Image Image

  Nostalgia ain't what it used to be

Wednesday, 17 January, 2018
Image

Torpedoed

Date: 01 August, 2005

By: Chief

Imageur Social Security 'system' that is.

Since envisioned and enacted into law by the Congress during the Roosevelt administration as a basic social safety net for older and retired people the Social Security program has become one of the largest, most misunderstood and definitely most abused boon-doggles in our country's history.

To discuss the Constitutionality of Social Security is really a moot issue for three reasons. First of all Congress ain't going to get rid of it — too many votes are riding on the election table for that to happen. Second is the mere fact that the vast majority of the American people pay into the system and, more importantly, do not want the program to go away. Lastly is the simple fact that I have already discussed the Constitutionality of both the Social Security and Medicare programs and really do not feel like re-inventing the wheel.

Therefore, I intend to discuss the current state of Social Security and what our politicians are bent on doing, for better or for worse (heard that one before?), about or to the Social Security program. After all, it is our money.

For decades Social Security has been a political 'scared cow'. A politician, any politician for that matter, who wanted to remain a politician or had dreams of moving up in the world of politics had better fully support Social Security or look for another line of work — and quickly. It was and remains basically that simple. To discuss changing, let alone eliminating, Social Security was tantamount to political suicide. No politician, that I am aware of anyway, wants to commit that.

The trust fund is empty

Most people, myself included, do not understand the Social Security retirement and survivors trust fund. More importantly, we do not understand how the purported trust fund actually works.

Remember this if nothing else: There is no cash or any other tangible asset in the Social Security "trust fund," and there never has been any. Period.

Here, courtesy of the Heritage Foundation, is the deal:

"The Social Security trust fund is merely an accounting device filled with IOUs that future taxpayers must repay. Far too soon, payroll taxes will be insufficient to pay all of the promised benefits. Unless Congress promptly takes action, taxpayers will have to pump hundreds of billions of additional tax dollars into Social Security to pay the promised benefits.

"How the Trust Fund Operates.

"Workers pay their Social Security taxes through their employers. Each employer periodically sends a lump sum payment to the U.S. Treasury that includes all of the income taxes and Social Security and Medicare payroll taxes paid by both the employer and its employees.

"The Treasury both receives the payroll taxes (and income taxes that higher-income retirees pay on their Social Security benefits) and pays monthly benefits on behalf of the Social Security Administration (SSA). The money stays in the Treasury's hands until it is either paid out as Social Security benefits or otherwise spent by the government. In fact, no money ever goes into the trust fund. Instead, the trust fund balance is the result of two accounting entries by the Treasury (emphasis added).

"First, the Treasury estimates how much of the aggregate tax receipts are Social Security taxes and "credits" the Social Security trust fund with that amount. Then the Treasury "subtracts" the total amount paid in monthly Social Security benefits from the trust fund balance. No money actually changes hands; these are strictly accounting entries.

"Any 'money' remaining in the trust fund is converted into special-issue Treasury bonds, which are really nothing more than IOUs. In addition, the Treasury pays interest on the trust fund's balance by crediting the trust fund with additional IOUs. These are also strictly accounting entries, and again no money changes hands. After crediting the trust fund with the proper amount in IOUs, the government spends the extra Social Security tax collections just like any other tax revenue--to finance anything from aircraft carriers to education research."

Well now isn't that just a fine kick in the teeth. What we working stiffs and employers have been putting into the U.S. Treasury in the form of payroll taxes have gone to fund everything from Social Security benefit payments to highways to Congressional 'fact finding' missions. Read that last bit as Congressional vacations and Christmas shopping sprees.

Any reasonable person would take the phrase "payroll tax" to mean Social Security. And nothing else. Furthermore, any reasonable person would assume that "trust fund" means exactly that. No money can be touched except for the express purpose of paying benefits as that is what the Social Security "trust fund" was enacted to do. Additionally, a reasonable person would assume that the "trust fund" was managed in such a way as to grow — in real terms. Finally, a reasonable person would assume that the "trust fund" held real assets. Bonds, property, mutual funds, etc.

None — got that — none of that is the case with the Social Security "trust fund." Not one bit of it. If you don't believe me, read this (again from the Heritage Foundation):

"Private-sector trust funds invest in real assets ranging from stocks and bonds to mortgages and other financial instruments. However, the Social Security trust funds are only "invested" in a special type of Treasury bond that can only be issued to and redeemed by the Social Security Administration. As the Congressional Research Service noted in a report on May 5, 1998:

"When the government issues a bond to one of its own accounts, it hasn't purchased anything or established a claim against another entity or person. It is simply creating a form of IOU from one of its accounts to another.

"According to the Office of Management and Budget under the Clinton Administration in 1999:

"These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures--but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. 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, borrowing from the public, or reducing benefits or other expenditures" (emphasis added).

I just love that last sentence:

"Instead, they are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures."

Fraud and embezzlement

Well guess what friends and neighbors the Congress of the United States has committed fraud and embezzlement. Both on a scale that defies anything ever before seen. The Congressional Social Security fraud makes Enron, Global Crossing, World Com and Martha (looks great in stripes) Stewart look like a bunch of kindergartners in comparison. It is a scam of unbelievable proportions.

I remember reading news stories about how managers of private pension funds would go to prison for misusing the funds. It is called embezzlement ladies and gentlemen. Hence, each and every member of Congress is an uncharged felon. Each and every member of Congress has committed embezzlement, fraud, conspiracy to defraud. And that is just the beginning. But guess what? Ain't nothing going to happen to these slimy pieces of human excrement. Not one single thing.

If you or I had committed what these dirtbags in Congress have committed we would have been locked up in some federal prison for so long it would not even be funny. And don't think Congress has not committed these outrageous criminal acts. It is a matter of public record that they have. The Congressional Record no less. It, if nothing else, shows that these elected criminals have perpetrated these crimes against us.

Additionally, U.S. Comptroller General David Walker stated:

"[t]his is not a real trust fund. Let's not kid ourselves[.]"

When he referred to the Social Security "trust fund."

Bottom line is that there is no money or other assets in the "trust fund." Congress embezzled it and spent it.

So what do we do? Other than get a rope and hang every member of Congress from the nearest tree. To do that would provide me with great personal satisfaction.

A decent plan

I have to tell you, and I never would have thought that I would say this, but King George the Bush has a plan. A decent plan, though it does not go nearly far enough.

The King's plan is to allow we mere citizens to invest a portion of our "money, set it aside in a voluntary personal savings account so you can invest in bonds or stocks — bonds and stocks, whatever you so choose" (quoting the King). I assume the King is referring to a portion of our payroll taxes.

The King went on to note that:

"if you can get a better rate of return than 1.8 percent, that compounds over time. And it's that compounding of interest that helps create wealth and security in retirement. The voluntary personal accounts will complement that which is available to you through the Social Security system. But you're going to get a better deal on your own money than in the current system."

I believe it to be an actually good idea, a good plan. Though, as I already wrote, it does not go far enough.

The current Social Security "trust fund" purportedly yields a 1.8 percent annual return (according to the King). That, however, is only on paper. It actually returns zero percent. Why? Because, as we have already seen the "trust fund" is a scam. There is no money or other tangible asset which can bring a monetary growth of any percent. Zero times zero equals — zero. Basic math. Something the Congress has no clue about.

What is quite entertaining about the King's plan is two things. First, as the King himself pointed out the payroll tax is "your own money" so why not invest it and, as much or as little as you like. But here is the ringer — it is a libertarian idea from day one. The second point and this is absurd, the Congress, especially the Democrats are dead set against allowing we mere and lowly taxpayers and wage earners from investing our "own money."

Congressional embezzling

Well hell's bells, Maynard. I can fully understand why Congress does not want us to invest our "own money." If we did then there would be less "trust fund" money available for members of Congress to embezzle.

Indeed Congressman Sander Levin, of Michigan, flatly called such accounts:

"[N]ot acceptable ... to Democrats in this institution" (quote from SF Gate).

Further, as reported by the SF Gate:

"[D]emocrats said they are ready to work with Bush on solutions — which would require benefit cuts, tax increases or both, though they were careful never to say this directly — but only if Republicans drop the plans for private accounts funded by diverting payroll taxes."

Did you see that part? The requiring "benefit cuts, tax increases or both" part? Why? Because Congress embezzled money from the Social Security "trust fund." That's why.

And, who could or would forget Congresswoman Nancy Pelosi's infamous statement pertaining to the "trust fund:"

"There's nothing wrong with Social Security lending money with the prospect of returning it."

Yeah, Nancy. Sure, you bet. I do believe that you have been eating from and embezzling from the Congressional hog trough for far too long. But on whose shoulders is paying back that loan going to fall? It sure ain't yours, Nancy. And it sure ain't going to fall on any other member of Congress's shoulders either. Isn't that correct ... Levin? The ax is going to fall on ourselves, our children and our grandchildren — at a minimum. Thanks, Nancy and Sander, you pernicious twits.

Unfortunately folks, that is exactly what is going to happen. Our members of Congress have deceived us. They claimed one thing — the "trust fund." And then promptly embezzled off any excess payroll taxes within the treasury.

The other reason that Congress does not want us mere citizens to be able to invest part or all of our payroll taxes is the simple fact that if we could — there would not be enough payroll taxes coming into the treasury to pay the — current — benefit checks the government writes. Why? Again because members of Congress have embezzled the "trust fund," quite literally, dry.

Scallywags

Our Congress have left us, our children and their children holding an empty Halloween bag on April Fools day. We, our children and their children should not have to pay back what Congress wrongly took and subsequently spent.

I fully believe that the members of Congress — themselves — mind you, should be required to payback what they took. If they refuse then we seize all of their individual assets, sell the assets off and seize their salaries as well. While all of that would not amount to a drop in the empty "trust fund" bucket, it sure would be a start. Further, it would provide us all with a great deal of satisfaction.

Then we hang all the worthless skunks from the nearest tree.

(Return to the top)