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02/11/12
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June 20, 2005 How is this possible? How can so many great minds continuously revise their long range estimates? It’s almost as though politicians, bureaucrats, and think tanks have done what science failed to do. They’ve devised a perpetual motion machine that just keeps going and going. And worst of all, the public believes this fantasy. Let’s temporarily forget that the Social Security trust funds are today recorded as 22 percent of the national debt. Debt is debt, it’s not a savings account, but let’s set that aside for the moment. Let’s also forget that these projections are based on the assumption that nothing will be done to alter payroll taxes. An assumption that may be necessary for the wizards to make their projections because the future is so tenuous, but an assumption that is nonetheless childish in view of the fact that this tax base has been changed 49 times during the 68 years of a smoothly operating system (see chart where every line represents a change). What do you suppose it would look like if the same 49 changes were put into the projections of the future? We will even go along with President Bush’s statement that “I will not raise payroll taxes” while the record shows that he’s already raised them every year he’s been in office including this year, fiscal 2005. The question today is; why does the estimated survival time of Social Security rise every year that it’s examined by the trustees and others? And the answer to that is painfully simple – the larger the trust fund, the longer it will last. And every year the trust fund grows by leaps and bounds. So what makes the Social Security trust fund grow? The answer to that is also painfully simple. The answer is theft, malappropriation, or whatever you want to call the continuous misuse of excessive payroll taxes every worker in America believes he or she is paying towards the minimal retirement program. The federal government takes this surplus money, spends it, and then pretends that it was merely borrowed or invested – an absolute impossibility. There is no way in the world that the same money can be both spent and saved. If there’s anything that “everyone knows” it’s that once you spend money it has left your pocket forever. Your only recourse is to go out and make more money, new money. That’s an indisputable fact of life, but not for the government. Not when fraud is possible. To carry out this fraud our government has invented fictitious accounts that they’ve labeled “trust funds” and equally fictitious “holdings” that they’ve labeled “special obligation” Treasury securities. They record all of this in the “Intragovernmental Holdings” (IH) side of the national debt, now totaling $3.2 trillion and all just as completely fraudulent. The crime involves a lot more than Social Security’s $1.7 trillion share, but let’s also set that aside for the moment. Considering Social Security alone, these stolen surpluses are not small amounts. In fiscal 2000, the year of our greatest surpluses, Social Security’s excess contribution was $94.5 billion. That was real money that could have been set aside, saved, or given back to taxpayers. It could have been applied to a reserve even if it was just stuffed in a mattress and not invested anywhere. The next year, fiscal 2001, it was the highest ever at $98.7 billion. And this is not counting the annual interest that was dumped into the account by depositing more fictitious securities at no expense to the government but further increasing both the trust fund holdings and the national debt. However, since 9/11, the war on terrorism, the invasion of Afghanistan and Iraq, and a worsening economy that the government publicly tries to deny or avoid talking about, these surpluses have steadily declined. In 2002, the Social Security surplus was $89 billion. In 2003 it was $82 billion. And last year it dropped to a $71 billion surplus. In the past few years, these stolen surpluses look like this:
By itself, this steady decline in booty is enough to panic the pirates. It’s enough to make them start thinking seriously about ways to “fix” Social Security, to increase payroll taxes, and to make the American public believe that it’s necessary or that it’s even inevitable. Add in the annual interest that the government simply dumps into the account and the trust fund looks like this: Please notice that the annual interest for fiscal 2004 is just as much as the entire trust fund’s increase in 1997, just eight years ago. This is all due to what Senator Daniel Patrick Moynihan and others have referred to as the “magic” of compound interest. Here’s the hooker:
Interest does not go down – it only goes up. As long as there is any surplus at all, even if that surplus is just one dollar, the compounding interest portion will continue to rise. The charts above illustrate yearly increases or decreases in the overall account. They do not show the accumulated amounts. As of the end of April, 2005, the Social Security trust fund stood at a total of $1.732 trillion and 22.3 percent of the national debt. At the close of fiscal 2004, the trust fund stood at a total of $1.635 trillion. This month, June of 2005, half of the annual interest against last year’s closing balance will be dumped in the Social Security trust fund at no expense to the government. This will cause the trust fund to rise $43.5 billion at this year’s interest rates plus whatever surplus America's workers contribute through their excessive payroll taxes in June. For fiscal 2005, the interest increase alone will be $87.1 billion. This new debt is brought to you, absolutely free, through the courtesy of your federal government and by the magic of compound interest. Add to this the surplus payroll taxes rolling into government coffers at a rate only slightly below last year’s $71 billion (see analysis) and we will have another increase to the Social Security trust funds of at least $150 billion – enough to extend Social Security’s life for another two years or so at the far end of the Matrix. Are you starting to realize why the Beltway Bandits, especially the democrats and a number of republicans, are intent on some sort of “fix” to Social Security and dead set against anything like Bush’s private investment accounts that might take away any part of the booty? Meanwhile, we’ve got a president no one can trust running around the country making all sorts of inane statements and too few true ones. About the only honest thing he’s mentioned has been to wave the Parkersburg trust fund backup paper securities in the air while calling them “worthless” or “meaningless” and failing to point out why they are definitely not meaningless to the government. Confusing,
isn’t it? Not if you worked for Enron, WorldCom, Tyco, Arthur Andersen,
have a swindler's mentality, respect crooks, have faith in the new "bubbles"
concept, or take Deep Throat's advice and follow the money.
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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