July 15, 2005
Its worth recapping the original Guiding Principles Bush gave this new commission:
The difference between what is said and what is actually done is most significant in terms of numbers two and three.
NUMBER TWO addresses the one and only major problem Social Security has had for ages a government that walks off with its reserve, its profits, and spends that dedicated money anywhere it chooses. Any private sector insurance company that did the same thing would be severely punished. And Social Security would not have any serious problems at all if that money had not been malappropriated.
If Bush were sincere about dedicating the entire surplus to Social Security, he could easily have frozen these surpluses until things were settled. He could have done it by the same sort of executive order that established this commission. Freezing assets is common practice in other litigation, disputes, and settlements.
Clinton could have done the same thing when we were wasting years debating lock boxes. And today, were right back to the same arguments while all the time real trust funds such as the government runs for its own Thrift Savings Plan are lock boxes by their very nature. No one but the trustees can touch the money and trustees can be held accountable.
In both cases, the portion of payroll taxes that were overcharges, the taxes that were collected for retirement and disability and were not needed at the time, could have been refunded (cut to breakeven to balance accounts) or stuffed in a mattress, put in some trustworthy bank to draw simple interest, or put in a real trust fund like the TSP trust with transparency and accountability.
Instead, the Beltway Bandits spent this surplus money and then used an elaborate pretense to cover up what they knew was illegal. They pretended to have borrowed or invested the money and they put IOU markers in accounts that are part of the national debt. Taxpayers end up caught in the Pay-It-Again Sam scam, double taxation plus interest. The markers are really UOUs that only the same taxpayers or their children can redeem.
Politicians cannot keep their greedy hands off surplus money and will spend it as fast as it comes into the Treasurys general fund, sometimes even thinking that it legally belongs to them, and always planning for it in their budgets as off budget revenue.
Raw cash malappropriated by the current administration since fiscal 2001 now amounts to $412.7 billion and the total held in the fictitious accounts is now $1.7 trillion, 22 percent of the national debt, and growing.
POINT NUMBER THREE, payroll taxes must not be increased, may be a miswritten over-simplified directive but if not then its downright silly in view of the indisputable fact that payroll taxes have been increased 49 times in Social Securitys 68 years of collecting these taxes. See the history table where every line is an increase, and while youre at it you might also notice the taxes paid when the ratio of workers to retirees was much different than it is today.
Prohibiting consideration of future raises is also ridiculous in view of the fact that the Bush administration has itself increased payroll taxes every year. In the last five years, these taxes have been increased by raising the cap on salaries taxed from $80,400 to the current $90,000 level of 2005. The legislation was in annual budgets and in view of the surpluses being generated wasnt needed at all.
There is also good reason to believe that point number three is not an oversimplification because its the same way the government, including the trust fund trustees, make projections of the future. They deal with todays figures as the base and completely ignore what have always been normal actuarial increases to adjust to changing economic and social conditions. And they do this because its too difficult to predict the future.
In other words, we end up with very frightening projections of what will happen in the Matrix if something isnt done when something has always been done in the past. The usefulness of these projections is never qualified properly and can be extremely misleading.
On the other hand, these projections are very useful to politicians trying to support their arguments or their attempts to increase surpluses to pilfer.
Bear with me on this, it's important.
A case in point is the self-perpetuating future date when the so-called Social Security trust funds will run dry. At the time when the Presidents Commission to Strengthen Social Security delivered its final report in December of 2001, this future date of insolvency was pegged at 2038. Their reports, both Interim and Final, are replete with references to this date.
Today, the date is set at 2042 and it will continue to increase as long as the government continues to spend the Social Security surplus. Because of their elaborate scam of pretending to borrow rather than to have stolen these surpluses, the trust funds increase. And the more the trust funds increase with bogus holdings, the longer the trusts will last. Its that simple.
Even if the government stopped stealing the surplus, the trust fund would increase anyway because of the annual interest thats dumped into the account at no expense to the government. This year alone, fiscal 2005, the interest paid the Social Security trust funds amounts to $86.7 billion. By itself, this compounding interest is enough to guarantee the trusts will increase in perpetuity.
No projections are made on the assumption that the same gradual increases that were implemented in the past might take place again. For instance, if we increased payroll taxes the same way it was done in the past 68 years how long would the trust funds sustain Social Security? The result would probably take us into the next century.
The arguments that would be made against such a projection would quite rightly be that the same conditions sparking those alterations in the past are different today. Thus, it would be wrong to use them again as a basis for projections.
And they would be right, particularly when it comes to the fantastic payroll tax increases that were implemented in 1983 under the co-chair of the new commission, the late ex-senator Daniel Patrick Moynihan. We have not had seven years of Social Security turning to its trust fund for small withdrawals that put Congress in a tizzy, caused Reagan to establish the Greenspan Commission on which both Moynihan and Bob Dole served, and which delivered a report in January of 1983 that few even bothered to read.
Serving on the Greenspan Committee gave Dole and Moynihan the credibility their cohorts could point to when these two hatched their own plan to save Social Security with a bill for huge payroll tax increases, a bill that passed within a month, and a bill that gave everyone an excuse to set Greenspans report aside.
Implemented gradually, this 1983 Moynihan/Dole Bill gave us the 15.3 percent payroll taxes that are still generating huge surpluses today and also raised the age of retirement to 67 by 2023. And the conditions that caused the "crisis," the conditions that gave the Greenspan Commission reason to meet monthly for a year, had already passed by the time their report was delivered. The eonomy was back on its feet, people were working, papyroll taxes were rolling in with a slight surplus, and the whole subject of reform could have been set aside.
Today we are told, based on the idea that things stay the same, there will not be a crisis until payroll tax receipts are less than payouts to the retired and disabled in 2018. And we are also told that its important to develop solutions now (make changes) even though big surpluses are still being produced, payroll taxes are immediate (as soon as workers next paycheck), and the money needed to keep Social Security balanced would be minimal at first, gradually increasing until 2042 when the trust will be exhausted (if nothing changes).
Think of it as a very serious game. A game that involves even more fabrications than our reasons for invading Iraq, and a devious plan to continue stealing Social Securitys surpluses right up to 2018 or whenever.
If you want to read the Interim and Final Reports by Bushs Committee to Strengthen Social Security, its all posted on my web site in PDF format. In these reports you will notice that just four years ago the experts were talking about Social Securitys shortfall beginning in 2016 and the trust fund sustaining the system or lasting until 2038 (considerably different than todays 2018 and 2042 dates respectively).
You might also note that nothing has changed in the last four years except the cap on payroll taxes that went from $80,400 to $90,000 salaries (see table), an increase in the base or market for payroll taxes.
If you really want to read something interesting, go to the transcript of the first public meeting (C-Span was there) of the members on Monday, June 11, 2001 at the Willard Inter-Continental Hotel in Washington .
The first 36 pages of this transcript cover the introduction of members where in round-table fashion they each tell us who they are, how appreciative they are for being chosen to serve, and their particular points of interest. Ive set the link to skip this first part and take you directly to the after lunch portion where they get right down to an immediate discussion of the value of the so-called trust funds, what the markers really mean for the government, and even the problem the government faces as these surpluses decrease until they are finally gone in 2016 (unless something is done to raise them). Todays real reasons for changing a system that doesnt need changes other than normal adjustments to population and economic conditions is to increase this falling booty, to push it back up to the hundred billion per year range for the government to steal.
The federal government, republicans and democrats alike, are desperate for money. They will even let millions of illegal immigrants cross our borders in hopes it will raise payroll taxes.