Social Security Surplus?

November 2, 2000

First a correction from my last essay. A sharp eyed reader informed me that the boy character in "Lost in Space" was Billy Mumy and not Billy Mumford. God, I love you guys.

The elite has used their media control to cover up the second greatest financial scam in American economic history. The greatest scam is the Federal Reserve and fiat money. Behind door number three is the gold price suppression conspiracy. Come to think about it, the fourth scam would be the rigged stock market. The total effect of these scams is the looming collapse of the American economy.

A brief history of Social Security will show how we got to the point of financial fraud. As proposed by Franklin Delano Roosevelt in the 1930's, Social Security was voluntary and the tax rate was 1%. Until the mid 1960's, politicians used Social Security as a vote getting slush fund-increase the benefits to get votes and increase power. It's all about using entitlements to redistribute wealth in order to get reelected-just as the Greek historian Polybius described the Athenian Republic doing. His thesis, that once officials and the people figured out how to prosper by taking money from one group and giving it to themselves, government would be gradually debased into an oligarchy. History shows this time and time again.

In the mid 1960's two things happened which have helped to create the current mess. The first was including Social Security taxes in the general fund. The thought was benefit increases would be harder to use as a vote getting ruse. The second was the creation of a second entitlement, Medicare, by President Lyndon Baines Johnson. Once Social Security was in the general fund, and expenses were increased by adding health benefits, a crisis was guaranteed. The duly ordained crisis arrived in the mid 1980's.

The Congress, terrified of elderly voters, promptly increased the withholding payroll tax to 7.5%. That's 7.5% times 2, one for you and one for your employer. You self employed types get to pay it by yourself, all 15% of it. In fact, the Medicare part of the tax is now unlimited. The 67,000 dollar cap was removed and now all income is subject to the Medicare part of the Social Security payroll tax. Just thought you would like to know. Today's "surplus" has its roots in this massive tax increase to "save Social Security". An unlimited 3% Medicare tax can generate an awful lot of revenue you know.

Fast forward to the year 2000 and the current political debate. The two stooges, Bush and Gore, are arguing about whether to spend the two trillion dollar Social Security surplus. The other two trillion dollars is, in my opinion, a mirage induced from economic delusions and fantasies. Plainly put, neither exists as a surplus at all. The first two trillion, the Social Security payroll taxes exists, but is already spent after 2012. The second two trillion is the result of economic numbers that are politically motivated and overly optimistic to put it mildly. Not so mildly, they are the delusions of hack politicians and their court economists.

Now rewind back to the Unified Federal Budget and look at what's really going on here. All Federal Revenue, excise taxes, income taxes, Social Security payroll taxes, are unified into one lump sum. Even though some funds are dedicated to a specific purpose, like airport fees or gas taxes, they are thrown into the general fund. In particular, these funds are replaced with Treasury IOU notes. The actual money is long gone and replaced with another fiat guarantee to be repaid after 2012. Are you starting to get nervous?

Most of us work for a living and get paid once or twice a month. Most of us either pay rent or have a house payment due on a specific date, usually the end of the month. And most of us are in budget surplus right up until the due date of our rent. In American slang, the Federal government is "spending the rent money." If normal people unify their two paychecks, the rent money is surplus until it needs to be actually spent. The obvious question is what happens when the Social Security rent money comes due between 2012 and 2020? The surplus has been gone for many years, having been spent as fast as it came in year to year. The Treasury guarantees to pay are all that actually remains. All that remains from the party is the bar tab. We must redeem the Federal Treasury IOUs by increasing debt, cutting benefits, raising the retirement age, or raising payroll taxes to cover the current benefits. Social Security is a pay as you go system, oras I prefer to say, a Loot and Pillage until you get caught system.

You say you didn't hear about any of this in the debates? Funny, I heard Al Bore say he would eliminate the Federal Budget Deficit by 2012. Except, what about the two trillion needed to fund Social Security benefits between 2012 and 2020 Al? Anyone care to use the term financial fraud?

I hope readers will appreciate I listened to all four political debates. I mean the sacrifices we pundits have to make Mr. Vronsky! Watching Al Gore was like watching the robot in "The Day the Earth Stood Still."- "What about the Dingell/Norwood bill?" And I do believe Mr. Bush really doesn't have much upstairs. Both of them conspire, along with the media and the banks, to cover up financial fraud. Britain had its media mogul Robert Maxwell play games with his employee pension funds. What we are doing is no different. If a financial planner looted a child's college fund, he would go to jail. Yet, we keep reelecting these criminals. Oh well. Only the rent always comes due.

Hopefully, this essay has shed more light than heat on the great Social Security Ponzi Scam. It's my desire the reader now understands the origin of this financial fraud. Now you know why I consider precious metals to be the foundation of my retirement plan. Assuming we make it to 2020, which given the current MidEast situation is dicey, I'm not trusting this current gang of political criminals. NO more government fiat IOU paper for me please. You see, it's not the Social Security Program at all, it's the Social Security Mirage. And I never liked the taste of sand.

"Both oligarch and tyrant mistrust the people;
therefore deprive them of arms" Aristotle, Politics

In 1934 President Franklin Delano Roosevelt devalued the dollar by raising the price of gold to $35 per ounce.