Deficits better than stealing

Deficits better than stealing

By Ed Henry


Better than stealing

What’s wrong with running a deficit? The federal government has the means to immediately borrow money whenever it’s necessary. Overnight. Faster than Congress could write the check.

Selling Treasury securities on the open market is honest borrowing, a contract between lender and borrower that is a lot different than the wholesale rip-off of entitlement money under the present system of producing a “surplus.” It sure beats stealing.

Of course, it raises the national debt. But we’re doing that anyway under a system of lies and deceit. The national debt went up $18 billion last year, fiscal 2000. And this was after the government paid $237 billion against one side of the debt.

You can check this out for yourself. All you have to do is start with the U.S. Treasury’s own Bureau of Public Debt web pages reporting the national debt to the penny. It’s at the bottom under “prior years.”

From there, you can go to other pages like “who holds the debt.” Don’t forget to come back sometime today or tomorrow.


After more than two years of wrangling about it, Congress passed and President Clinton signed, in November 1997, the Balanced Budget Act. Secretly buried in this popular legislation was a clause that raised the national debt ceiling to $5.9 trillion, making certain there wouldn’t be any more government shutdowns like those experienced in late 1995. At least, there wouldn’t be any for awhile.

What you need to know about this so-called Balanced Budget Act is that it is an agreement to live within annual receipts under what the government calls the “Unified” budget. Not simply a budget, but a unified budget. A neat little accounting trick of our crafty politicians and bureaucrats, the opposite of pretending that there are two sides to debt when the public pays it all. They unify the budget, but split the debt, when it should be just the other way around.

The “Unified” budget lumps all normal receipts from income taxes (personal and corporate) together with receipts from entitlement taxes such as those from Social Security, Medicare, gas taxes, and dozens of other entitlements. The latter accounted for $149.8 billion of the fiscal 2000 surplus of $237 billion and is supposed to be money not to be spent elsewhere. Not supposed to be spent for anything other than the purpose for which it was collected. That’s what “entitlement” means. You paid for a service, you’re entitled to it.

The reason it was so important to raise the national debt ceiling at the same time this bill was passed is simply the fact that every time the government borrows/steals entitlement money, an equal amount must be placed in the respective entitlement’s so-called trust fund with “special obligation” nonmarketable Treasury bonds. Calling them “IOUs,” the Beltway Bandits often refer to these promissory markers as “investments” or “strengthening” Social Security’s (or any entitlement’s) future. Actually, they aren’t any different than markers from the Mafia. Doing so increases the national debt, but then they are awarded annual interest, which also increases the national debt every year.

This sleight of hand is nothing more than a rip-off. Since the American taxpayers, the workers of this country, are the only people who can redeem these markers, they are UOUs, not IOUs. They will be redeemed with future income taxes you pay, just like any money borrowed from the public or other nations under what’s known as “running a deficit,” the honest way to borrow.

Treasury securities of all types are “the safest investment in the world” only because they are backed by and redeemed by every man, woman, and child in this nation, now or in the future. Taxpayers’ money is the only thing buying back any of them, whether they came from honest deficit borrowing or from the dishonest theft of your entitlement money.

In other words, you buy back your own money, with interest. That’s what happens to your entitlement surpluses. Your extra payments to Social Security, Medicare, at the gas pump, and dozens of other places where you are overtaxed.

Without a doubt, Social Security is the largest of the many slush funds the federal government has created. Of the $150 billion surplus from entitlements last year, $94.7 billion came from Social Security’s extra revenue. Since 1983, when the Greenspan Commission took Social Security off the pay-as-you-go system to put it on a “partial reserve” system, both Social Security and Medicare have received more than they needed to meet all of their commitments.

There is absolutely nothing wrong with a partial reserve system. It could be wonderful if the reserve is invested wisely. Unfortunately, this has not happened. It has consistently been stolen, in total, by the government.

In other words, your federal representatives deliberately overtax you so that they can take the money, use it somewhere else, and then, in the most insidious act imaginable, put promissory notes in an account so you can pay the same amount again, with interest. At the very least, that’s unfair and dishonest. I call it extortion and fraud.

The two Social Security Trust Funds (which are not real trust funds) now hold $1.016 trillion in bogus babble bonds. The two Medicare Trust Funds hold about $249 billion. Of the total $150 billion “surplus” from entitlements, $94.7 billion came from Social Security alone, while $55.1 billion came from other entitlements.

If you do not believe that you and your children will eventually buy back all of this stolen money with future taxes, and there’s no reason why you should take my word for it, then take a look at what your last president said.

In one section of his fiscal 2000 budget, William Jefferson Clinton said: “Trust fund bonds are not real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

Is that good enough for you? Or do you think he’s fooling around with words again? In government language, that means: (1) send a bigger check, (2) borrow if you have to, (3) give up something like your vacation to do it.

Other loyal or misguided establishment economists have said much the same thing. It’s obvious that “raising taxes” comes directly from taxpayers. “Borrowing from the public” means putting it on the national debt credit card to pay later, with interest. And “reducing benefits” means it comes right out of your annual taxes by not providing something else that’s supposed to be necessary.

People like Senator Kennedy are afraid you will find this out before they’ve disarmed you.

In short

What difference would it make if the government borrowed all of the national debt honestly, by running deficits, instead of stealing our entitlement funds? Wouldn’t it be better than indenturing our children or future generations with double taxation?

If Social Security’s surplus had been invested wisely, we would probably be enjoying a true pension system by now instead of supplemental payouts. We could then certainly handle any “boomers” on the horizon, and we wouldn’t be worried about prescription drugs for the elderly, where we’re paying high prices for research and innovation.

When it gets right down to it, the only reason the government prefers stealing entitlement money, not allowing that money to work for you, is that they don’t have to pay annual interest to trust funds with real cash. They just hand the trust more bogus babble bonds—saving themselves six or seven cents a year on every dollar used this way.

But the propaganda has got everyone believing that a “deficit” is bad, evil, a nasty thing to have or encourage. In reality, it’s a direct line of honest credit. The safest investment in the world.

Straightforward contracts between lender and borrower, investor and the government. Did you agree to have a good portion of your Social Security and Medicare money taken and spent elsewhere?

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