August 31, 2005

Here’s another one that you can put alongside the Federal Employees Retirement System (FERS) trust fund that mysteriously receives a pile of nonmarketable Treasury bonds every September, a deposit of billions that seems to float into the account for no reason other than to keep the program solvent. Another feat that only a corrupt government could pull off while robbing other entitlements like Social Security and Medicare and making us wonder what will happen when these trusts are exhausted.

This one is more than hazy. It’s preposterous. Yet, it’s dutifully reported every month in the U.S. Treasury’s Monthly Statement, table 8, three pages from the back and titled “Trust Fund Impact on Budget Results and Investment Holdings.” Remember that this is a federal government trust fund where holdings can be turned into cash at any time by raising taxes, borrowing from investors like China, or raiding budgeted programs to make these "holdings" good.

In other words, these nonmarketable bond "holdings" may, as President Bush says, be worthless to you and me, but they are certainly not worthless to the government. They are "negotiable" because they can be turned into cash that comes in one way or another from America's taxpayers and, in the case of Social Security, Medicare, or payroll taxes in general, amounts to double taxation with interest added.

Then these same politicians have the balls to put forth a disaster scenario about what will happen when Social Security and Medicare surpluses run dry and these entitlements must turn to their trust funds, coupled with how long these so-called trusts will last.

The nice thing about Adobe’s PDF format for the Internet is that you can quickly go to the end of the report and then back up two pages. Voila, there it is, Table 8, for anyone to read except the mathematically challenged media, investigative reporters of the Fourth Estate, or the various “think tanks” supporting one or the other of our two political cults.

As Jimmy Buffett says; “some things are still a mystery to me while others are much too clear” and this one has me baffled. I assume that this trust is for some sort of health and life insurance for federal employees, but it’s difficult to get precise information about it.

Still, it’s a trust fund and it’s listed under Intragovernmental Holdings where all the trusts held there are a major portion of the national debt and are stuffed with nothing but “special” nonmarketable bonds. Don’t you wish that you could pass off something like these on your unsuspecting creditors? Even get them to give you more money for them?

In particular, you will notice that this is the only account having no receivables, none whatsoever. Annual interest, where every other trust is given more nonmarketable bonds, also seems to be missing and the algebraic rule that “a minus times a minus equals a plus” seems to be used in this accounting to make the balance grow.

This is the only trust fund where disbursements are listed in the “outlay” column with a minus sign. Normally, accounts would not need this “minus” sign since everything listed under “outlays” would be considered and expense, a negative.

This fund seems to start with nothing and grow it into something. That beats alchemy and transubstantiation all to hell.

Here’s what the trust has shown for the last three years running:

FEDERAL EMPLOYEES LIFE & HEALTH TRUST FUND

Had the interest against the previous year’s balance been paid like all other trust funds, we would see an increase of more than two billion a year, perhaps in two payments of more than one billion each. But in this instance, there’s no apparent interest payment at all. Who needs interest when you’re increasing the fund with outlays?

These figures are copied directly from the Monthly Treasury Statement of Receipts and Outlays of the United States Government. What appear to be errors in addition or subtraction are, in many cases, simply caused by rounding. But some errors are unexplainable, at least by me.

For instance, in the tables above there is at least one month in every year when a “minus” sign was not used in the “outlay” column. In 2004 and 2005, this caused the “balance” to go down and, while the amounts are off a bit, this can be attributed to “rounding.” But in fiscal 2003, when in July there is a negative “surplus” of $109 million, the “balance” does not go down. In fact, it goes up $14 billion. I have no explanation for this. It just looks like sloppy and inconsistent bookkeeping to me. The same can be said for many other instances where discrepancies cannot be attributed to rounding.

When are the media and the general public going to start paying attention to these shenanigans, this outright scam?

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