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How to Steal $2.5 Trillion

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Lately, we have been hearing about public policy regarding Social Security from elements of the Republican Party, ranging from the loudmouthed new Tea Partying Senate candidate from Alaska, Joe Miller, through self-styled "Young Gun" of the Party of No, Rep. Paul Ryan (R-WI1), to the erstwhile Senator from Wyoming, and noted cranky old buzzard, Alan Simpson. Each of them is advocating a public policy on Social Security insurance that is simply a plan for the heist of this or any other century, resulting in the theft of two and a half trillion of American working people's dollars.

Miller, recently cited in a three-car crash that he initiated by rear ending another motorist, is speaking in a way that seems to guarantee that he will eagerly continue his recklessness in the Senate, particularly with regard to rear ending. Ryan is the Congressional Republican voodoo economic witch doctor and wunderkind that John Boehner has tasked with engendering the fictions required to flesh out the Republicans' three blank page budget and economic plan as well as a sitting member of the President's commission on deficit reduction. Ex-senator, Alan Simpson, is the Co-chairman of the President's "bipartisan" commission on deficit reduction, who recently envisioned the American People's perception of Social Security as a "milk cow with 300 million t*ts". It remains difficult for us to determine how Senator Simpson could have spent his entire life (his father was governor of Wyoming and a Senator from Wyoming) with his face inseparably affixed to his personal government teat while his foot was so firmly planted in his mouth, but I guess this guy is still pretty spry despite his advanced age, which, by all indications, has carried him into his dotage.

They all have been holding forth on how the Social Security system is "broke" with mere "I.O.U.'s" for a trust fund; and how the government has no Constitutional business in compelling young people who don't know better, and TEA Partiers who will never know better, to pay into a system that doesn't pay off as well as a Wall Street crap shoot would, under ideal conditions, as far as they know.

The corporate media has been nodding in uncritical agreement, in a way meant to communicate that this is a wonderful new idea to painlessly deal with the looming default of the Government of the United States due to the irresponsible run up of thirteen and a half trillion dollars in debt by an unassisted Barack Hussein Obama.

The supposed object of the commission's exercise is the reduction of deficits and the national debt, but the fact is that Social Security has never contributed one thin dime to either the deficit or the national debt. In fact, Social Security, funded by the Federal Insurance Contributions Act (FICA), has never failed to leave a positive balance (surplus) in any year since its inception in 1937.

Really, the only flaw in the Republican argument is that it is a cynical fiction, stem to stern, beam to beam, and all the way down to Davy Jones' Locker, which by the way, is our destination if we take that ride on the Republican crazy train. No, that's not a mixed metaphor; they actually intend to drive the Train of State to the bottom of the ocean.

In the best traditions of twenty-first century Republican thought, our three counselors of the right have eschewed actual thought in favor of parroting a September 2004 Heritage Foundation "Executive Memorandum" authored by David C. John, entitled, "Misleading the Public: How the Social Security Trust Fund Really Works". Characteristically for Republicans, it is what comes before the colon that they got right. What comes after the colon is what one might expect to find following a Republican colon.

In any event, the contents of this "Executive Memorandum" match the reasoning of the Miller-Ryan-Simpson trio point for point except for the part about Social Security being unconstitutional. One must assume that David C. John couldn't bring himself to make that claim, understanding that Article I, Section 8, clause one of the Constitution is sufficient to refute such nonsense.

The Heritage "Memorandum" was produced in 2004 to provide then President, George W. Bush with the philosophical underpinning for his attempt to pull off the heist in February of 2005. It was then, in the week after his State of the Union speech that he said, "Some in our country think that Social Security is a trust fund; in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust." Again, with his last sentence he inadvertently made a true statement as he rationalized the default on what, at that time, was just under two trillion dollars in special Treasury Bonds. Does it sound familiar?

The response from former Rep. Bill Archer was, "If one believes that the trust fund assets are worthless, Americans who have bought EE Savings Bonds should go home and burn them because they're worthless because the money has already been spent."

A sensible American public left the Bush administration with the impression that, if Dubya actually pulled it off, the next time a Republican could be elected dog catcher, would simply be an excuse to set the dogs on him. That's when they decided to table the measure for a rainier day. The effort turned out to be no more than an exercise in casing the joint.

Actually, the Social Security System should have a trust fund. During the Reagan administration, concerns grew that the system could not be funded by a growing number of workers paying in when the Baby Boomers started to retire. A commission appointed at that time decided that the Baby Boomers would have to be responsible for funding a good deal of the benefits that they themselves would be collecting. This was accomplished by a sharp series of increases in the payroll tax that led to larger and larger surpluses that the Reagan administration immediately began to misappropriate by spending the surplus to disguise their own huge deficits. They kept the accounting straight by replacing the "borrowed" cash with special bonds, debt instruments that could only be used in the Social Security Trust Fund, and could not be traded for any other government debt instrument, but nevertheless backed by the full faith and credit of the Government of the United States.

You must be familiar with such a strategy. It is called "passing debt on to our grandchildren." You would think that Republicans should be able to speak authoritatively on the subject, since they invented it.

With the inconvertibility of these bonds, they cannot reduce the annual budget deficit; they can only be defaulted upon to reduce the national debt by that 2.6 trillion dollars. Then the Republicans will take credit for the reduction in the national debt with the money that they have stolen. It's like a bank robber expecting to be paid for his effort in tidying up the vault that they just emptied.

The looting continued through the Bush 41 administration and the Clinton administration, whose fabled surpluses could not have been claimed without support from redirected Social Security money. Bush 43, accepted access to these funds as he did everything else that was handed to him throughout his life, and still ran up record deficits while seizing Social Security funds and carrying the wars off the books to pretend that the situation wasn't so bad.

That's when, despite Dick Cheney's claim that deficits don't matter, someone started to wonder where they were going to get two trillion dollars to fund those debt obligations to date. The answer that seemed sensible to Republicans was, "Why should we have to raise taxes to pay them off at all?"

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I am a lifelong resident of the Chicago suburbs, with a several year hiatus to serve in the Navy when my Vietnam era draft notice turned up. I had been told that guys with last names like mine were among the preferred cannon fodder in the Army, so (more...)
 

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work on Wall Street... by Michael Morris on Saturday, Sep 11, 2010 at 10:59:01 AM
The confirmation of what I see: The Republican Par... by BFalcon on Saturday, Sep 11, 2010 at 11:16:44 AM