figure. No one but deep throat will admit where the bulk of this huge addition does come from.

See the series of tables - click here.

To maintain the solvency of the federal pension plan the government simply deposits more “special” obligation nonmarketable bonds in the account during September. It doesn’t cost them anything to do this, but real money to cover the monthly shortfalls is taken from the Treasury’s General Fund of taxpayer dollars. Real money that comes from taxes, borrowing, other budgeted programs or maybe even the excessive surplus payroll taxes America's civilian workers are providing the government every month so they can steal it and spend it elsewhere.

In other words, the taxpaying public is covering more of the monthly benefits to retired government people than they have or are contributing themselves. Isn't that nice?

I suppose we should be thankful that employees make any real cash contributions at all or that the government doesn’t just dump in a few trillion and be done with it. But then, that would be too obvious wouldn’t it?

As it is, there’s a good chance most who are covered by this retirement plan don’t even know this is happening. After all, who but me is crazy enough to record these monthly balances or even look at the Treasury’s Monthly Statement? Certainly not the media, the watchdogs or think tanks like the Heritage Foundation, Cato Institute, or even AARP, the competing insurance company that has wormed its way inside the Beltway.

The idea of a “deep throat” putting me on the trail of this scam may be a joke (call me in 33 years and I’ll tell you) but the figures above are certainly not a joke.

They are all part of the public record in the Treasury’s Monthly Statements. And the Treasury even provides an archive of these reports month by month. You can check them yourself. The only difficulty will be finding the Bureau of Public Debt’s records of the average interest paid each year, interest that’s determined with a five year model of the interest paid honest securities sold on the open market to raise/borrow money.

These IH securities are the same type of bonds President Bush waves in the air and calls "useless" or "meaningless" just as so many other authorities have told us that they have no value to the taxpaying public. I only hope that by now you realize that these are not useless to the government that invented them. They represent the greatest financial fraud the world has ever seen.

If the government can do this with their own employee's retirement pension, then they could do it with Social Security and there's no need for debate, argument, or any change. Just dump more bonds in the account when the baby-boomers start retiring and let the American taxpayers take it from there by coughing up even more of their hard earned cash. We don't need a deep throat. We need deep pockets.

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.

Archives

The Job Market Reflected In March Payroll Taxes

Changing Direction On Social Security Reform

Response To Our Open Letter

Cacophony - Don't Feed The Animals

Your Money - Gone, But Not Forgotten

Echo Chamber Goes National

Inquiry Into Trusts

Cockamamie All Over The Place

911 And Social Security

Another Confession, Like Pulling Teeth

FERS - The Federal Employees Retirement System

Lost Pensions Plaguing Workers

Prepare For An Onslaught Of Garbage

PBGC - Do You Know What That Is?

Complete Archives for Ed Henry