Imagine if your private investment company came out publicly with a change in theirprospectus: “Dear grateful investors, due to economic conditions we are forced to reduce all accounts by 22% across the board, even our most conservative investments. Anyone investing with is now hereby entitled to only 78% of everything we contracted before.
They would be strung up for doing anything remotely close to this.
This is exactly prospectus given recently by the Social Security Administration.
The Social Security Administration (SSA) and all the liberals and socialists who praise the system would like us to believe that our “contributions” (that is, “taxes”) into that behemoth are collected and saved in a “Trust Fund.” More and more people today are beginning to realize how big a lie this really is.
The SSA is quite aware of these two facts: 1) the Trust Fund is a tremendous accounting trick, and 2) that accounting trick is becoming widely acknowledged. So, in order to address the tension arising from these two facts, the SSA has resorted to that time-honored bureaucratic tradition: lie to your face and expect you to accept it.
This tactic is evident in the most recent round of personal Statements sent out by that Administration. Mine included a box entitled, “Will Social Security still be around when I retire?” My initial thought was “Not if I have anything to do about it.” I amuse myself.
But I was even amused when I read their answer: it was definitively “Yes.”
Well, it was “Yes,” anyway, and was considerably less definitive when I read further. It appeals to the “Trust Fund” into which our “taxes” (openly stated) are now paid, and it declares openly that these taxes are not saved, but “are used to pay current beneficiaries.” Back to this letter itself in a minute. . . .
Now liberals love to point out that the Trust Fund system has been running “surpluses” for decades. Thus says Christian-Socialist Jim Wallis’ organization Sojourners: “the program actually has been running surpluses for decades, to the tune of $2.6 trillion total.”
Is there really $2.6 Trillion in cash sitting in the SS Trust Fund, waiting to fund retirees indefinitely?
The email version (from Jan. 24, 2011) of Sojo’s $2.6T claim footnotes the 2010 Annual Report from the SSA’s own board of trustees—the Fund’s own trustees. (BTW, the ”trustees” include people like the Secretary of the Treasury, Timothy Geithner, and the radical leftist Secretary of Health and Human Services, Kathleen Sebelius.) This is a bit like taking the Enron Board of Directors at their word in regard to their corporate finances, and assuming the accounting procedures used are just peachy.
Indeed, what the Trustees really mean by that figure, and what liberals like Wallis and Sojourners take to be $2.6 trillion dollars, is actually a bookkeeping entry that says $2.6 trillion. But this entry only designates a claim against the Treasury—a promise from the Treasury—not an actual surplus of marketable assets or commodities.
What we have known explicitly, at least since George W. Bush in 2005, is that these surplus funds, once sent to the Treasury, are immediately spent into oblivion on other government programs. The cash is gone. Nothing remains except the promise to repay upon call.
A somewhat less biased view of the situation was given in 2000 by the Office of Management and Budget:
These 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. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits.
According to the OMB, therefore, the only way this indebted, squandering, spendthrift government can repay on its promises is by raising taxes, borrowing more money, or reducing the payouts. That’s it: tax, borrow, or default. All of these changes from the initial promise, by the way, are merely different ways of accomplishing the same thing: defaulting on that promise.
Now liberals jump at this point to rebut: “but that promise if legally backed by the full faith and credit of the U.S. government.” But despite the escalation of language, is this anything more than a bare promise?
Of course not. It makes the promise no greater or more secure of a promise than childish word games: like when we were kids and someone “promised,” and we said, “But do youswear.” “Yeah.” “You swear on your mama’s grave?” “Yeah.” “Well, OK, but you better really mean it!”
It was still a bare promise, breakable by the next better self-indulgent benefit that floated by. Although, I admit, I can’t think of a much better image for our belief in the government’s promise to repay social security benefits than the verbal wagering on one’s parent’s grave. Social Security is, after all, a cradle-to-grave wealth-transfer scheme, paid for by an inter-generation scheme of wealth-redistribution. By that system, the government, ultimately, swears on our mothers’ graves.
And yet it is still a bare and elusive promise. Back to the personal “Statement” the SSA sent me: their answer to the default question was, as I said, “Yes.” But what followed was a terrific example of double-speak: “Yes,” but, “The Social Security Board of Trustees now estimates that based on current law, in 2041, the Trust Funds will be depleted.” So, “yes,” but “not really.”
The details of the “not really” are even better:
However, this does not mean that Social Security benefit payments would disappear. Even if modifications to the program are not made, there would still be enough funds in 2041 from taxes paid by workers to pay about $780 for every $1,000 in benefits scheduled.
What an assurance! By the time I am able to retire (I don’t believe in retirement, but for the sake of argument, I will be exactly 67 years old in 2041), I will have the great privilege of receiving 78 cents on every dollar I am promised! And you, too! That’s only a 22% negative return!
Paying 78% of what is promised. How’s that for full faith and credit? Not so full.
The law should, therefore, say that the promises are backed by “the partial faith and credit” of the U.S. government.
Notice the SSA states that this will be the case only “if modifications to the program are not made.” And we know what types of modifications can be made: tax, borrow, or default. So far they are promising a 22% default, so any changes to deflect that will necessitate borrowing or taxing more.
And of course, this all assumes that the Trust Fund actually exists, which we’ve already seen, it does not. So the full extent of the problem is infinitely worse. What really needs to happen is the raising of taxes or borrowing in order to meet the full extent of the entitlement payouts (beyond the taxes already collected of course), every year—not just after 2041, but every year up until that time.
So the question really is, Does the government have the means and the will to extract that whole $2.6 Trillion by force of taxation in the future in order to repay on its promises? And will the future generation—whose likelihood of repayment is even bleaker and even less “full”—stand idly by and continue being robbed by such a decrepit, corrupt, and immoral system?
Or perhaps the real question should be, especially for Christians, whether it is moral and biblical to extract and spread wealth by forceperiod, and whether stolen wealth can morally be transferred to the previous generation without inviting God’s judgment on society. Further, should Christians even accept such “benefits” in light of the fact that they are wealth gained by coercion of other people’s children and grandchildren?
I say the whole system—in its conception, design, and practice—is corrupt and sinful. Christians should now be busy providing for their own futures, and creating private systems in their churches for those few who cannot really provide for themselves. The fact that they have not done so is testimony to their true faith: not faith in God, but the full faith and credit of the force of the U.S. government.
But that false god is failing them. Their soon-to-be 78-cents-on-the-dollar return is proof of that failure, and is only the beginning of the total failure to come.
Christians need to lead the way providing private solutions, and lead the way in demanding total freedom from the current tyrannical government system.
For thoughts on how to accomplish this, see my “Freedom in Welfare: how to get it back.”