Playing ping-pong: With the national debt
Haven’t you wondered why President Bush talks only about paying down “available” debt? Why he talks about paying off only $2.4 trillion of a national debt that is more than $5.7 trillion? Doesn’t this bother you just a little bit?
What would you think if I told you that he really cannot pay off any more of the debt, even if he had $5.7 trillion in hand today and wanted to be a good guy? It’s true. And it’s not that hard to understand once you strip away the garbage the government has been telling you.
Two sides of debt
For very good reason, the Beltway Bandits have separated and run up two sides of our national debt. They label one side “Public” debt, and the other side “Federal” or, since Greenspeak coined the label, “Intragovernmental” debt. The latter is meant to imply and create the fiction that the public does not have to worry about this side. That, somehow, the Beltway borrowholics are themselves going to perform the impossible task of paying off this side.
Despite what some of the products of our educational system believe, the federal government has no source of income other than what it gets from taxpayers. Income tax and payroll taxes make up the federal revenue. Sure, some small part of it comes from duties paid on imported goods. But, even these, are still taxes usually paid by American importers and built into the price of the products they sell. It’s the same with corporate taxes where tax cost is built into the product or service you buy. In one way or another, federal revenue all comes from taxes paid by citizens.
In other words, the federal government couldn’t pay off the “Federal” side of the national debt with anything but taxpayer money. It could not redeem the “IOUs” it claims to have put into trust when “borrowing” entitlement money from Social Security, Medicare, gas taxes or any of the many entitlements it robs, even if they were all John D. Rockefeller clones.
At the close of fiscal 2000, the “Federal” side of the national debt was a total of $2.268 trillion, while the “Public” side was $3.405 trillion. At the close of fiscal 1997, the public side had been up to $3.789 trillion, but we’ve been paying it down in a money laundering operation that saves the government six cents in interest with every dollar we provide in surplus entitlement money.
The “Public” side, is debt incurred by borrowing from investors who contracted Treasury securities on the open market. What you see advertised on daily news reports of the Bond Market. Wealthy individuals, nations, and little old ladies looking for a safe haven to invest some of their money. Nothing could be safer than securities guaranteed by the “full faith and credit” of every taxpayer in the country. Every man, woman, and child who will ever pay taxes.
The method of paying down this side is simple. When securities mature, the government pays them off and does not immediately issue new securities to replace them. Since 1997, all of the Treasury securities sold on the open market have been only to quickly replace those maturing in order to maintain the debt level. With Treasury securities maturing at more than $5 billion per day, 365 days of the year, this results in a lot of make-up sales. To not have a run on the Treasury the government couldn’t afford.
The only hitch to paying down this side is that many of the investors are not going to give up their long term five, ten, or thirty year bonds before they mature or without negotiating a premium of some sort. If they have to go out and find some other, not so safe investment, then they want to be paid a bonus for doing so and giving up a bird in hand. Thus, there’s a minimum of “available” debt that can be paid off under “sound business” management. President Bush claims that it’s better business to just wait for the rest to mature.
Paying off the other side of the national debt is not so easy.
The dishonest side
Everything on the “Federal” side of the national debt is composed of nonmarketable bonds stuffed in so-called trust funds belonging to entitlements that the government has robbed. They claim to have “borrowed” this money and substituted “IOUs” for the real money, but it’s all theft.
What’s more, paying down this side of the debt is absolutely impossible if the respective entitlement doesn’t need the money. If President Bush had a barrel full of thousand dollar bills, all neatly bundled and stacked, and wheeled it over to the Social Security Administration in Baltimore, Maryland, that entitlement would simply return it to the Treasury with some comment like: “Here, credit this to my account.” The Treasury would put that cash in the General Fund where Congress and the President would spend it, and then issue the trust fund more nonmarketable bonds. We would be right back where we started.
Since the Social Security Administration is having no difficulty whatsoever meeting all of its current responsibilities to the retired and disabled, and is in fact collecting a huge “surplus,” it doesn’t need the money. Last year, fiscal 2000, this surplus amounted to $94.4 billion. It was all stolen and nonmarketable bonds deposited in the Social Security Trust Fund, raising that so-called trust from $874 billion in funny money to $1.016 trillion (ONE TRILLION, SIXTEEN BILLION DOLLARS). Including the annual “interest” that was also piled into the debit black hole account, paid at the rate of 6.666 percent last year against the previous years balance of $874 billion.
The beauty of this scam is that the Social Security Administration will never need to draw on its phony trust account. All the stories you hear about baby-boomers, people living longer, and other threats to the supplemental retirement system are all just that—scare stories meant to frighten the public into coughing up even more in surplus entitlement money for the Beltway Bandits to pirate and play with. There isn’t one of these fables that the Social Security system can’t handle with relative ease.
Phony crisis dates are continually extended into the distance and the pirates remain silent about this side of the national debt. Talking about it might expose their cover. Remember, it isn’t just Social Security funds the pirates are plundering. There are dozens of other entitlements that they rob with equal abandon.
As mentioned above, the Social Security Trust Fund now holds 18 percent of the national debt with $1.016 trillion in bogus bonds. The total held by all entitlements is $2.268 trillion. Both figures at the close of fiscal 2000. In other words, $1.252 trillion comes from Medicare, gas taxes (the Highway Trust Fund), Unemployment taxes and other entitlements—plus perks for government employees that are also established by simply handing a trust nonmarketable bonds.
It’s almost as though the Oligarchy has a school for training newly elected recruits in the rip-off and money laundering scam of stealing from the working class, probably led by Alan Greenspan. With about 80 percent of America’s workers reportedly paying more in payroll than income taxes, this is not a rich man’s tax problem.