TREASURER O'NEILL SINGS FOR THE DEAF AND DUMB
by Ed Henry In speeches and interviews with the media, Secretary of the Treasury Paul O'Neill has repeated the truth about the Social Security Trust Fund. That there are no real assets in this trust fund, only liabilities. As he puts it: "pieces of paper" that are nothing more than "promises to pay." Debt that, should the Social Security Administration ever find it necessary to draw on this fund, will have to be redeemed by (1) raising income taxes, (2) borrowing from the public (putting it on the credit card by selling legitimate securities to investors we will then owe), or (3) cutting back on discretionary spending, i.e., taking the money from other programs like defense or education.
He said it to Sam Donaldson on ABC's This Week Sunday morning, June 24th, and he said it during a luncheon speech to the Coalition for American Financial Security on June 19th in the World Trade Center.
Even the Beltway based establishment think tank, the CATO Institute, included it in their Weekly Newsletter saying: "Treasury Secretary Paul O'Neill has done something rare in Washington, and it appears to have set off something of a political firestorm. He told the truth about the Social Security Trust Fund .... 'Today, we have no assets [in the Social Security Trust Fund].'" Going on to say: "that statement prompted howls of outrage from Democrats in Congress. Representative Charles Rangel (D-NY) and Robert Matsui (D-CA) called the statement 'the height of irresponsibility.'"
The CATO newsletter then goes on to say: "It seems strange that anyone could dispute O'Neill's statement. The Clinton administration itself stated in its FY2000 budget: '[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...." (See first paragraph for these three points.)
But none of the people who hear this seem to get it. They do not seem capable of drawing the most obvious conclusions from statements such as this.
Sam Donaldson gets all flustered and asks the Treasurer something to the effect of: Do you mean if I buy Treasury securities, they're not assets? Not understanding the difference between securities sold on the open market and bogus nonmarketable bonds handed to entitlement trust funds.
Frankly, I'm getting sick of what has to be either absolute stupidity on the part of our news people or deliberately creating confusion with misleading information. There's no in-between here.
At the very least, what Treasury Secretary O'Neill is telling us is that the federal government has been lying for years about "strengthening" Social Security by adding to its trust fund. You've all heard it: statements about how Social Security will have to begin drawing on its "reserves" when the "baby-boomers" start to retire; and how even these funds will run out by 2032 or so before the supplemental retirement system goes kaput. But then, because the fund has grown so much, this date is set back again and again.
Do you think it's ever going to settle into Sam Donaldson's brain that when Social Security begins to draw on its trust fund, you will be paying double taxes? Every worker in America will still be paying 15.3 percent of his cost of employment in payroll taxes-plus more in income taxes to cover the withdrawals. Either that or putting it on the credit card for you or your kids to pay later with interest. Or maybe you will just do without something else that you paid for, like defense. (Again, the three points above.)
How did the Social Security Trust Fund ever get so large in the first place? So large that it now accounts for more than 18 percent of the national debt? Why, it happened because you gave the government extra money in payroll taxes. You gave them a surplus. More money than Social Security needed to meet all of its then current requirements to the retired and disabled.
The Beltway Bandits took this extra money, every cent of it, and blew it on whatever they pleased. They then deposited "special obligation" nonmarketable bonds in debit black hole accounts labeled "trust funds." They took your money and gave you debt in return, with interest added. Isn't that nice?
Now, when you or your children have to pay higher income taxes to redeem those phony bonds, you are paying again, a second time, plus interest. It's the Pay-It-Again-Sam plan. Double taxation plain and simple.
Gene Deragon, an ex-radio talk show host in South Carolina once presented this to one of the Concord Coalition's people who go around the country lecturing on Social Security reform, and guess what kind of answer he got. The Concord guy insisted that it wasn't the same thing at all. When you pay Social Security taxes out of your right pocket, and then redeem trust fund bonds with income tax money from your left pocket, it really isn't you making the payments. Isn't that brilliant?
And if our investigative reporters, watchdogs, and think tanks can't see what's going on with this simple scam, how can you ever expect them to grasp the debt laundering operation our federal government has underway?
Ah, but the media watchdogs have other stories to tell you about. Other breaking news items to cover and explain. News that doesn't put demands on the mathematically challenged. Plundering $300 million a day, 365 days of the year, isn't newsworthy enough for them.
In the ten minutes it has taken to read this article, two million more has been added to the government's coffers. Two million you gave them and that you or your children will pay back in the future with interest added. All on Social Security's tab.
The government's entitlement trust funds are nothing more than demands on future taxes. All of them. Social Security's trust is merely the largest of many such debit black hole accounts.
All together, entitlement rip-offs account for 40 percent of the national debt and it's growing. Within ten years, the entire national debt will be in entitlement trust funds. What do you think, is that newsworthy?
Up until now, there wasn't much you could do about it but complain. As of July 4th of this year, you can now join <www.get-tuff.com>: the Taxpayer's Union for Financial Freedom. An organization that will fight to end tax injustices.
TUFF: TAXPAYERS' UNION FOR FINANCIAL FREEDOM
Voice of the Tax Payer
Of thepeople, by the people, for the people
We are not going to take it any more. We will present a united front in the battle against unjust taxation. We will carry that battle as far as it must go in the process of eliminating the most unjust taxes first. It's our money. Our sweat equity. We hold the purse strings. Government works for us, not vice versa. We will not be cheated.
Spread the word. In unity there is strength. Anyone who has or will ever work in this country should become a member of this union.
We demand that our elected representatives, those who are supposed to work for us, put an immediate stop to the following:
1. The wholesale theft of our retirement money. Last year, fiscal 2000, $95.4 billion was stolen from Social Security funds every worker paid. This year, it will be more.
2. The theft of other entitlement money. Extra gas taxes, unemployment taxes, Medicare, airport and other user taxes. Money that is not supposed to be spent elsewhere.
3. Double taxation. By depositing "special obligation" nonmarketable bonds in debit black holes labeled "trust funds" our children are bequeathed the "Pay-It-Again, Sam" scam, with interest.
4. Debt laundering. Saving six cents in accrued interest with every dollar plundered and applied to one side of the national debt, while the other side of the debt increases proportionately.
5. Income Tax: After an $87 billion surplus in fiscal 2000, and $107 billion in expected overcharges this year, our benevolent government gives us a refund of less than half.
Wise marketing people have cautioned that if we do not charge dues, people are liable to doubt we are a real union. In spite of this sage advice, we have decided to allow free membership. There may come a day when, in order to carry out activities other than this website, we will charge some minimum to our members. Whatever these activities happen to be -- lawsuits, strikes, and so forth-they will not be undertaken without the support of the rank and file. <www.get-tuff.com>
--Ed Henry, People's Open Opposition Party (POOP) <http://www.poop.org>, is a veteran research analyst, a pioneer of qualitative market research in Chicago, founder of a Chicago firm "Applied Market Research."