Article...NEW YORK TIMES HAS A SCREW LOOSE...
By: Ed Henry
etherzone.com
Paul Krugman is nuts and a loyal but lousy propagandist. In an article he wrote attacking the President's Commission to Strengthen Social Security for being salted with members of the CATO Institute, he claimed that the windfall surplus Social Security produced through excessive payroll taxes was $90 billion last year. He's right about the institutue, but the surplus was $95.4 billion, a fact Mr. Krugman could easily determine if he subtracted the interest from the total that the Social Security Trust Fund increased last year. But he would need the balance at the close of 1999 and the interest rate in order to do that and apparently finding that is beyond Mr. Krugman's capabilities. But an error of five billion four hundred million is small potatoes when you're out to write vitriolic nonsense.
In his attack, Mr. Krugman wrote: "I had been trying to come up with a reductio ad absurdum, something that would demonstrate how nonsensical the commission's analysis is. But I needn't have bothered; a commission member, Thomas Saving, did the job for me, in a presentation he gave at Cato. He repeated the report's claim that the trust fund accumulated through decades of Social Security surpluses is no help when it comes to paying future benefits. But he was more specific: The trust fund is worthless, he said, because it is invested in U.S. government bonds. If it were invested in German bonds the trust fund could indeed be used to pay benefits……Is he saying that last year's Social Security surplus did not enhance the government's future ability to pay benefits? If so, he's just plain wrong. Last year the government paid off more than $200 billion in debt to the public, largely because of the Social Security surplus. And lower debt implies lower future interest payments, which means that the government can pay more in benefits without raising taxes or cutting other spending."
Now, let's be sure we've got this straight. The government actually threw $237 billion against one side of the national debt. That should make Mr. Krugman's argument even stronger, right? He's already told us where "$90 billion" came from, but he didn't bother to tell us where the rest came from.
Well, it breaks down this way. $87 billion came from income taxes, including about 20 percent, or 17 billion, of that from corporate tax. $95.4 billion came from Social Security alone. That's a big portion all right, but it's only 40 percent of what was used to pay down the investor side of the debt, the side where cash must be used to pay interest. Where did the other $54.6 billion come from?
Surprise, the balance came from other entitlement surpluses that the government robs with equal impunity. It came from extra Medicare, gas taxes, airport and airline taxes, unemployment taxes and about a dozen other entitlements we overpay. No one tells you this, do they? Well, believe it. That $54.6 billion didn't just appear out of hot air.
Next, let's look at how this $237 billion, as Mr. Krugman put it, enhanced the government’s future ability to pay benefits. It all went against the honest investor side of the national debt to save interest. The average interest paid these investors, those holding real U.S. Treasury securities, was 6.489 percent last year. That means the government saved $15 billion (exactly $15.38 billion) in accrued interest with this money.
The government did this in the only way they can pay down the national debt. They allowed $237 billion worth of securities to mature without renewing them by immediately selling new bonds, bills, or notes on the open market. According to Mr. Van Zeff, the head of the Treasury's Bureau of Public Debt, an average of $5 billion in securities mature per day, weekends included, and it's his job to immediately resell that amount on the open market. This is the "bond market" you see and hear in the daily news with its accompanying interest rate and possible discount.
If you think spending $237 billion to save $15.4 billion is a sound investment or use of your money, then you've got a screw loose. And remember, $149.8 billion was from entitlements, $95.4 billion from Social Security alone.
That means that your retirement money saved the government a whopping $6 billion last year. Wow. Do you think the mathematically challenged Mr. Krugman has a bridge to sell? The "bridge to the future" that Clinton sold him.
As for the comments about German bonds, Thomas Saving was right on the mark when he said we would be better off with them instead of US Treasury markers. Does Mr. Krugman really believe that the politicians and bureaucrats of government are going to pay the Social Security bonds off all by themselves, out of their own pockets? Boy, that would be nice, and we should try to force them to do it, but the truth is that the markers deposited in the Social Security Trust Fund will all be redeemed by no one but the American taxpayers. In large part, the same people who put up the surpluses in the first place. Double taxation, plain and simple under the Pay-It-Again, Sam scam.
The only thing that allows critics like Krugman to come out with these outlandish convoluted claims is that the President's Commission itself dances all around the subject without getting to the heart of it, without facing it head on. Avoiding the most horrendous, outlandish, obvious economic crime a government has ever committed against its citizens. We give them money -- they give us debt in return. Double taxation. A conclusion it seems no one but yours truly is willing to draw and the common man probably doesn't want to hear. After all, how much intellect does it take to see that the Social Security Trust Fund has always been a substantial part of the national debt? Debt is debt folks, there ain't no two ways about it. Even if you do wear a two-tone Ricky Ricardo jacket and have an autographed picture of Andy Devine.
Part of the reason for this is that the CATO Institute to which Mr. Krugman rightly refers has spent a good deal of its time and effort over the years studying the actuarial data any good insurance firm must deal with. Hence, they come out with all sorts of smaller issues given almost equal weight to the big one. They miss the forest for the trees.
If CATO truly wants a reason for private accounts, they've had it since at least 1983. Both Moynihan and Greenspeak have claimed Social Security was taken off the pay-as-you-go system and put on a "partial reserve" system when payroll taxes were raised beyond what Social Security needed. The trouble is, this reserve was consistently stolen in total and the partial reserve idea was never given the chance to function. It's not too late if, and only if, we let the chips fall where they may.
Until we get honesty involved with the third rail's major problem, we're not going to get anywhere with real reform. And I repeat, you can't count on the crooks themselves to come up with meaningful solutions. They will stall and propose things that merely increase the booty. And today's question is, how much has the CATO Institute's position inside the Beltway warped their thinking? |
