By James Schaefer.
Jonathan Weisman wrote cogently in the Wall Street Journal about addressing the budget deficit (Voters Back Tough Steps to Reduce Budget Deficit, Aug 17, 2010 — subscription required).
He points out that tens of millions of voters are ready to accept tough measures to balance the federal budget, and that they are far ahead of their elected representatives in this regard.
Still, the article states that “the accumulated debt held by the public will exceed 77% of the economy within a decade, not including the debt the government owes itself for raiding Social Security taxes for decades.”
Government’s “raiding” of Social Security means that American taxpayers will pay twice to provide the same benefits: first, as FICA taxes paid on earnings, then later as taxes to pay off the $2.5 trillion in Treasury Bonds in the Social Security trust fund.
You and other future taxpayers are going to have to pay tomorrow for the Social Security of tomorrow. The “FICA” you’ve paid to date was really just income tax, used to pay for long-forgotten “government programs”.
Those Social Security trust funds were supposed to be held — literally — “in trust” for America’s citizens. The raiding of that trust fund violates a fiduciary responsibility.
In the real world beyond Washington, a trustee or mutual-fund manager who violated that sort of trust — the fiduciary relationship — would go to jail. That’s exactly what Bernie Madoff was all about.
When did all this occur? The answer is in two parts. The first thing you need to know is that all the dollars held in the trust fund are invested in U. S. Treasury bonds. That’s the same thing as saying that they were loaned to the government, and of course all the money that is loaned to the government is spent right away.
And the government’s borrowing has been larger than you thought, because each year they’ve been claiming those Social Security contributions as an offset to make that year’s deficit look smaller. According to the Social Security Administration, this “unified budget” was a bipartisan effort between Lyndon Johnson, Richard Nixon, and the 1969 Congress, and since then no Congress or President has had the courage to tell the truth.
Every budget of the last 40 years has been less than forthright about this simple fact.
If the Social Security “trust fund” had remained in trust for its future beneficiaries, it would be $2.5 trillion closer to solvency, and much of the current conversation about cutting benefits and raising the retirement age would be unnecessary.
Al Gore was right about the lockbox.
And if you haven’t seen this in a while, enjoy the lockbox spoof on SNL 2000 Presidential Debate (STRATEGERY).