The Real Lock Box
The Real Lock Box
By Mary Pitt
The good news: Social Security is still solvent.
The bad news: It's all in T-Bonds!
When a bank is robbed by a common criminal, the police at all levels are on high alert and the thieves are pursued until they are caught. However, when the theft is by a bank insider with access to the books, the theft can be covered up for a long time while the guilty parties make their getaway to live a long, luxurious life in a foreign country. The victims, the depositors have theiir money replaced by tax funds, and the only losers are the American taxpayers. Now we find that there is an "inside job" going on that is stealing a vitally important trust fund and all indications are that the thieves are going to get away with it, due to adept manipulation of the funds and obfuscation of the truth.
Back in the days of Franklin D. Roosevelt, the people in our beleaguered government realized that the elderly of our nation were doomed to be a burden on the children whom they had carefully and patiently reared in the hope for a better life for them and those children were faced with bitter choices on a daily basis. No family was ever able to provide the necessities of life for everybody and the choices were whether to provide for the needs of elderly parents or for their own children. In most cases, the choice was for all to share what little there was and for everyone to go hungry. The nation was in the grip of the Great Depression; those who had carefully saved money had lost it all in the stock market crash and the bank closures, the only earnings that were available were from what one had and could sell, what one could grow and trade for products and services, and hungry people worked all day at heavy labor for a meal handed out the back door by a householder. Nobody who was not alive in those days can comprehend their misery. This level of privation had not been experienced since the earliest days of the settlement of this continent.
In that climate, while there was little that could be done for the immediate problem, it was resolved that this should never be allowed to happen again. Many programs and regulations were instituted in order to restore the monetary system, the business climate, and the culture which had been established over the years. Among these programs was that of Social Security. This allowed people to contribute to a fund during their working years so that they could draw from it when they became too old to work. It took many years to pay enough into the fund to qualify, but elderly people worked assiduously to establish this entitlement so that they would not burden their own children as they had been burdened in the past. It was considered to be a trust fund, much like the one to which people now contribute in order to prepare for the education of their children.
At first, it was not complete. Only wage earners were allowed to participate. Farmers were left out as well as the self-employed and, during World War II, soldiers were not covered for their service pay. But, over time, more people were covered and adjustments to the rate of investment were made so that surviving dependents and those who became disabled before reaching the age of 65 were also included. Social Security became a uniquely American institution, providing the much-needed "safety net" for those who could not hope to save enough money from their meager wages to plan for all contingencies. To the working class it was a God-send, an investment in their futures, over and above the income tax which they paid.
Initially, the accounting separated the funds paid into the Social Security account from the general fund and the balances grew in preparation for the needs. However, once the war was over the time came, as it always does, to pay the bills for the post-war rebuilding of our own and other nations. This threw the Federal budget into deficits and the Presidents and Congress feared the repercussions when the people became aware of it. (Even then, government officials were loath to increase taxes to meet needs.) It was decided to cease that separate accounting practice and to list all the money received into the same general fund to hide the degree of national indebtedness. With time and the increases in the amounts withheld from payroll, the fund went into "surplus" because more was paid in than than was paid out to beneficiaries, and this money was "borrowed" in order to keep the deficit down and to pay for all the spending which Congress found so essential.
In 2001, when the current administration took office, there was a "projected surplus" of 1.75 trillion dollars over the next ten years which would carry the program for many years into the future. However, this money was spent for tax cuts and pre-emptive wars, and for subsidies to the multi-national corporations. Now, we are told, not enough money will be paid into the system to pay for the benefits that are going to be drawn out by retirees. They project huge increases in the amounts of deductions that will be necessary when the "baby-boomers" reach retirement age. The alarms are being sounded on a daily basis by the Conservatives and we are being pounded with their theory that the only way to save Social Security is to "privatize" it because the system will go broke under the increased load and be an unreasonable burden on the taxpayer. The "shortage" in the fund now requires that enough tax be paid in each year to pay the current benefits. Once that is done, the "excess" is spent and simply disappears into the general budget for war and pork.
However, noted economist and New York Times columnist, Paul Krugman, tells us that the Social Security System is sufficiently funded to last for another forty years without alteration. Currently the Federal General Fund is indebted to the Social Security Fund in the amount of $800 billion dollars and this amount should be included in the projections which are being made to determine the future of this vital program. After about 2043, according to Mr. Krugman, the program will fall about 20% short of total solvency. Taken in context, this is not a bad situation, since our national budget currently falls 30% short of available income. The arguments for its dissolution are not only fallacious, they are simply politically motivated. The necessary adjustments only require across-the-board tax increases or restraint in other government spending.
So, let's explore the reasons why the demise of this program, so essential to the welfare of the working poor, has been targeted for extinction by this administration. Common sense tells us that we cannot "repair" the program by taking even more money from it to put in the stock market. However, we could make it last a lot longer by increasing the maximum earnings on which the tax is paid or, in a worst-case scenario, adding a "means test" so that people who do not need it won't be drawing the same benefits as those for whom it is a matter of life or death. There are many ways to ensure that the original intent of the Social Security Act remains in force for the welfare of society as a whole but the policy-makers of the Republican Party refuse to consider them. In short, the money is in the bank, but the bankers won't release it because, in doing so, they will expose the fact that the bank itself is insolvent!
This program was designed, first, as "insurance" in which holders pay premiums. Later, it was changed to a "trust fund" concept wherein the money was held for future needs. However, once the government started "borrowing" the money, it was changed to an "entitlement", as are Medicaid and Public Welfare. In short, our money was taken by those into whose trust it was given, and put to other purposes and now they fear that they will not be able to repay it. If you were to start a trust fund at your bank into which you placed your "nest-egg" only to find later that it had disappeared, you would be preferring charges and demanding that the thieves be put behind bars. This time, the thieves are IN the bank and they blandly tell us, "There is no trust fund. The money is gone!" We should tell them, in no uncertain terms, that the money is not gone. It has been wrongfully spent by the officers in charge, it is owed to us, and we demand that they pay it back. If they cannot or will not make restitution, they should go to prison for a very long time.
Mary Pitt is a septuagenarian Kansan who is self-employed and active in the political arena. Her concerns are her four-generation family and the continuance of the United States as a democracy with a government "of the people, by the people, and for the people". Comments and criticism may be addressed to email@example.com .