Social Security Debate - Stop The Bleeding

Wednesday, February 02, 2005

STOP THE BLEEDING
FOR REAL SOCIAL SECURITY REFORM

By: Ed Henry

If you are confronted with a crisis, the very first thing to do is to stop the bleeding. You don’t stand around doing nothing, arguing about what caused it, debating why it happened, who is to blame or how we might prevent it in the future. These are all things to discuss, argue, settle, and perhaps even improve later.

Your very first task is to keep the victim alive and treat the injuries with first aid. If you can’t handle that, get someone competent who can and get them fast. Call 911.

Applying this to Social Security reform, we are immediately confronted with one very stunning obstacle – emergency response lies in the hands of the very people who inflicted the wound, the same body of people who caused the bleeding – Congress and the federal bureaucrats.

How can we possibly stem the flow of the system’s life blood when the people in charge of the victim are happy with the situation and have no intention of applying a tourniquet or pressure that might even slow the bleeding? Instead, they have encouraged a form of medieval medicine that involves leeches.

Like a band of savages that believe drinking the victim’s blood will add to their own strength, these vultures have inflicted a wound on a very healthy insurance program that actually does strengthen them because what’s flowing is money, the life blood of capitalism.

In the last five years, Congress and the administration have bled off $94.5 billion in fiscal 2000, a high of $98.7 billion in 2001, $89 billion in 2002, $81.8 billion in 2003 and $71 billion last year, 2004, in a troubled economy. These are the figures dutifully reported year-by-year by the U.S. Treasury. Denial is not a river in Egypt.

This isn't something that's going to happen in the future. It isn't something we should prepare for like the "baby boomers." It's happening right now, right before your eyes, and it has been happening since at least 1983 when payroll taxes were, over a seven year period, raised way beyond what was necessary. And the victim has been bleeding all over the place while no one did a thing to stop the bleeding.

I can't help it if the younger generation believes that Social Security is not going to be there for them, that they've got a better chance of meeting an alien from outer space than receiving retirement benefits. Blame that on the educational system and the color blind newshounds that can't see the bleeding or ask the right questions, people that must think $71 billion taken away last year alone or nearly one half trillion over the last five years is chicken feed.

I can't help it if Congress spent years debating "lock boxes" when real trust funds are supposed to be effective lock boxes, what was nothing more than a feeble attempt to cleanse their souls without accepting responsibility, to weasel out of a criminal situation.

By itself, this is sufficient reason for sensible people to start thinking about taking the very healthy Social Security system completely out of the hands of government, out of the hands of a not-for-profit organization that shouldn’t be engaged in free enterprise or the insurance business in the first place, and placing it in the hands of the private sector – “privatizing” it.

For various reasons, this is somewhat like throwing the baby out with the bathwater rather than directly addressing the bleeding, especially since there is no private sector entity with the authority to force premium payments.

Now we have President Bush pushing hard for what he calls “partial privatization” through “ownership” accounts for younger generations of entry level workers who pay the least in payroll taxes. A plan that is suddenly on the front burner and involves various options for investing portions of payroll taxes somehow at the participants choice.


Considering the surplus/profits being generated by Social Security and stolen by the government, such a plan is certainly feasible as long as it’s restricted to stopping the bleeding that’s been going on for ages.

Yet, the advocates of this new plan are saying things that simply don’t make any sense and lead to suspicions of being nothing more than another convoluted plan like “lock boxes” or promises not to touch Social Security’s money. In particular, they’re talking about “transition costs" that will run as high as one or two trillion dollars over the next decade.

This brings us to the heart of the matter.

It costs virtually nothing to set up a real trust fund and put the profits in it. If such a trust fund did nothing but draw simple interest in some bank, or if the money wasn’t invested anywhere at all, we would still be one hundred percent better off than we are now with the government running off with the profits.

In other words, stop the bleeding by taking the profits away from the government that has used them as their greatest slush fund for “off budget” revenue. Privatize the profits. Leave everything else in place as is. Deal with what to do with these profits later, including the idea of giving them back to America ’s workers or cutting payroll taxes.

Knowing full well that they should not be using these funds as general income, spending them as fast as the money came in, the Beltway Bandits have set up one of the most elaborate financial scams in history. They deliberately set up a myth that asks us to believe that it’s possible to both spend and save the same money. And they used the idea of “trust funds” to do this, but only the idea.

For years, they all pretended that they merely “borrowed” or “invested” Social Security’s profits. As they were spending this money, they were also issuing certificates of obligation to so-called entitlement trust funds, certificates that they periodically roll over into “special obligation” nonmarketable Treasury securities, bonds.

As such, the two Social Security trust funds that we normally think of as one, the Federal Old Age & Survivors Insurance trust and the Federal Disability Insurance trust, now hold more than 22 percent of the national debt and stand at more than $1.6 trillion, none of it in real assets. It’s what the pirates themselves refer to as an “unfunded liability.”

The hooker is that only taxpayer dollars can redeem this debt. The pirates will try to convince you that the “Intragovernmental Holdings” portion of the national debt is money that the government owes itself or one department owes another, but the truth is that this debt can be reduced only with taxpayer dollars. It’s a system of double taxation plus interest.

It’s also a form of self feeding fraud because to carry out the fiction of having borrowed the money the bandits add annual interest to the tab without money involved. They simply hand the phony trust funds more bogus bonds, increasing public indebtedness and, in their false logic, extending the life of Social Security. Ironically, the more they steal and the more interest they award, the longer they claim Social Security’s life is extended.  

In conclusion

Just remember that when you listen to politicians describing things like “transition costs,” you are listening to the people who have been robbing Social Security for years and who understand very little about actuarial data or the inner workings of a highly efficient insurance company that operates on less than one percent of its annual revenue, maintains offices in almost every major city, and has never failed to deliver benefits precisely on time.

In all likelihood, they are talking about money/profits that they feel belong to them, funds they feel they’ve earned and deserve, and if you try to take these away from them they will be forced to borrow by running up the national debt even more than they’ve already run it up to preposterous levels. They are telling you that they’ll do this rather than curtail spending.

Secondly, the President’s plan for personal investment accounts is not first aid; it’s a diagnosis that would be a disaster and misdirection for Social Security, a program that came into being because individual Americans could not save sufficiently for an extended depression and still can’t do so today. If imitating the government’s own Thrift Savings Plan had any merit, it would be applicable to everyone, not merely youngsters just entering the labor market, and not forcing inflation by making employers report each member separately.

Every excuse the Beltway Bandits have for stealing Social Security’s profits is belied by the fact that they do exactly the same thing to Medicare, the Federal Employees Retirement System (FERS), Military Retirement, Veteran’s benefits and at least twenty entitlements in total. Social Security is just the largest fund they plunder.

And just what do you think will happen when the foreign nations that have been loaning us hundreds of billions are going to do when they find out that our government has been cheating the very people responsible for paying back those loans?


source: http://www.etherzone.com/2004/henr121704.shtml