Don’t worry, forty-three percent of our horrendous national debt is completely fraudulent and could be eliminated tomorrow without consequence. All that has to happen is that the Beltway Bandits suddenly become honest or, in one way or another, honest people decide to get rid of the bums, all of them.
Sounds preposterous, doesn’t it? Well, it is. It’s preposterous that this has been allowed to continue for as long as it has. It’s preposterous that our national debt has risen from practically nothing to an incredible $6.4 trillion in the last twenty-five years. It’s also preposterous that the government is prosecuting companies in the private sector for doing the same thing that our lawmakers do on a much larger scale.
Ironically, the pirates turn to industrial reports, factory figures, or the elements of the Gross Domestic Product put forth by the same industrial giants who hide debt and distort their financial position to show that “as a percentage of GDP” our debt really isn’t as bad as it looks. Talk about students bringing apples to the teacher.
Let’s face a few facts:
Since taking office, George W. Bush has run up the national debt $733 billion. And that’s only from January 31, 2001 until February 20, 2003, a little over two years.
In the first year of the Bush term, fiscal 2001, the government claimed to have the second largest surplus in history—a surplus of $127.2 billion, all of it from entitlements like Social Security’s $98.7 billion payroll tax overcharge in 2001.
On February 20, 2003, almost 90 days ago, three months or one full quarter of the fiscal year, we hit the national debt limit or ceiling of $6.4 trillion and the government has not been able to borrow new money since that time. That’s a long time for borrowholics to be on the wagon.
This fact has been ignored and underplayed by the loyal media, watchdogs, think tanks, or those supposedly watching our economy—probably because the government told them to sit back, shut up, and wave their flags. We do not want to appear financially weak during the invasion and rebuilding of Iraq or display our dirty underwear to a world population increasingly against us.
Amongst the false promises and government inability to adhere to its own policies, the 1997 Balanced Budget Act picked the year 2003 as the time when the government would finally be able to live within its income, the almost two trillion in taxes now provided annually by taxpayers.
It was the same popular Balanced Budget Act of 1997 that, unbeknown to most, included a raise of the national debt limit to $5.95 trillion. This raise was inserted by John Kasich (R-Ohio), Head of the House Budget Committee, long before it was needed.
Shortly before or immediately after hitting the debt limit on February 20th of this year, Congress could have voted to raise the debt limit or placed such a raise into other popular legislation for passage. They failed to do so. Why?
The fact that the federal government has been able to survive a full quarter without spending more than it receives proves something, doesn’t it? How long could they go if they were truly cost conscious?
Every State in the union, every city and local government, has been suffering from a lack of federal funding. Programs included in the federal budget for fiscal 2003 have been cut off at the knees. Local governments have already bitten the bullet by cutting essential programs, including Homeland Security, since the money for these programs went into the invasion of Iraq. (See:New York Times article of May 8, 2003, and one from the Washington Times on May 14, 2003.)
We have a trade deficit of more than $500 billion that will skyrocket even more due to the boycotting of American products across the world including our strongest allies where more than 80 percent of the populations of Britain, Spain, and Australia were against our invasion of Iraq.
Does anyone know what it cost us to buy the “coalition of the willing” that includes many small nations mumbled to be somewhere between 40 and 60 supporters?
We have a weakening position of the dollar against the Euro. Last reports were that it takes $1.15 US to buy one Euro.
Debt limits became law in 1968 as a means to force the federal government to live within its revenue, to balance its budgets. It has never worked.
Laughably, the debt limit was supposed to make it embarrassing for a politician to stand before Congress and ask for a borrowing increase. Can you beat that? Begging for money is a prerequisite of political life in our country.
The borrowholics of Washington have no compunction about using their constitutionally authorized “emergency” credit card to run up the national debt and place more and more burden on our children and grandchildren. This applies to democrats and republicans alike.
Paul O’Neill resigned as Secretary of the Treasury and Mitch Daniels recently resigned as head of the Office of Management and Budgets (OMB) the president’s budgetary advisor. As usual, the spin claims these gentlemen left to spend more time with their families and, in the case of Mr. Daniels, includes the new twist of a possible running for governor of Indiana. But it’s beginning to look a lot like rats leaving a sinking ship.
Deeper meaning.
We now have estimates of deficits in the hundreds of billions per year and these so-called deficits do not include the money stolen from entitlements like Social Security’s surplus that are included in budgets as “off budget” revenue but increase the national debt.
If entitlement overcharges are included in the budget, then they cannot be considered “over budget.” How’s that for crooking the books and hiding debt Enron style?
Contrary to the propaganda, surpluses are not gone. Entitlements have always accounted for the major if not the only portion of any government surplus. In fiscal 2000, Social Security alone produced a surplus of $94.5 billion. In 2001 it was $98.7 billion. And in fiscal 2002, even with high unemployment, it was still an $89 billion surplus/overcharge or what could be called profit. And all of this came from an organization supposedly “in trouble.”
In the same years, all nineteen entitlements together accounted for surpluses of $149.8 billion, $160.7 billion, and $149.0 billion respectively.
President Bush talks about the “double taxation” involved in dividend taxes, but it’s nothing compared to the double taxation involved in the working man’s entitlement taxes.
Companies pay taxes on their profits. Then when they declare dividends to investors, the investors pay a capital gains tax on the money they receive. These are not the same people paying the same tax. It’s more like paying sales tax on a used car after the person who bought it new paid the first tax. Charging sales tax every time a car is resold wasn’t always a tax.
If the president wanted a real stimulus to the troubled economy he would cut payroll taxes. If he really wanted people to go out and spend more, he would help the American workers who supposedly account for two thirds of the economic growth in our economy.
But the federal government is never going to give up the slush funds they’ve painstakingly developed, the rip-off of every worker’s retirement and health care money plus what’s taken from seventeen other entitlements from unemployment taxes to military retirement.
Here’s what happens.
The government pretends to borrow every cent of surplus entitlement money. It’s all a big pretense and fraudulent game they play. Actually, it’s outright theft and we are buying debt with every surplus cent we give them.
The American worker might just as well walk into the U.S. Treasury, plunk down a handful of money and say; here, give me some debt.
The federal government spends and plans to spend every surplus entitlement dollar that comes into the Treasury and do so as fast as it comes in. Then, wanting the public to believe that it’s possible to both spend and save the same money, they deposit certificates of obligation in a fund that they call a “trust fund” but actually hasn’t the slightest resemblance to a real bonifide fiduciary activity dealing with the stewardship of property.
It’s a debit black hole containing nothing but debt.
Periodically, these certificates of deposit are rolled over into “special obligation” nonmarketable U.S. Treasury bonds as well as tacking on about six percent annual interest paid against the previous year’s balance just to make the “borrowing” appear authentic.
Interest is figured on a five year model of the interest paid real long term bonds sold investors on the honest side of the national debt. A side that deals entirely with investor loans but is deliberately mislabeled “Public Debt” (it should be called Investor Debt) to make you believe it’s the only side for which the public is responsible.
Interest is also paid entitlements by simply handing the “trust” more bogus bonds, no real money whatsoever involved. Interest is paid the Social Security trust fund in December and June. Last year, fiscal 2002, the Social Security trust was paid $64.3 billion by simply handing the distrust fund more debt. Isn’t that nice?
Last year, the crisis over the national debt ceiling of $5.95 trillion was due entirely to the semi-annual interest due the Social Security trust—what the authorities confess is a bookkeeping effort. Since this interest raises the national debt substantially, it was essential the debt limit be raised during June. On the very last working day, Friday, June 28th, the debt limit was raised to $6.4 trillion and the crisis was over.
There is currently $2.7 trillion in bogus bonds in the fraudulent Intragovernmental Holdings portion of the national debt. The words “Intragovernmental Holdings” are another misnomer to make you believe that the government owes itself or that somehow the government is going to pay this off without taxpayer money—an absolute impossibility. This should be called “Entitlement Debt.”
Ninety-three percent of the “holdings” are in the nineteen different entitlement black hole accounts with Social Security being the largest at a current $1.3 trillion or 21.7 percent of the national debt all by itself.
The other seven percent is in perks for judges and government employees. Simply name a trust, deposit some bogus nonmarketable bonds in it, and when you need real money take it from the Treasury’s general fund of recent taxpayer dollars or money borrowed from investors. (See: Trust Fund List)
Economists have continually claimed that if the poor dears in Washington ever have to turn to the Social Security trust fund for money, they will be faced with the tough decision to either (1) raise taxes (2) borrow from investors (3) cut benefits, or any combination thereof.
These are the normal options of government in raising and managing revenue whether there is a trust fund or not. In other words, the trust fund is meaningless and useless except as a means of double taxation.
The only single purpose of these fraudulent “Intragovernmental Holdings” is that they allow the Beltway Bandits to withdraw money from the U.S. Treasury without having to vote on it. They do not require legislation if the entitlement needs money.
We’ve had confessions right from the horse’s mouth, from President Clinton and heads of the Congressional Budget Office, that this is nothing more than a bookkeeping scam.
But we also have Alan Greenspan of the Federal Reserve telling us that “the only thing that matters is that it’s enforceable.” When called on, revenue will come out of the Treasury’s general fund even if it takes all of the operating cash for that year or forces more honest borrowing from investors.
And this is happening right now, today, with the Unemployment trust fund, the Airport & Airways trust, the Highway trust fund, and several others. With today’s income taxes, we are repaying money that was already paid once before by someone else.
Without its credit card, without the ability to substitute money borrowed from investors, the government is forced to cut existing programs. There has been no other choice for the last three months.
When it happens with Social Security it will be the same people who paid the tax in the first place, their children or grandchildren, who will be paying the tax again, plus interest. That’s real double taxation, plain and simple.
The federal government will never give up this scam. It’s up to the victims to take action.
“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”