CUT THE
DEBT
BY 42 PERCENT - $2.9
TRILLION
By: Ed Henry
We could cut the national debt almost in half, and we could do it overnight. All we must do is eliminate special obligation nonmarketable Treasury bonds, the so-called securities that compose the entire Intragovernmental Holdings section of the debt, as well as eliminate the phony trust funds that hold them.
This would require a massive effort on the part of American citizens. The tax paying public would have to spearhead an effort to get Washington to do what's right. We would have to take matters into our own hands and probably get rid of all the forces currently holding power in the District of Corruption, republican and democrat alike.
The federal government is never going to approach the subject because they are the ones using these bonds to perpetrate an enormous nonpartisan scam. They are also the only ones who would suffer any sort of loss if of these bogus bonds were simply wiped from the books. For the rest of us, it would be a God's send and true justice.
If these bonds disappeared, the government would lose its slush funds, its means of double taxation with interest added, and the many perks they've set up for themselves plus the hush money benefits for their employees and federal judges who would never allow the subject to be prosecuted in court. Combinations of crimes that make Enron and other private sector crooks look like children playing in a sandbox.
All of these bonds are in black hole debit accounts that the government has deliberately and falsely labeled as trust funds. They are similar to real trusts in name only. And they never hold anything but debt. If they held positive assets, they wouldn't be part of the national debt.
As of the end of fiscal 2003, there are 144 different trust funds under the Intragovernmental Holdings section of the national debt. Nineteen of these are entitlement funds with Social Security the largest. (See Trust List)
What is commonly referred to as the "Social Security Trust Fund" is the combination of the Federal Old Age & Survivors Insurance trust and the Federal Disability Insurance trust fund. But there are 17 other funds, including Medicare, that are in the same boat.
From time to time (in the case of Social Security it's all the time) these entitlements produce surpluses, money that is not needed in order to meet current obligations.
Under the flagrantly ridiculous idea that it's possible to both spend and save the same money, the federal government pretends to "borrow" these surpluses. They take the surplus money and spend it wherever they please; leaving nonmarketable bonds in the respective entitlement accounts as "IOUs" that they would like you to believe have the same value as the money they just spent.
In reality, these markers cannot sustain the entitlements because they have no value and are truly UOUs because they can only be redeemed with taxpayer money.
To complete the pretense of "borrowing," the pirates then award
the various trust funds annual interest. This interest is paid by
simply handing the trust more bogus bonds, no money whatsoever
involved. Thus, we have the ludicrously compounded act of crime
added on top of crime. This would continue to increase taxpayer
indebtedness even if there were no more borrowing or stealing
surpluses; even if the theft actually stopped, the national debt
would continue to increase on accrued annual interest
alone.
To add debt on top of debt and call it interest gained
is insane.
Proof that these trust funds hold no viable assets and are not real trusts comes from several directions. For one thing, the years of senseless arguments and debate over "lock-boxes" prove that current accounts are not real trusts. By their very nature, real trust funds are already lock boxes.
Since 1983, there has been a need to stop the government's theft of Social Security overcharges or profits from excessive payroll taxes, but lock-boxes were never the solution. Twenty years later, in the recently closed 2003 fiscal year, the Social Security surplus has grown to $81.8 billion despite high unemployment; i.e., few workers contributing.
Other proof of the trust fund scam comes right from the horse's mouth.
In the Analytical Perspectives Section of his fiscal 2000 budget proposal, President Clinton said: "Trust Fund balances are available to finance future benefits...but only in a bookkeeping sense...they do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes or borrowing."
Speaking at the CATO Institute's Conference for Women and Social Security, former Director of the Congressional Budget Office, June O'Neill put it this way; "It holds no real assets. Consequently, it does not generate funds to pay future benefits. These so-called trust fund 'assets' simply reflect the accumulated sum of funds transferred from Social Security over the years to finance other government operations." She forgot to mention the annual compound interest.
Shortly before the tragic events of 9/11, when Social Security was temporarily on the front burner after then Secretary of the Treasury Paul O'Neill had publicly said there were no viable assets in the Social Security trust fund, several renowned economists all repeated the same mantra. If Social Security must ever turn to its trust, the poor dears in Washington would be faced with the tough decision to either (1) raise income taxes (2) borrow enormous sums (3) cut benefits, or any combination of these three.
Of course, September eleventh occurred before the public had time to realize that these are the normal options for raising government revenue at any time whether there is a trust fund or not.
In other words, we've been lied to for years. There is no way that the Social Security trust fund can sustain the supplemental retirement system until 2041. Also, there is no way to "raid" an account that holds nothing but debt. Congress can raid Social Security money alright, but it's not coming out of the trust fund. The trust funds are meaningless except for double taxation.
It took Alan Greenspan to break the sad news that: "The only thing that matters is that they (the bogus bonds) are enforceable." In other words, as needed the money will be drawn from the Treasury's general fund of taxpayer dollars on hand or borrowed legitimately and constitutionally from investors (the bond market) increasing the national debt under "Public Debt" (another misnomer that should be called Investor Debt)
This is double taxation plain and simple—with interest added. In the case of Social Security, the same American workers who for the most part paid excess payroll taxes in the first place will now pay them again, for a second time, with interest added because Congress and the administration stole the first surplus payments and spent that money elsewhere.
This is already happening with unemployment taxes. For years, employers paid more than was required to provide unemployment benefits. The government stole these excess payments and by May of 2001 the Unemployment trust fund held more than $90 billion in bogus bonds. Since the recession hit, these holdings have dropped to $48 billion and in fiscal 2003 alone the general taxpaying public went on the hook for more than $28 billion to cover benefits and extended benefits to those out of work. Taxes that had been paid previously by employers.
All of this $28 billion came either from 2003 taxpayer money scheduled for items of discretionary spending like education, agriculture, and so forth, or from money borrowed honestly from investors through the bond market, putting our children and grandchildren further in debt.
How's that for taxation without representation? Future generations of our children and grandchildren will enter the world owing taxes they had nothing to do with.
Nineteen entitlement trust funds account for 93 percent of Intragovernmental Holdings under the above conditions. Let's turn now to the other 7 percent.
Perks & Other Gouges
Simply name a trust fund, throw some nonmarketable bonds in it, and voila, you've got chits that can draw money from the general account for whatever purpose you want. In a way, we are probably fortunate that the Beltway Bandits haven't chalked up more than $224 billion in this category of criminal fraud. (See trust list—items #20 thru #144)
Health benefits, insurance benefits, gift accounts, annuity funds, educational and relief funds, all sorts of things can be established this way. Even donations from philanthropists and scholarships where the money has already been spent elsewhere are now represented by nonmarketable bonds ready to draw current taxpayer dollars or borrowed money whenever needed.
Besides providing benefits for federal employees, departments, and judges, items that the government wants to carry from one fiscal year to another can be handled this way.
Since a not-for-profit governmental organization must bring its yearly books to a zero balance, where all items in the annual budget must be accounted for, only a trust fund allows the government to carry funds from one fiscal year to another. Thus, the crafty trick of designating these black hole accounts as "trust funds" gets around the law with fraud.
None of this means that the federal government doesn't have some real trust funds.
Real Trusts
Sixteen real trust funds with marketable assets are currently managed by the federal government. These funds are not part of Intragovernmental Holdings, but are categorized under "Public (Investor) Debt" because the accountants do not know where else to put them in a list of all trust funds. Pretense or fraud will get you into that sort of dilemma and they then become part of what the government considers "not subject to the debt limit." (See trust list—items #145 thru #160)
Of the $53 billion held by these trusts, the Thrift Savings Plan for federal employees stands out above all others with $51 billion in viable assets as of the close of fiscal 2003. This is after enjoying a 17 percent return on investment for the year despite a sour economy.
The Thrift Savings Plan was instituted under the direction of Vice President George Herbert Walker Bush in 1987 and is laid out in detail on the Internet under the Personnel Department.
During his campaign for office, George W. Bush hinted at a similar plan for young entry level workers who wouldn't be paying much in payroll taxes anyway. Have you heard anything further about this plan?
What's good enough for federal employees should be good enough for everyone, but it requires a real trust fund managed by competent trustees. What difference would it make if a sixty-four year old participated for merely a day before retiring? It would certainly be better than what he's got now. And where would we be if the money stolen in the last 20 years had been invested this way instead of stolen?
I repeat, none of this is ever going to be corrected and improved until the general pubic storms the Bastille.
As further proof, consider the following. Increasing consumer spending has long been touted as one of the elements to jump start the economy, but have you heard any mention of cutting excessive payroll taxes as a way to immediately put money in the worker's pocket? What would $82 billion in excessive Social Security taxes returned to taxpayers have done for the economy in fiscal 2003, not to mention the $149 billion stolen from all entitlements together?
Having an oligarchy is one thing, but having an oligarchy that
commits fraud is a criminal offense.
"Published originally at
EtherZone.com : republication allowed with this notice and
hyperlink intact."
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Ed Henry can be reached at [email protected]
Ed's FREE pamphlet-"To The Moon, Alice"
the national debt, your Social Security, and the Pay-It-Again Sam
scam.
We also invite you to visit his website at http://www.uncle-scam.com/
Published in the November 14, 2003 issue of Ether Zone.
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