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11/21/08
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July 19, 2005 We not only pay more than is needed for our own supplemental retirement insurance (Social Security) but it looks like we pay more than half of the premiums for millions of federal employees because they don't contribute enough to keep their own retirement program going. And the pirates are more concerned with reforming Social Security than they are their own troubled program. You haven't heard any talk of reforming the FERS insurance program have you? And it's a perfect example of what happens when more is promised than the system can afford. Sometimes I wonder if anyone but me keeps a record of the receipts and expenditures reported in the Monthly Treasury Statements for various entitlement trust funds, the same trust funds that make up $3.3 trillion of our national debt. Social Security alone currently accounts for 23 percent (22.9%) of this horrendous $7.8 trillion total taxpayer obligation. But then most of you have probably swallowed the fantastic Harry Potter story that this $3.3 trillion in debt is a case of the government "owing itself" and will be redeemed without taxpayer money (an impossibility) or somehow just magically disappear. The second largest trust, the FERS account currently standing at $657 billion in debt may be the most blatant example of how the pirates use debt markers (bonds) to suit their own purposes. It may even be worse than continuously dumping more markers into each account at absolutely no cost and calling it annual interest. For a long time, I thought that this phony interest payment was the most heinous thing the pirates could do, but it pales in comparison to what’s happening with their own retirement system. For as long as I’ve been keeping a running tab on the FERS trust activity, for six years in a row, this account has been in the red every month except September. In September, the trust receives a large and unusual influx of receipts, usually averaging about 21 billion. It’s just enough to keep the system in the black for the year and move it ahead. Unlike the Unemployment trust fund, this trust has never shown an annual decline, it only becomes larger. Let’s get specific. Here’s the running table on fiscal 2004:
If we average receipts for the first eleven months, we get an average of $1,990 paid into the system by federal employees, their premiums. If we substitute this figure for the $28 billion in recorded receipts, it would mean that in September the system had a $2,469 million shortfall, and a total yearly shortfall of $31.5 billion that had to come from somewhere in order to pay benefits. Guess where it came from. We should all realize by now that if a trust fund experiences a shortfall the government must either (1) raise taxes (2) borrow from investors (3) cut programs (including benefits) or any combination thereof in order to fulfill its obligation. If premiums were raised for federal employees, they certainly were not raised enough. This leaves borrowing from investors like China , Japan , and organizations or individuals willing to loan the government money or cutting budget programs. In other words, we are paying for federal employee’s lavish retirement, a system where many get as much as eight-to-one in “matching” funds. Isn’t that nice? Obviously, this extra deposit in September did not come from interest against the previous year’s closing balance. Interest that was paid half in December and half in June, just like Social Security’s bogus interest increase in our obligation during the same months. All inquiries to the Treasury, short of a freedom of information petition, have resulted in nothing, no explanation. I’m assured that it has nothing to do with the regular premium payments employees have taken from their paychecks, and when I ask if it could possibly be from bonuses at the end of the fiscal year, people just laugh. Everyone admits it’s a good question, but no one will admit to why it happens, and they just shuffle me off somewhere else including the Personnel Department. If push came to shove, if the pirates could be backed into a corner, I would bet that the rationale or spin for this huge September income is based on the 8-to-1 matching fund promise. Add up the amounts contributed by federal employees for the year and multiply it by 8.37, the last increase I've heard of, and the result is very close. Of course, this assumes September's contributions were around $1,990 million. And no matter, because it still amounts to dumping more bonds in the account at no cost to the government but plenty to the American taxpayer. There is no other logical reason for this September increase except the fact that the U.S. Treasury simply dumps more bogus certificates in the FERS account to keep their retirement system solvent. As it is now, the American taxpayer covers more than half of the benefits to today’s retired federal employees. And you might say that we’re lucky we don’t cover it all, that federal employees contribute something, but then they couldn’t get their 8-to-1 matching funds if they didn’t contribute something. And you don’t hear any talk about the FERS system being in trouble, needing to be “fixed.” Raising the premiums would not balance accounts because the matching funds would grow at the same time. If you don’t believe this is possible, pay attention to what Thomas R. Saving, PhD, and one of the public trustees of the Social Security and Medicare trust funds had to say on the subject during the fist public meeting of the President’s Commission to Strengthen Social Security: “Mr. Chairman, I think an issue that’s related to this issue is that if we, and we could do this, Congress could simply do this by running the printing press and printing up more of these bonds, if there was a googol trillion dollars in the trust fund, and that’s 10 to the 100 trillion in the trust fund; or if there’s zero, the implication for the federal budget are identical after 2016. It makes absolutely no difference what’s in the trust fund, and because of this, we would argue in economics there’s nothing in the trust fund, it’s simply a promise, and as it impinges, as I pointed out earlier, both with Medicare, Medicaid and this, by 2070 one hundred percent of the federal budget will be used for these programs. And that’s assuming the federal budget grows with gross domestic product and stays a fifth of the GDP. The point is that the trust fund is irrelevant except in this legal sense, that when the trustees come to the Secretary of Treasury and hand them these certificates, they are required to give us cash and that’s only required if Congress requires them to do that, and if it’s impinging on the other aspects of the federal budget that are more important at the time, then clearly hard decisions have to be made. But it doesn’t change the actual federal revenues in any way. So it impinges on these revenues, and it’s important for I think the public to understand what the trust fund really means and changing those numbers, because they can easily be changed and the system can be made solvent in that sense of the word. We can make that trust fund anything we want to. If we want to change the interest payments, which is a suggestion that’s been made, change the rate of interest, make it 100 percent a year, we can make this last forever, but we can never actually find the real resources because retired people, as I say, drive real cars, eat real food, and live in real apartments and use real medical care, and that’s real output in the country and that’s the only thing we have. We can’t change it with writing numbers on a sheet of paper.” Here's another little ditty for you. The Social Security trust funds, FOASI and DI, were awarded $86.7 billion in "interest" this year. Assuming that the interest rate of 5.327 percent remains constant, this compounding interest would generate $1.65 trillion in bogus bonds by 2018. This almost doubles the trust's current "holdings" and it does not include what will be added by thirteen more years of surplus borrowing (theft). Do you know of any legitimate private sector insurance company or program that can operate this way? Do you hear anyone else talking about this other retirement insurance program, the Federal Employees Retirement System? All entitlement trust funds are in the same boat as Social Security. And as far as I know, the FERS scam may have been set up originally to run this way or at least since the Eighties when FERS replaced the original Civil Service Retirement plan.
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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