Posted on 04/06/2005 7:00:24 PM PDT by smoothsailing
April 06, 2005
Fund-less Trust Fund
The filing-cabinet drawer in West Virginia.
Yes, Virginia, there is a Social Security Trust Fund. Actually, Virginia, it's in West Virginia — Parkersburg, to be precise.
President Bush traveled there Tuesday to visit the trust fund. Americans could be forgiven for thinking that he toured giant vaults brimming with gold bars, diamonds, real-estate deeds, precious antiques, and paintings by Rembrandt and Frans Hals. No such luck.
"A lot of people in America think there's a trust," Bush said, "that we take your money through payroll taxes, and then we hold it for you, and then when you retire, we give it back to you. But that's not the way it works...There is no 'trust fund,' just IOUs, that I saw firsthand."
What Bush found inside the H. J. Hintgen Building, not far from the Ohio River, was the trust fund's actual repository: The locked bottom drawer of a gray filing cabinet.
"Imagine — the retirement security for future generations is sitting in a filing cabinet," Bush said in astonishment.
That drawer, inside an office of the U.S. Bureau of Public Debt, contains $1.76 trillion worth of special-issue U.S. Treasury bonds. Each of these, 225 pieces of paper in all, is contained in one of two white, loose-leaf notebooks that hold plastic page covers. Despite the protective plastic, these certificates have no more financial value than the ink with which they are printed.
"The paper is symbolic," Bureau of Public Debt spokesman Pete Hollenbach explained in a February 26 Associated Press dispatch. As a 2004 Congressional Budget Office report observed, the trust fund is an "accounting mechanism" with "no economic resources."
The key reason these notes have no value is that the money that should be behind them — the excess payroll taxes not devoted to today's retirees — instead gets spent by Congress on everything from farm subsidies to national parks to armored Humvees.
In fiscal year 2004, Cato Institute scholar Michael Tanner reports, the Treasury collected $570.7 billion in payroll taxes and credited Social Security with $89 billion in interest. Social Security recipients received $501.6 billion in benefits. This $158.1 billion balance — which could have funded personal-retirement accounts — instead flowed into general revenues. Congress spent that amount no differently than income-tax proceeds. In corporate America, this misallocation of funds is punishable by law. In Washington, it's the law.
Even worse, these special-issue bonds are not traded in the capital markets, where investors could infuse them with cash value. They are merely IOUs under which future Congresses will have to finance the Treasury's Social Security checks by raising taxes, authorizing increased federal borrowing, or cutting retirement benefits or other programs.
Beginning in 2041, Washington will have to bridge an anticipated 30-percent gap between what Uncle Sam will collect in payroll taxes and what retirees are being promised.
That task will be plenty difficult for the senators, congressmen, and presidents of tomorrow. And, as President Bush dramatized Tuesday, they will get precious little help from a drawer full of plastic-wrapped sheets of paper deep inside an Appalachian filing cabinet.
— Deroy Murdock is a New York-based syndicated columnist with the Scripps Howard News Service and is on the advisory board of the Cato Institute's Project on Social Security Choice.
The President should do a commercial explaining and showing us the filing cabinet. People might begin to get the idea.
I agree.
When SocSec has to dip into this file cabinet and redeem the first piece of paper, how will they cash it? They will go to Congress who has the choice to raise taxes or cut spending. Gee, which would they choose? So, in other words, they tax the value of the paper out of the taxpayer of the day. Now, consider if they didn't have the piece of paper to present but instead just asked for the money. Hey, same result! The taxpayer of the day has to pony up just as much money whether or not the paper exists in that file cabinet!
That is why increasing the payroll tax rate and or extending the cap higher than 90K won't work. All you are doing in making the numbers on those pieces of paper bigger while allowing Congress to spend more money now. Yeah, a bigger inflow might help around 2017 to stave off raiding the file cabinet for a few more years. So why not wait until 2017 to bump up the tax? That is when it is going to happen anyway.
Just as Congress can fake us with a tax increase now to move the date on paper, consider that they could also decide to up the rate on those junk bonds sitting in that file cabinet to also push out the date. After all, what does it matter? How many of them will still be in office in 2017? Their pension doesn't come out of that file cabinet.
Hmm, the government can use phoney IOUs, but if I try to pay my taxes with an IOU that I print from my computer, I go to federal prison.
There is a reason this is in WV. And a reason Bush went there. KKK Byrd is going to have a surprise if he seeks re-election.
There is no money for SS unless we allow the govt. to confiscate our money.
The personal accounts are the only way out of this.
We keep our money, the govt.is forced to cut entitlement programs and balance the budget.
The Democrats will fight that tooth and nail.The Republicans and President Bush have got to do a better job of pointing out the reality of the present system and showing that personal accounts are the only way to end this madness.
Have you tryed MONOPOLY money? :^)
Sheets has had it coming for a long time.President Bush is very popular in WV.
there must be a connection.
LOL! My IOU would fetaure a nice engraving of my portrait with "Trust me, I'm good for it" printed below on a scroll. Also, I could include the phrase, "I promise that I'll this amount after I win the trifecta."
Unfortunately, you're right.
Fortunately, what Bush has to say about personal accounts is right, too. Because at least that "trust fund" will NOT be in the filing cabinet.
OR
"IN ME I TRUST"
8^)
Send the Gov't a UOMe, tell them to take the taxes out of the money in your Socialist security account. They probably wouldn't go for that either.
LOL! They'll just place me on the "Right Wing Nut List", oops, I am there already...
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Life imitating fiction. Sob!
SW
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