What government pretends to owe…
The Social Security Trust Fund of some $2.8 trillion is often listed in charts – such as the one above – as part of the National Debt. This particular graphic, the latest available, is from the Federal Reserve, an institution that is part of the huge debt and is owed $2.465 trillion by taxpayers.
The difference between the Social Security “debt” and the Fed debt is an amazing accounting sleight of a sharp pencil.When the banks almost went bankrupt in 2008, the Fed bought more than $2.4 trillion in Treasury Notes from its member banks at no interest, and then sent that money to financial firms here and in Europe.
In short, The Fed purchased Treasury notes from its member banks, using credit it created out of thin air. It’s called printing money, but you don’t hear much about the Fed’s part of the current $21 trillion owed by taxpayers.
What you do hear, over and over, is that “awesome” $2.8 trillion Social Security debt, combined with a warning that the retirement plan will go bankrupt.
The $2.8 trillion is an accumulation of all the excess money that workers paid into the system since the mid-80s. Congress borrowed this excess, and issued “special” treasury notes to the Social Security Trust Fund, bonds which then earned a pitiful rate of interest, but still have grown to the present total of nearly three trillion dollars.
There are also Medicare, civil service and veterans funds included in the national debt. These are each cases of just owing ourselves, and investing that money in bonds.
When you hear about Social Security being broke, realize that the liars decided that the treasury notes issued for your excess FICA taxes don’t need to be paid back to you or your children.
They do insist that China’s $1.2 trillion or the Fed’s $2.5 trillion are real debts, and backed by the full faith of the U.S. government. You don’t screw with the Fed or China.
Alan Greenspan, who orchestrated this over payment of FICA taxes, beginning in 1986, said then that the accumulated trust fund would allow us to overcome the increased retirement payments to baby boomers in the 2000s. In addition, he pushed for moving the retirement age from 65 to 67, cutting benefits, and opening up this public pension money to federal income tax – all to boost the fund’s total.
In 2015 Greenspan, during a presentation to the Peter J. Peterson Foundation’s Fiscal Summit, was asked about the status of the Social Security Trust Fund, and he announced:
The notion that we have a trust fund is nonsense—that trust fund has no meaning whatsoever. The trust fund is a meaningless instrument that has no function.
This was sad news for the 50,679,000 Americans, retired on Social Security, who paid extra taxes to build up that fund during their lifetimes of work.
Of course, Greenspan is not alone in his opinion, which is shared heartily By Speaker Paul Ryan and dozens of Senators and Reps, who depend on big business donations and other, perhaps less visible, “gifting.”
The newest political confiscation move is “pay-as-you-go” budgeting, which would prevent the use of the Social Security Trust Fund, and thus end the requirement to pay it back or pay interest on the notes issued.
My analysis is that the power brokers loved it when we overpaid into FICA, and the government then used the money for so-called general funds, leaving us an IOU.
Now, the time is near, when there will be no annual FICA surplus to confiscate, the political hacks want to raise taxes and cut seniors’ benefits. The Trust Fund surplus will not be reduced, but increased, boosting the National Debt.
New rule: a growing National Debt is a bad thing, except for the hard-earned debt that goes to the working class.