Trust: Uncle Scam
If you can’t trust the government on the subject of trust funds, you can’t trust them on anything.
• “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.” President Bill Clinton in his Analytical Perspectives section of the 2000 budget.
• “We have no positive assets in the Social Security Trust Fund.” Secretary of the Treasury, and one of the Social Security trustees, Paul O’Neill, June 19, 2001, at a luncheon speech to the Coalition for American Financial Security in the Sky Room of the World Trade Center and later to Sam Donaldson on This Week, Sunday, June 25, 2001.
• “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.” June O’Neill, former Director of the Congressional Budget Office (CBO) at the CATO Institute’s Conference for Women and Social Security.
• “Government trust funds do not correspond in any meaningful way to those in the private sector. Government trust funds are simply a form of earmarking, accounting mechanisms that record tax receipts, user fees, and other credits and associated expenditures,” Barry Anderson of the Congressional Budget Office in testimony before the House Budget Committee, September, 2002.
• “It means that ordinary working Americans, like teachers, police officers and firefighters, who believe their payroll taxes are going toward their Social Security retirement are in for a surprise…Instead of going to the Social Security trust fund, their payroll contributions are being funneled directly into tax breaks for individuals and corporations” Robert Matsui (D-CA), Chairman House Ways & Means Subcommittee on Social Security, Associated Press, March 30, 2002.
• “It is in this role as a savings account that the Trust Fund could fail. It cannot work because it holds no independent assets. Though the Trust Fund is backed by government securities, these have a different meaning than they would for you or me. If I hold a government bond, I have an asset that the government will give me money for or that I can sell at any time. If the government holds a bond, however, its obligation to give itself money is meaningless. The government cannot make these bonds good, as needed in 2014, except by borrowing, reducing other expenditures or taxing citizens.” House Budget Committee Chairman Nick Smith 6-8-99
• “In fact, the money the government has supposedly been putting aside from the Baby Boomers’ Social Security taxes is not there. The government has been borrowing the money to pay for the budget deficit. The Social Security Trust Fund is simply IOUs from the U.S. Treasury…. [Social Security] would be fine if the government would stop borrowing the money.” Newt Gingrich 4-7-95
• “The truth is that the Social Security Trust Fund has already been stripped bare. There is no trust and no fund. It is a lot like the S&Ls. The savings and loans had a lot of real estate on the books, a lot of property, a lot of shopping centers, a lot of deposits, and everything else, until you looked inside and found out there was nothing there. The assets were mostly on paper…. Meanwhile, the Social Security cupboard is bare.”Senator Ernest “Fritz” Hollings (D-SC) Congressional Record 4-24-91
• “The Enron case made headlines because fraud and deception of such magnitude is fairly unusual in the corporate world. Washington fraud and deception of a much greater magnitude doesn’t make the headlines because fraud and deception in government is standard practice….Washington politicians have for decades been doing precisely what Enron has been accused of doing — concealing debt with accounting tricks. Congressmen tell us that our Social Security taxes go into a trust fund to pay for future retirement pensions. That is a boldface lie. The Social Security trust fund has no money in it.” Walter Williams, Professor of Economics, George Mason University in an article published by the Washington Times April 17, 2002.
• “First, an immediate and significant reduction in the payroll tax will, more than any other proposal, put money in the hands of those who need it and will spend it — across the entire income spectrum. It will give both employers and employees more cash as quickly as the next payday, thus relieving financial pressures on both. A just-released Congressional Budget Office study notes that a payroll tax cut ‘would probably have a large bang for the buck’ because it could induce spending and reach families with lower earnings. This action can be taken without undermining the Social Security Trust Fund or the benefits of current and future retirees.” John T. Dillon, CEO of International Paper, in the Washington Post January 11, 2002, Editorial Page.
• “When the money going out exceeds the money coming in, you are in trouble and that happens in 2016. Those who try to push the fatal date off to 2038 are counting the money that Social Security has in its so-called trust fund. However, the so-called trust fund exists only as a legal technicality, not as an economic reality…you cannot spend and save the same money.” Thomas Sowell, The Washington Times, July 29, 2001.
• “Enron’s murky ‘off-balance sheet’ accounting practices highlighted its assets and downplayed its debts – as does Social Security’s ‘trust fund’ accounting. While the trust fund’s trillion dollars in government bonds are ‘assets’ to Social Security, they are debts to the rest of the government – which will have to raise taxes or cut other programs to repay them, just as if there had been no trust fund at all.” Andrew G. Biggs of the CATO Institute for the Washington Times, April 4, 2002.
• “Every dollar collected in (FICA) payroll taxes is spent the very minute, the very hour, the very day it comes in the door … any funds left over, they are spent on other programs or used to pay off the national debt. But nothing is saved. No money is stashed away in bank vaults; no investments made in real assets.” John C. Goodman, President of the National Center for Policy Analysis in an article published by the Washington Times, April 12, 2002.
• Senator Peter Fitzgerald (R-Illinois) on the Senate floor during lock-box debates, 1999: “A few years back Congress passed laws making it illegal for State and local governments to plunder the pension funds of their employees. But during all this time, where Congress has put these laws on the books and made it illegal in the private sector and at the State and local government level to plunder pension funds, we have gone on and on in Washington taking all the money that goes into the Social Security trust fund, taking every dime of it out, and spending it on some other program. As a result, as I speak now on the Senate floor, there is no money in the Social Security trust fund. All of it has been taken out and spent on other programs. They have put meaningless, nonmarketable, nonnegotiable securities in the Social Security trust fund, securities that have no economic value because they cannot be sold to raise cash. Right now our Government is building up, theoretically, surpluses in the Social Security trust fund, but they are taking all that money out and spending it. So when we actually need it to pay benefits, beginning in the year 2014, there will be no money there. No matter what the balance of those bogus IOUs is in the Social Security trust fund, in the year 2014–whether that balance is $1 trillion or $5 trillion–they are of no assistance in paying benefits to those who depend on Social Security. The country will either have to raise taxes or cut benefits to make up for the shortfall that is anticipated after the year 2014. This legislation is basic, decent common sense. We should not allow Congress to continue frittering away the Social Security trust fund. I urge all my colleagues to support it and end this outrageous practice of plundering the Social Security trust fund, to the detriment of our Nation’s seniors and those who will be desiring to live on Social Security benefits in the next century.”
• “Currently, the Social Security system is running a surplus, taking in more in taxes than it spends on benefits. That surplus is used to purchase government bonds — the only purpose to which it can be put. The purchase of those bonds generates general revenue for the federal government and that money is spent on the operations of the federal government. That is a bad system, but it is how the trust fund was designed to work. The fund does not hold cash, never has held cash, and was not designed to hold cash.” Michael Tanner-CATO Institute 10-16-99 “Pointless Debate Over SS Trust Fund”
Compare the above with all the years of spin stories you’ve heard about the Social Security trust funds (the Federal Old Age & Survivors Insurance and the Federal Disability Insurance trust funds we usually combine and consider as one) extending the life of the supplemental retirement system until at least 2041. Or is it until 2043 by now?
Compare the above with all the fairy tales you’ve heard about lock boxes, investments, not touching Social Security money, projections of disaster, and so forth. Is it any wonder the younger generation believes they have a better chance of meeting alien life forms than receiving benefits from money they are paying today?
For years, but particularly since 1983, the federal government has been pretending to borrow surplus Social Security contributions made through payroll taxes. The tools of this fraud and deception are trust funds that resemble real trusts in name only and are awarded special obligation nonmarketable bonds invented for the purpose of defrauding the American worker with double taxation plus interest. It’s a trust fund fraud, a trust fund lie, and a trust fund problem that must be addressed.
The Beltway Bandits have all sorts of excuses for what they’re doing with Social Security funds, but these excuses are all belied by the fact that Social Security isn’t the only entitlement raided, it’s just the largest. They do exactly the same thing with Military Retirement money, their own Federal Employees Retirement System (FERS), Medicare, gas taxes that are supposed to go towards highways, airport fees, and at least 25 so-called trusts in total.
Worst of all, the entire Intragovernmental Holdings portion of the national debt, almost half of the nation’s debt, is fraudulent and could be eliminated tomorrow without ill effect on anyone but the Beltway Bandits who use it to double tax the American public under the Pay-It-Again Sam scam.
Your government has been screwing you, the taxpayer, for ages and nobody is doing a damn thing about it.
“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”