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US Public Policy
John Koraska
September
11, 2006
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i
ABOUT THE AUTHOR
Recognizing that credibility of an informational source may be of equal
importance to that of assigning a validity rank (e.g. scale: 1 to 5) to
information being evaluated, this is a brief history of the author, John T
Koraska, MSgt, USAF, Retired, age 70.
While in the
service (1954 � 1974), the author was a Communications Intelligence
Analyst/Reporter. Although paid by the USAF, most operational duties were under
the direction of the National Security Agency (NSA). He held security clearances
of Top Secret, Cryptographic, and was indoctrinated for Codeword (Special
Intelligence) with access to compartmented information (projects and
intelligence). This is mentioned only to affirm that during his military
career he was entrusted by the US government to safeguard some of the nations�
most sensitive, classified material. He was stationed overseas most of the time,
in places that were not tourist attractions, eg. Libya, Turkey, Shemya, Alaska
and Vietnam.
Training received in the Air Force and at the National Security Agency provided
opportunities to develop an ability to analyze complex situations and systems to
create logical intelligence products. All available sources of information were
analyzed to develop possible/probable scenarios of ongoing military activities
(especially within the former USSR). In recent years, he has used his analytical
skills to research and analyze US government tax and welfare programs, policies
and enabling legal statutes and the US Economy.
In
the past two years, the main focus has been to discover how and why the most
militarily and economically powerful country in history has transformed itself
from creditor to debtor nation status. Specifically, he was curious to find out
the root causes for the conundrum of multi-trillion dollar explosion in federal
fiscal exposures while business profits were enjoying double digit increases and
employment is at historic high levels. He was also curious to learn how Social
Security evolved from a "Safety Net" for the working poor into charity for the
wealthy. Documented results of his research are
amazing.
During the course of his research, the author established a website,
debtism.com,
Social Security Articles Directory . It
provides a public record of findings. Each step along the way, an article was
produced. Each succeeding article was an improvement, since additional research,
and analysis developed new insights. Ideas do not flow systematically and
therefore the cumulative work on the website is disorderly.
E-Book
Getting Ready for Hard Times is an attempt to organize a more condensed, coherent read.
Chapter II
US Economy
6
Chapter III
Social Security
18
Chapter IV
Strategy for
Reconstruction
25
iii
Introduction
Compared to the Economic
Catastrophe that is coming, the last
Great Depression (1929 �
1932) will be considered mild.
Warning of Perpetual Debt
"I place economy among the
first and most important virtues and public debt as the greatest dangers to be
feared. To preserve our independence, we must not let our rulers load us with
perpetual debt. If we can prevent the government from wasting the labor of the
people, under the pretense of caring for them they will be happy."
Thomas Jefferson
The United States tax, welfare, and countless other laws are like a gigantic,
mutating octopus. New tentacles of law are generated faster than old ones can be
counted or understood. Getting Ready for Hard Times is an expose� of the
biggest tax scam in the history of the world. The report focuses on Social
Security to exemplify ambiguities in federal tax and welfare law. But, that
program is only symptomatic of a much larger problem �
Unredeemable federal debt!
For millions of Americans the
distance between the fantasy of prosperity and abject poverty is only one
paycheck away, and it may be measured by the amount of debt supporting the
illusion.
Freedom
of choice is sacrificed when the
economic foundation of a society is erected on phony money,
debt, and political promises.
The USA is leading the �Global Economy� toward the biggest economic catastrophe
ever recorded. Depreciating fiat dollars and legal and accounting defects in US
tax and welfare laws are the root cause of the inevitable calamity. There
appears to be a growing public awareness that the American Dream is slowly
evolving into an American Nightmare. Voices that sound alarms of the impending
peril are woefully muted or publicly ignored.
The free press is as derelict in fulfilling its public responsibility of
government watchdog as the federal government is in creating trillions of phony
dollars and unredeemable debt. Consequences of the economic upheaval are beyond
measure or imagination. While there is little �the people� can do to
avoid the impending national/global disaster, there may be steps that can be
taken by individuals to survive.
The invisible interrelating forces of inflation, deflation, stagflation, fiat
currencies, trade, monetary, and fiscal policies, and defective tax and welfare
laws are so voluminous and complex; there are no practical means of translating
economic cause and effect, except by discernible results. The best explanations
for failure may be found by learning how the public mindset has been insidiously
converted from �A Penny Saved is a Penny Earned!� to �Buy Now, Pay Later!�
against a background of principles set forth in the US Constitution.
To
keep it as simple as possible, a crude roadmap has been constructed to identify
and document certain defective laws. The Social Security program is evaluated by
measurable results and expected outcomes. Future generations will not enjoy the
same level of prosperity as current retirees.
The federal government is confiscating Social Security nest eggs and dispensing
it like toilet paper, leaving Trillions of Dollars in unredeemable
debt for baby-boomers and their progeny to wrestle with in coming years.
Contrary to popular belief there is no Social Security Trust fund. There is no
Security, no Trust, and no Fund. Many, including President Bush and former
President Clinton have admitted that the Social Security Trust fund consists of
government IOUs and has no real assets to support future claimants (current
contributors). Both Presidents have been misinformed. There are no surplus
FICA (OASDI) revenues to place in the fund. After �business expense� deductions,
less money is being collected by the OASDI taxes than is currently being paid
out to current beneficiaries.
The gaps between public myth and law grow increasingly wider. Enciphered in
*federalese,
legal issues are so complex that truth is often difficult to discover. Law may
state one thing; but through the deliberate application of ambiguous words,
terminology, and text; real meaning and intent are often disguised or hidden. A
contrived, more appealing, message is communicated to the general public. There
is no better example of federalese than the dubious legal basis and accounting
practices of the Social Security program; both how it is funded and how benefits
are determined. Myths surround the Social Security program because of deliberate
public deception.
The primary responsibilities of the US government is to promote the general
Welfare, insure domestic Tranquility, establish Justice and provide for the
common Defense. The US Constitution provides the bedrock on which laws are
erected. Laws found to be in violation of the basic document must be modified or
repealed by the legislature or struck down by the courts.
Flawed tax and welfare laws erected on a depreciating fiat currency are not only
morally and ethically repugnant; they threaten national security. Surprisingly,
it was during the last Great Depression, many of these seeds of destruction were
planted, virtually assuring a repeat of that tragic era.
Powerful forces that erect barriers to individual freedom of choice drive the
evolving dynamics of government, business, and banking policies and practices.
Private citizens may have strong desires to manage their own financial affairs; but are
often denied their natural and constitutionally guaranteed rights to do so. The force of questionable law
pilfers personal control of one�s own financial affairs. Income that might be
saved to provide for a more prosperous future is confiscated and distributed by
a government that is too big, too powerful, too irresponsible, and too reckless
with money, debt, and indefensible commitments.
The goal of �Getting Ready for Hard Times� is to document injustices concealed
in law, so working citizens may become more aware of the massive forces working
against them. As layers of deceptive monetary, tax and welfare laws, rules, and
policies are dismantled, exposed, and analyzed; truth becomes more transparent.
Aware and united, American Patriots may take their country back before the
government bankrupts it. Truth may be a formidable weapon; that is why it often
remains hidden.
v
Specifically, laws that tilt the scales of justice toward profits over wages or
between employers and employees are examined. Workers must earn incomes that
provide as a minimum, a living wage with a cushion for savings, to meet future
needs such as retirement. Companies must earn profits with a cushion for
investments to enhance their own development. Both must be held accountable to
themselves for success or failure and when the latter occurs or appears
inevitable, work harder or try again. Government interference should be kept at
an absolute minimum.
A
healthy competition between profits and wages operates best when treated with
equal balance and respect. Contented employees are a company�s best assets. A
worker�s best security is a good paying job. Society functions best when Freedom
of Choice is held in high esteem. A Nation prospers when resources are managed
prudently. It is doomed to failure when defective law supplants justice and
natural talent and resources are wasted.
The magnitude of unsustainable debt encouraged by
**debtism
and the risks it poses to national security may be measured by comparing it to
tax collections. Since 2000, federal fiscal exposures reported by the GAO have
increased $26 trillion, averaging $5 trillion, annually. During the five-year
period (2001 � 2005), the IRS reported total internal revenue collections of
$10.39 trillion, averaging $2 trillion, annually. By this measure, federal
fiscal exposures are increasing at 2 � times the amounts of tax collections.
There is no rational explanation for this absurdity. The only certainty is that
it cannot continue.
This report is provided primarily for American youth and the silent majority.
They are the ones often called upon to do the dirty work, pay the taxes, and
fight the wars; but whose voices are seldom acknowledged, heard, or even
appreciated by their elders or the ruling elite. To those aware of the economic
challenges facing the nation, little explanation is necessary. To those who
stubbornly refuse to learn, explanation is near impossible.
*federalese
� bureaucratic legal and financial accounting double-talk; a means of
enciphering simple speech so that it becomes so complex and evasive, real intent
or true meaning may be difficult to understand or is hidden.
**debtism n 1. A uniquely American socio-economic, fiat currency, tax,
and welfare arrangement created by unconstitutional law. 2. A fraudulent
monetary system based on a fiat currency and fractional reserve banking that
creates destructive capital imbalances between equity and debt; profit and labor.
3. A scheme that encourages debt with tax incentives and devastates savings by
taxing the inflation produced by a depreciating currency. 4. A practice of
perpetual government borrowing to sustain an indebted consumerist driven economy
until the currency and the economy collapse.
�Law cannot be properly
evaluated by the quality of its words or intent; but, by the quality of fairness
and justice found in the results produced by its application.�
John Koraska January 1,
2005
vi
Chapter I
Legacy of Perpetual Debt
The
legal principle of Equal Justice Under Law,
engraved over the Supreme Court is a modern oxymoron. Violation of this
principle has evolved into Injustice Under Law.
Freedom without justice is as elusive
as justice without truth.
John
Koraska
A
Legacy of Perpetual Debt is the American government's bequest to its hard
working people. Practices of socialism and debtism have caused the USA to become
the world's leading Debtor Nation. This did not happen because the nation is
poor or in recession. The path from creditor nation to debtor nation is the
direct result of faulty tax and welfare schemes that reward debt, penalizes
savings, and erodes the rights of a free people. The Social Security (Chapter
III) program provides prima facie evidence of how the U.S. economy is being
insidiously transformed from a system of private ownership and free enterprise
to socialism and debtism.
As
a practical matter, getting ready for hard times requires changing attitudes and
tax and welfare policies that are driving the country toward perpetual debt.
That means education of voters and election of new faces with new ideas.
Any fair tax system
should treat similar net incomes (regardless of source) with similar rates. All
tax laws should consider the impact of inflation on income and should be indexed
to an appropriate standard measure before taxes are calculated. This would
reduce the incentives for government and citizens to use inflation to pay down
debt with cheaper dollars. A return to the Gold Standard or a basket of indexed
commodities would also reduce much of the political mischief and misdeeds that
have occurred.
The US economic and social fabric is frayed and the tax, welfare, and monetary
systems are broken. No amount of peripheral tinkering with programs now in place
can repair the damages, regardless of who is in power.
�Getting Ready for Hard Times� provides vital information regarding flawed tax
and welfare policies to alert and motivate citizens to develop comprehensive
plans to attain financial security, independent of government promises. The
evolving dynamics of government and business
activities are driven by diverse public interests that often provide formidable
obstacles to the private interests and personal wellbeing of an individual who
may have strong desires to control his own financial destiny.
The federal government has become the master, not the servant, of the people.
Self-serving politicians confiscate income from wage earners that could be saved
and invested; believing they can manage household budgets more effectively than
the individual. A review of government's and the Federal Reserve Bank's records
of fiscal and monetary failures indicates a chimpanzee could probably do a
better job and would likely be more entertaining. The errant policies and
practices of the federal government, the banking system, and corporate America
have promoted debtism, while diminishing personal savings, equity, personal
responsibility, and the motivation for self-sufficiency to provide for one's own
needs.
Brief Review of
Ambiguous
FIT & FICA Rules, Laws & Practices
16th Amendment to the US Constitution (1913)
"The Congress shall have
power to lay and collect taxes on incomes, from whatever source derived, without
apportionment among the several states, and without regard to any census or
enumeration."
Social Security
Act of 1935
INCOME TAX ON EMPLOYEES
"SECTION
801. (Paraphrasing) �In addition to other taxes, employees shall pay an
income tax on 1% of wages up to $3,000 and every employer shall pay an excise
tax on individuals in his employ of 1% on wages up to $3,000 on each
employee...... "
Note: The
initial 1% was scheduled to increase in the early years of the program.
There appears to be no constitutional authority for the government to transfer
funds taken from one citizen and give them to another. Further, there is no
constitutional authorization for a single taxing entity to collect two
income taxes on the same income.
DEDUCTIBILITY FROM INCOME TAX
"SEC. 803.
For the purposes of the income tax imposed by Title I of the Revenue Act of 1934
or by any Act of Congress in substitution therefore, the tax imposed by section
801 shall not be allowed as a deduction to the taxpayer in computing his net
income for the year in which such tax is deducted from his wages.�
Note:
This provision of the Social Security Act more clearly violates the US
Constitution than collecting two income taxes on the same income. It mandates
that employees not only pay two taxes, it requires FIT taxes to be paid on FICA
taxes. The 16th Amendment only authorized a tax on income. It DID NOT empower
the government to collect an income tax on an income tax.
The FICA tax
should be a legitimate deduction from individual FIT for no better reason than
its prohibition is based on law of questionable constitutional merit. It is
absurd that a debtor can deduct interest on a loan made voluntarily, but is
prohibited from deducting the FICA income tax confiscated involuntarily from the
same income.
The employee
FICA tax rate is currently 7.65%. The 6.2% OASDI rate is capped at $94200 (2006)
and the 1.45% HI rate has no ceiling. Since "deduction" of the 7.65% FICA tax is
disallowed from individual federal tax returns, a taxpayer is required to pay
income tax on the FICA tax. A worker in the 20% nominal tax bracket is actually
paying 9.18% (7.65% FICA on gross income + 1.53% FIT on FICA income taxes).
EXCISE TAX ON EMPLOYERS
SEC. 804. In
addition to other taxes, every employer shall pay an excise tax, with respect to
having individuals in his employ, equal to the following percentages of the
wages......(The excise tax matched the employee 1%)
Note:
The implication �In addition to other taxes,� is two taxes are exacted on
employers, (1) on income tax on profits and (2) an excise tax on wages. In
practice, that is NOT how it operates.
No (SEC 803) prohibition
was made for adjusting employer (corporate) income taxes by the amounts of other
taxes. This TAX LOOPHOLE has led to massive government subsidies to corporations
by fiat. Corporations not only deduct their own taxes, but ALSO all the
individual FIT and FICA taxes confiscated from the paycheck of their employees
plus their wages.
A
possible remedy to balance employee and employer taxes is to close the Loop Hole
that favors the latter. Simply repeal the Sec 803 standard that compels
employees to pay two income taxes on the same income and FIT taxes on FICA taxes
OR apply the same standard to employers that would eliminate the Business tax
deduction of employee FIT & FICA taxes. Closing these Loop Holes would result in
Business Employers to pay their fair share of taxes, reduce the tax load on
employees, and provide billions in new revenue to the IRS.
Business
Expense Deduction
Deduction
of employee FICA and FIT Taxes as Wages
IRS Publication 535 (2004), Business Expenses
http://www.irs.gov/publications/p535/ch06.html
IRS QUOTE:
6. Taxes... Employment Taxes:
If you have
employees, you must withhold various taxes from your employees' pay. Most
employers must withhold their employees' share of social security and Medicare
taxes along with state and federal income taxes. You may also need to pay
certain employment taxes from your own funds. These include your share of social
security and Medicare taxes as an employer, along with unemployment taxes.
You should
treat the taxes you withhold from your employees' pay as wages on your tax
return. You can deduct the employment taxes you must pay from your own funds as
taxes. You pay your employee $18,000 a year. However, after you withhold
various taxes, your employee receives $14,500. You also pay an additional $1,500
in employment taxes. You should deduct the full $18,000 as wages. You can deduct
the $1,500 you pay from your own funds as taxes.
UNQUOTE
How The IRS
Utilizes "Reverse Accounting"
To reconcile the Gross
Amounts of FICA taxes reported to the Social Security Administration (SSA) with
the Net Amounts of FIT & FICA tax collections the IRS has resorted to �Reverse
Accounting�!
This is footnote (5) to
Table 1, discovered on page 41 of the Internal Revenue Service (IRS) 2003 Data
Book.
Quote:
�(5). Collections of individual income tax are not reported separately from Old
Age, Survivors, Disability, and Hospital Insurance (OASDHI) taxes on salaries
and wages (under the Federal Insurance Contributions Act or FICA, and on
self-employment income under the Self-Employment Insurance Contributions Act or
SECA). The OASDHI tax collections and refunds shown in Table 1 are based on
estimates made by the Secretary of the Treasury pursuant to the provisions of
Section 201(a) of the Social Security Act as amended and include all OASDHI
taxes. Amounts shown for the two categories of individual income tax were
derived by subtracting the OASDHI tax estimates from the combined total
collections for the two taxes (refund estimates were not made for these two
categories).�
Unquote
The IRS 2005
Data Book
http://www.irs.gov/pub/irs-soi/05db01co.xls
provides the most current annual tax data, (fiscal year, ending September 30,
2005). This is a brief summary of Table 1 that focuses on key elements.
Gross Amount
Net Amount
$2,268,895,122 $1,998,850,893 United States Total
307,094,837 272,762,788 Corporate Income Tax
1,107,500,994 879,927,524 Individual Income Tax
786,612,462 766,315,297 Individual Income Tax withheld
759,955,617 754,951,225 Employment Tax OASDI-HI total (5)
716,905,338 n.a. Federal Insurance Contributions
Act (FICA)
43,050,279 n.a. Self-Employment Ins.
Contributions (SECA)
6,947,510 6,819,217 Unemployment Insurance (FUTA)
4,538,535 4,534,855 Rail Road retirement
Note:
In footnote 5, (referenced, above) the IRS has confirmed that the FICA (OASDHI)
tax is just another �income tax�, even though the IRS and the SSA continue to
label the FICA income tax as a �Contribution�. Even more interesting is the
revelation of how the US Treasury reconciles ($100s of billions) of differences
between gross FICA taxes reported to the SSA; but not collected by the IRS (due
to EMPLOYER Business Expensing of Wages & Employment taxes, withheld from
workers paychecks) on government balance sheets.
To reconcile the
shortage of net IRS FICA collections with the gross contributions reported by
the Social Security Administration, the US Treasury simply totals up FIT & FICA
collections, subtracts the estimated FICA taxes from the total, and calls the
remainder �Individual Income Tax.� This dubious technique of �reverse
accounting� provides a convenient, but highly questionable means of complying
with the law that states: �Social security (OASDHI) (FICA-contributions)
income taxes can only be spent on Social Security and Medicare.
This interpretation
(reverse accounting) of IRS Footnote 5 is further supported by the US Treasury
�Budget Results for fiscal year 2005�:
�Social insurance
and retirement receipts were $795 billion, $2 billion higher than the MSR
estimate. This increase was primarily attributable to the reallocation of
withheld tax receipts from individual taxes to the Social Security and Medicare
Trust Funds. The adjustment offsets the adjustment to individual income taxes
described, above; there is no impact on total receipts.�
The arrogance of politicians, corporate and banking functionaries to think they
can do a better job of managing money than an individual acting in his own
self-interest is ludicrous and dangerous. The economic failures of the USSR
provides an illuminating example of how dubious planning and excessive control
by a central government erodes individual rights of the masses and diminishes
the real value of labor and capital, over time. Vast wealth is concentrated into
the hands of a tiny minority with increasing power over those who choose to
surrender their individual freedom to socialist bureaucracies. History is a
testament that centralized economic control, in the extreme, has always preceded
economic and social chaos, although the process may take decades.
One might ask a Russian pensioner their thoughts on collectivism (central
government economic management) and paper money. Specifically, one might ask
what happens to political promises when a fiat currency loses its luster, or
debt service overwhelms income and creative new schemes to sustain economic
bubbly? Then, one might ask, what is the United States doing to AVOID a similar
outcome?
The United States of America was formed to free the colonies from oppressive
foreign rule and to create a unified defense. The U.S. Constitution was designed
to limit the power of centralized government, and to preserve sovereign rights
of and for the people. Finding new meanings in the document that do not exist
are a hallmark in the political and judicial "Halls of Blame.�
Trends of pyramiding US debt are so ingrained in the economy that any abrupt
change in direction will release massive economic forces that will erase decades
of prosperity built on the national credit card and unconstitutional practices.
The crisis once ignited will rapidly become uncontrollable. When trust is
betrayed, it is almost impossible to restore.
Chapter II
The US Economy
Global Economy Increasingly at Risk of Catastrophic Failure!
�With Congress, every time
they make a joke, it�s a law
And every time they make a
law it�s a joke.�
Will Rogers
Backed by the most dominant military force ever assembled under one banner, the
US economy provides the glue that binds the global economy and the lubricant
that propels it. Both are precariously riding on top of a massive economic
tsunami that may crash abruptly and with little warning. There are actions the
US government and others could take to avoid the crisis or reduce its impact,
but because there are no painless solutions, the chances for appropriate
remedial actions to avoid it are practically zero.
Currently the U.S. economy appears healthy and improving. But, is it?
Revitalization of the economy is not without costs. Each cyclical recovery over
the past several decades has required more stimulation than the one that
preceded it. This one has taken the largest deficit spending in history, 13
successive interest rate cuts by the Federal Reserve, two massive tax cuts,
three wars (War on Terrorism, Afghanistan and Iraq), establishment of another
redundant bureaucracy (Homeland Security), massive tax incentives (i.e. Capital
Gain and Dividend tax rate reductions to 15%), significant growth in Money
Supply, short term negative interest rates, a tax induced housing �boom� and a
�low-interest� induced mortgage refinancing �Boom� to emerge from the relatively
short 2001 recession.
The
strongest factors sustaining the present economic condition is robust growth in
the housing market and attendant sales of furniture, appliances, etc; and
low-interest home equity loans that translate to positive household cash flow,
temporarily. Aside from low interest rates �The Taxpayer Relief Act of
1997�(Sale of Home) has contributed significantly to the housing and refinancing
�booms�. The cheap money to finance this �Boom� has decimated savings and
punished savers to a degree not seen since the early 1980s.
During the 5-year period of 1978 to 1982, inflation reduced purchasing power of
the US Dollar by FIFTY percent. Since then, an accommodative Federal Reserve and
�wealth redistributionist.� from both political parties have encouraged the �buy
now, pay later crowd.� Incentives to save have virtually been eliminated.
Recently, the US Department of Commerce stated that savings rates were below
zero, the lowest since 1933. This should surprise no one, since savers are
penalized for saving, after adjustments for inflation and taxes. Savers
are forced to pay taxes on nominal income that in terms of real purchasing power
represent real losses. Debtors are rewarded with tax deductions and the ability
to pay loans back with cheaper money.
This phony money operation can only continue as long as the US enjoys dollar
hegemony (a trading currency monopoly that the US has enjoyed since WWII).
It is becoming more evident that the US$ is increasingly vulnerable to the Euro
and other foreign currency and trade challenges, as chronic deficits and account
imbalances persist. The perilous risks to the US economy are of our own making.
No one is forcing Americans to live beyond their means.
United States of America - Debtor Nation
On
March 20, 2006, President Bush signed a bill to raise the (statute) Debt Ceiling
to $8.965 Trillion. The National Debt of $8.44 Trillion (July 31, 2006) has
increased $511.64 billion (at a daily average of $1.68 billion per day)
since soaring to $ 7.93 on September 30, 2005!
The Government's power to transfer wealth from one to another (regardless of
equity or need) has grown exponentially since the advent of Socialism during the
last Great Depression. As costs of Social Welfare programs exceeded revenues,
new victims, i.e. �Mothers With Tots�, were compelled to join the work
force and Debtism was further developed to fill the funding gap; thus paving the
way toward latchkey kids and perpetual debt.
It
took this nation 205 years (1776 to 1981) to accrue $1 TRILLION in official US
government debt capped by federal statute. It has taken only 24 years (1982 -
2005) to exceed an eight fold increase. On Dec 30, 2005, the debt was $8.17
TRILLION; but this is just the tip of the iceberg.
Unfunded federal (implicit commitments) fiscal exposures such as Social
Security, Medicare, Medicaid, SSI, etc. are a significant multiple of the
official debt. Recent studies and reports provide a flavor of the inestimable
trillions in shortfalls. An example:
The Treasury Papers, a study, commissioned by former Treasury Secretary
Paul O'Neill revealed:
"A
fiscal gap (the present value difference between government's projected
expenditures and receipts) of over $44 trillion "now more than $50 trillion
thanks to the new Medicare drug benefit. Almost all the un-funded debt is a
consequence of Social Security Retirement and Medicare benefits. Medicare now
faces an imbalance exceeding $36 trillion. That is the amount of money in
present value that Medicare is projected to pay out for future benefits in
excess of the money in its trust fund, plus the money it is projected to collect
in future taxes and premiums. Social Security's imbalance exceeds $7 trillion."
The Government Accounting Office (GAO) more recently confirmed findings in the
study:
Brief Summary of
GAO Remarks to Congress
Quote: Material
deficiencies in financial reporting (which also represent material weaknesses
and other limitations on the scope of our work resulted in conditions that, for
the ninth consecutive year, prevented us from
expressing an opinion on the federal government�s consolidated financial
statements.
The federal government did not maintain effective internal control over
financial reporting (including safeguarding assets) and compliance with
significant laws and regulations as of September 30, 2005.
Moreover, as a result of the material deficiencies we found, readers are
cautioned that amounts reported in the consolidated financial statements and
related notes, certain information contained in the accompanying Management�s
Discussion and Analysis, and other financial management information that is
taken from the same data sources as the consolidated financial statements, may
not be reliable.
More troubling still, the federal government�s financial condition and long-term
fiscal outlook is continuing to deteriorate...The current financial reporting
model does not clearly and transparently show the wide range of
responsibilities, programs, and activities that may either obligate the federal
government to future spending or create an expectation for such spending. Thus,
it provides a potentially unrealistic and misleading picture of the federal
government�s overall performance, financial condition, and future fiscal
outlook.
The federal government�s (explicit and implicit) fiscal exposures now total more
than $46 trillion, representing close to four times gross domestic product (GDP)
in fiscal year 2005 and up from about $20
trillion or two
times GDP in 2000. About one third of the approximately $26 trillion increase
resulted from enactment of the Medicare prescription drug benefit in fiscal year
2004.
This translates into a burden of about $156,000 per American or approximately
$375,000 per full-time worker, up from $72,000 and $165,000 respectively; in
2000.These, amounts do not include future costs resulting from
Hurricane Katrina or the conflicts in Iraq and Afghanistan. Continuing on this
unsustainable path will gradually erode, if not suddenly damage, our economy,
our standard of living, and ultimately our national security. Unquote
These estimates do not include federal explicit exposures such as inadequate
funding of the military and Civil Service retirement & health programs; or other
implicit exposures such as Supplemental Social Security (SSI) and the Medicaid
program that is growing faster than Social Security.
Growing public unease and uncertainty with respect to the nation's future
prosperity is not only rooted in the political agendas of the Senate, the House
of Representatives, the Executive Branch, or the Courts. President Bush's
initiatives for Social Security reform in 2005 and tax and immigration reforms
in 2006 have failed; NOT just because of partisan politics; but because issues
have become so complex, hopelessly confusing, and counter-productive that
political consensus has become almost impossible to achieve. How these policies
work and how they have developed is necessary, so an individual may create a
comprehensive plan to achieve financial independence.
The Road to
Perpetual Debt
A
brief chronology and commentary of how this economic and social transformation
was allowed to occur is fundamental to understanding current issues and
prospective outcomes. Major mile-markers along the road may provide some insight
into the inevitable destination dictated by existing tax and welfare law. With a
compass to guide them, it is hoped citizens may develop the character, strength,
and resources needed to survive the major difficulties that lie ahead.
1913 � Passage of the 16th Amendment to the US Constitution provided
a means whereby government could legally confiscate money from its citizens.
(Note: Conspicuously omitted from the Amendment was any authority for the
government to give away the revenue produced by the tax.)
Comment: The 16th Amendment was not rejected by the status quo
because, at the time, it was perceived to be a tax only on the wealthy.
Also, creation of the Federal Reserve banking system (1913) provided a means
whereby money created by the government could be distributed throughout the
economy, but at a cost � interest - and the multiplier effect of fractional
reserve lending.
1933 � President Roosevelt, on April 5, 1933, issued Executive Order No. 6l02:
"Executive Order Forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold
Certificates." Banks, were required to turn over gold coin, gold bullion, and
gold certificates "owned or received by them," to the Federal Reserve Bank. This
included not only gold owned by the banks, but also gold owned by their
depositors. In short, on or before May 1, 1933, all privately owned gold in the
United States (subject to a few minor exceptions) was to be confiscated by the
Government.
As
compensation, the owners were to receive paper money, whether they liked it or
not. Willful failure to submit to the confiscation was punishable by up to ten
years in jail and/or up to a $10,000 fine.
Comment: The Executive Order and supporting legislation clearly violated the US
Constitution. It was accepted by the status quo because they were lead to
believe the paper currency was as valuable as gold and silver. This law laid the
groundwork for the creation of 100% fiat currency, 38 years later.
1935 � Enactment of the Social Security system providing a government guaranteed
retirement system for Old Age (OA) low-wage workers. A retirement �Trust� was
created funded by demanding an additional income tax of 1% on workers and a
matching 1% tax on employers. The Social Security Act of 1935 required all
surplus contribution amounts be invested only in US government securities or
Securities guaranteed by the US government. This restriction on Trust Fund
investment created a �SLUSH FUND� for government spending, instead of a �TRUST
FUND� with compounding assets for later distribution to beneficiaries.
Comment: By restricting the surplus cash to investment in government securities,
means government can only loan money to itself. This is the same as spending
money and calling the same money � savings. An analogy to private savings is
placing IOUs in a container and spending the cash, instead of putting the cash
in the container or putting it in a bank. To achieve the objective for the
savings, at some point the IOUs must be redeemed. Since the cash intended for
deposit in the Social Security Trust Funds has already been spent, it is the
redemption of the IOUs that is the problem. To redeem the IOUs, in the Trust
Funds, government will be required to raise taxes, cut benefits, print or borrow
more money, and/or increase the retirement age, again.
Also, while the 16th Amendment may have provided a Constitutional
basis for collection of a second income tax (FICA) on wages, it can be argued
that it lacked a Constitutional basis for distribution of these specious taxes
(inappropriately referred to as contributions) directly to individuals.
1937 - The Federal Insurance Contribution Act (FICA) required workers to pay
taxes to support the Social Security system. Payroll taxes were 2%.
1939 - Social Security was expanded to cover dependents and survivors (OASI).
Payroll taxes were 2%.
Comment: It was at this juncture that an equity-based retirement program
designed for the (OA) working poor was commingled with charitable grants, since
no additional premium was exacted for spousal/dependent coverage.
1943 - Mandatory federal income tax (FITW) withholding through the Current Tax
Payment Act of 1943 was sold politically as a patriotic means of supporting the
war. Also, the withholding mechanism was misleadingly reported as a benefit to
taxpayers. Government officeholders, even then, widely regarded it as a means of
extracting greater tax revenue.
1950 � Social Security coverage was expanded to jobs outside of commerce and
industry, and benefit levels were increased. Payroll taxes were 3%.
1956 - Disability Insurance (OASDI) was created, and expanded over the following
years. Early retirement at age 62 for women was permitted. Payroll taxes were
4%.
1961 - Early retirement at age 62 for men was permitted. Payroll taxes were 6%.
1965 � Medicare and Medicaid: The Social Security Act Amendments was signed into
law by President Lyndon Johnson on July 30, 1965, in Independence, MO. It
established Medicare, a health insurance program for the elderly, and Medicaid,
a health insurance program for the poor. These two entitlements while noble in
intent, were flawed from the beginning. The estimated future costs of the
programs were grossly understated. The combined un-funded liabilities of these
programs now threaten to bankrupt the nation.
1971 � The dollar become 100% fiat when President Nixon closed the �Gold Window�
whereby foreigners could no longer exchange surplus dollars for gold.
1972 - Automatic cost-of-living-adjustments (COLAs), which index benefits to
inflation, were introduced. The formula to calculate increases initially
overstated inflation by 25%, and people born between 1910 and 1916 received an
unintended windfall. Payroll (FICA) taxes were 9.2%.
Comment: In retrospect, the percentage of COLA increases could have been a flat
payment with each beneficiary receiving the same payment based on an average of
total benefits. Had this been done beneficiaries on the low end of the scale
(with greater need) would receive higher increases and those at the high end
(with less need) would receive less. It would also eliminate the compounding gap
of benefits between high and low income beneficiaries following retirement. Such
a measure would be closer to the original intent of Social Security of providing
a safety net for lower income workers.
1977 - The mistake in the benefit formula was corrected. The "notch" refers to
the difference in benefits paid to the group that received the windfall and
those who retired following the formula correction. Social Security was thought
to be actuarially sound. Payroll taxes were 9.9%.
1983 - The National Commission on Social Security Reform was created in response
to the actuarial unsoundness of the system. The commission called for 1) an
increase in the self-employment tax; 2) partial taxation of benefits to upper
income retirees; 3) expansion of coverage to include federal civilian and
nonprofit organization employees; and 4) an increase in the retirement age from
65 to 67, to be enacted gradually starting in 2000. Again, Social Security was
declared actuarially sound. Payroll taxes were 10.8%.
Comment: Reagan appointed Alan Greenspan to head up the Commission. Asking a
banker to reform a government program is like asking the Fox to guard the
Chickens. At the top of the list of recommendations in the reform package was an
income tax on Social Security benefits. For decades, politicians defended double
taxation of wages by proclaiming the benefits would NOT be taxed.
1984 � Taxation of Social Security Benefits. Up to 50% of an individual's or a
couple's OASDI benefits were subject to Federal income taxation under certain
circumstances. When implemented, it was estimated that less than 3% of retirees
were immediately subjected to the new tax. Provisional income thresholds of
$25k (Single) and $32k (married filing jointly) were established. The revenue
derived from this provision was allocated to the OASI and DI Trust Funds on the
basis of the income taxes paid on the benefits from each fund.
Comment: The thresholds were considered relatively high at the time; but, now, (due
to the absence of adjustments for inflation) the levels capture an
increasing number of beneficiaries subject to the tax provisions. The forces of
inflation have pushed nominal retirement incomes and Social Security benefits
(which are annually adjusted for Cost of Living Allowances) to levels more than
double of that just 20 years ago. Taxation of benefits was not repudiated
because at that time, only 2 or 3 percent of beneficiaries paid the tax and it
was seen as just another tax on the wealthy. NOTE: The thresholds for taxing
SS benefits are not adjusted for inflation and therefore an increasing number of
beneficiaries are taxed, each year.
1985 - The Social Security Trust Funds were moved "off-budget" so that the funds
earmarked for the Social Security system would be tracked separately from the
rest of the budget. Payroll taxes were 11.4%.
1986 - COLAs were increased to respond to minor levels of inflation. Payroll
taxes were 11.4%.
1995 - The maximum portion of OASDI benefits potentially subject to taxation was
increased to 85%. Provisional income thresholds
of $34k (Single) and $44k (married filing jointly) were established for the new
tax. The additional revenue derived from taxation of benefits in excess of
one-half, up to 85 percent, is allocated to the HI Trust Fund. Payroll taxes
were 12.4%
Comment: This Act may be euphemistically referred to as �Medicare Bailout
Act.� One might ask if the diversion of revenues from this additional tax on
RETIREMENT and DISABILITY (OASDI) benefits to the MEDICARE (HI Trust Fund) may
have contributed to the anticipated short fall that has prompted the call for
reform of OASDI when it appears a bigger problem is runaway MEDICARE (HI Trust
Fund) and Medicaid (General Treasury) spending.
1996 - The Social Security Trustees' Report stated that the Social Security
system would start to run deficits in 2012, and the trust funds would be
exhausted by 2029. All members of the Advisory Panel agreed that some or all of
Social Security's funds should be invested in the private sector. To keep the
unchanged system actuarially sound, payroll taxes would have to be increased
50%, to 18% of payroll, or benefits would have to be slashed by 30%.
1997 - All members of the presidential-appointed Social Security Advisory Panel
agreed that some or all of Social Security's funds should be invested in the
private sector. To keep the unchanged system actuarially sound, payroll taxes
would have to be increased 50%, to 18% of payroll, or benefits would have to be
slashed by 30%."
1999 - The Social Security Trustees' Report stated the Social Security
Retirement System's un-funded liability increased by $752 billion since the 1998
Trustee Report was published. This brings the total long-term un-funded
liability to more than $19 trillion.
2003 � Medicare Prescription Drug Benefit: After years of discussion and debate,
President Bush signed a new outpatient prescription drug benefit into law on
December 8, 2003. Since Medicare�s enactment in 1965, the program has not
generally paid for outpatient prescription drugs � despite numerous attempts by
Congress and prior Administrations. The new benefit, which will be implemented
in 2006, provides beneficiaries with prescription drug coverage that will be
offered by private risk-bearing plans.
2006 - Medicare Prescription Drug Benefit: Beneficiaries who choose to sign up
for the new drug benefit will pay a monthly premium, estimated to be $35 per
month in 2006. Beneficiaries will be responsible for the first $250 in drug
expenses, and then will pay, on average, a 25% coinsurance until they reach the
benefit limit ($2250 in 2006). Once they reach the benefit limit, they will face
a gap in coverage in which they will pay 100 percent of their drug costs up to
$5100 in total drug spending (equal to $3600 in out-of-pocket spending).
Medicare will then pay 95 percent of drug costs above that amount. These benefit
levels are indexed to rise annually with the growth in per capita drug
expenditures for the Medicare population
Comment: Like prior Social Security, Medicare, and other social legislation,
costs of the new program were grossly under-estimated. This one will add
TRILLIONS of unfunded liabilities on the shoulders of �Baby Boomers� and
succeeding generations.
Defective Law
Erected on Fiat Currency
Throughout history, governments have regularly relied on trickery and legal
obfuscation to cover up their real objectives from a suspicious public.
Tax and welfare laws erected on a depreciating, fiat currency are equivalent to
legalized fraud. Many of these laws that have evolved over the past century are
corruptive and diverge from constitutional intent and prohibitions. Taxpaying
citizens are often required to pay taxes on counterfeit gains denominated in
fiat dollars that have decreased in real value and pay multiple taxes on the
same income.
Contradictions between law and justice may be explained by comparing real money
(representing intrinsic value or paper currency backed by a physical store of
value) to fiat currency backed ONLY by faith and credit of the issuing
government, their elected politicians, and/or a fractional reserve private
banking apparatus created by politicians.
The unsustainable debt induced by fiat money; inspired by the IRS tax code and
orchestrated by the Federal Reserve Bank�s fractional reserve banking system and
the insatiable appetites of politicians to spend now and borrow from the future
has created this multi-headed monster.
At
an assumed interest at a 5% rate on the inestimable tens of trillions of federal
fiscal exposures (statutory federal debt combined with un-funded entitlements)
is more than the US governments (2006) $2.6 Trillion budget. With the government
debt sinking deeper in the 5th year of an economic recovery with employment
levels at all time highs and business profits at double-digits, how can the
government credit card backed by trust fund IOUs be redeemed in the future under
less favorable conditions? The short answer is they cannot be redeemed. The IOUs
can be renounced. This reality, once acknowledged, will compel the creation of
tax and welfare laws that are fair and just.
Tax and welfare laws denominated in a depreciating currency disrupt and corrupt
the natural forces of supply and demand. Heavy-handed central bank and
government intrusion into the financial affairs of business and workers has
created injustice by penalizing labor, capital, and thrift while rewarding idle
behavior and debt. Resources are misallocated and parasites are created on the
backs of cheap menial labor. Erected on the quicksand of a depreciating
currency, these wealth redistribution schemes have resulted in more, not less
reliance on government assistance.
Labor is demeaned by jobs that pay less than living wages and the middle class
is being taxed into government dependency. Businesses illegally employ hordes of
illegal immigrants to keep their labor costs down. The illegal competition
compromises the scales of justice between employer and employees. Americans
would accept many of these jobs if wages were competitive, offered a decent
standard of living, and preserved worker dignity. The US government condones
this invasion although it is governments� constitutional responsibility to repel
it.
Precious Metals � Store of Value
While the constitutionality of a fiat $100 bill may be questionable, the facts
that gold is a store of value and fiat currency loses value are not uncertain.
The average monthly price of one ounce of gold in 1970 was $35.94. A single $100
bill could have purchased 2.78 ounces of gold. Today, July 24, 2006, the spot
price of 1 ounce of gold is $612.50. 2.78 ounces of gold will buy over 17 $100
bills, and change. Adjusted for inflation it requires $521.91 to purchase the
same goods and services that could have been purchased in 1970 for $100.00. An
ounce of gold today has the same physical qualities it had in 1970. While its
market value changes over time, it retains a store of value that is absent from
fiat currency. While a $100 bill today will purchase less than $20 in goods and
services it could have purchased in 1970, an ounce of gold has increased its
purchasing power.
American Eagles are
official legal tender gold coins of the United States. Their face values are
largely symbolic, however since the market price of gold has historically been
much higher than the face values of the coins, since their introduction in 1986.
The Gold American Eagles are minted in four sizes from 1/10 of an ounce to one
ounce. They are the only coins whose weight, content, and purity are guaranteed
by the United States Government.
The tax and welfare system erected on a depreciating currency
is implicitly and explicitly forbidden by the US Constitution
!
Note: A depreciating currency is one that loses
purchasing power over time.
Under US law, a $100.00 has the same legal value of two $50 American Gold Eagles
(AGE) or one hundred $1.00 American Silver Eagles (ASE) and they may be
exchanged based on their respective face value. A $100.00 bill may be produced
for 6 cents. As of June 15, 2006, the market value for a single $50.00 AGE is
more than $600.00 and a single ASE is more than $12.00.
American Eagle �PROOF� (Silver, Gold and Platinum) coins may be purchased
directly from the US Mint. You cannot buy �BULLION� American Eagles directly
from the US mint. However, they are widely available for sale at major coin and
precious metals dealers, as well as some banks. They sell at gold�s prevailing
market price, plus a premium to cover coinage and distribution costs.
The legal exchange of a $100.00 bill is two $50 AGE or 100 $1.00 ASE; since all
are legal tender backed by the full faith and credit of the United States
government. They misrepresent true value because they cannot be fairly exchanged
based on their legal face value denominations.
The problem with these "face value" representations of legal currency is the
public is lead to believe a fiat $100.00 bill (that cost only 6 cents to
produce) is more valuable than silver and gold; when it is obvious, even to a
politician, that the reverse is true. The fiat dollar is a depreciating asset
that disguises the true value of physical assets, the nominal price of which is
determined by fundamental principles of supply and demand. The gold and silver
coins represent a �Store of Value� that is distorted by the decreasing value of
the currency in which they are denominated. The tax collector thrives on this
fraudulent confusion.
Capital Gains Tax
(Precious Metals and
Stones, Stamps, and Coins)
Gold, silver, gems, stamps, coins, etc., are capital assets except when they are
held for sale by a dealer. Any gain or loss from their sale or exchange
generally is a capital gain or loss. If you are a dealer, the amount received
from the sale is ordinary business income.
The question arises that
if US gold and silver legal tender coins are subject to a capital gains tax
because its market value (denominated in US Dollars) has increased, why
is it the loss in purchasing power of fiat US dollars against the coins not
subject to a capital Loss?
Besides the market price, the purchasing power of both legal currencies can be
valuated against inflation as measured by the Consumer Price Index (CPI) at any
fixed point in time. If a hundred dollar bill loses purchasing power, it is
no less a real loss than if it was used to purchase any other asset that failed
to keep up with inflation. Again, why is it that this loss in purchasing power
not a legitimate tax deduction?
�Coin� EXAMPLE: A $50 AGE purchased for $300, then sold 20 years later for $400
is not a real capital gain although nominal gain of $100 is subject to tax when
in fact the $400 adjusted for inflation is less than the purchasing power of the
$300 at the time of purchase.
The
Minneapolis Federal Reserve Bank Inflation Calculator demonstrates how the
same goods and services purchased with a $100.00 bill in 2006 would have cost
only $19.16 in 1970 - an 80% loss in purchasing power.
�Stock� EXAMPLE: Boeing Aircraft (BA) common stock sold at an average price of
$18.74 in 1970. On June 22, 2006, "BA" closed at $84.06 per share. If sold at
the recent price, 1000 shares would have a nominal value of $84,060.00 producing
a gross profit of $65,320.00 subject to capital gains tax. Using the Inflation
Calculator BA would have to sell at $97.81 per share just to maintain purchasing
power against the depreciated US dollar. In inflation adjusted terms, this
transaction results in a real loss of $13,750.00.
The above examples expose the tax and welfare confusion or fraud created by
denominating income tax liabilities in a depreciating currency. Capital gains on
assets nominally inflated by a depreciating currency should not be taxed because
in terms of purchasing power wealth is diminished not increased; unless, a real
gain is realized after adjustment for inflation.
While adverse consequences of socialism and debtism are already being felt by
millions of Americans, the worse is yet to come. Under current tax and welfare
schemes, those who save and contribute to Social Security, IRA's, 401k's, etc.
are unlikely to receive acceptable returns on their investments. They will
increasingly be required to subsidize those government decides is more entitled
to their savings. Only significant changes in law or those who enact them can
alter the trend toward a welfare state and/or bankruptcy.
Equality does not exist in nature. No philosophy, ism, or law, no matter how
attractive, can alter this fundamental fact without unjust, interference in the
natural order of self-survival. Since the �New Deal,� the evolution of
Capitalism toward Socialism and Debtism has become increasingly evident. The tax
code and other legal, but equally unjust social remedies that reward debtors and
penalize savers have resulted in unsustainable debt at every segment of society.
At
the core of increasing USA debt is tricky US tax and welfare laws, and an
accounting charade that if practiced by any entity other than the federal
government would be criminal.
What it boils down to is the government has developed a statutory, but
constitutionally questionable means, whereby they can pick the pockets of
taxpayers without them realizing that theft has occurred. It requires tens of
thousands of pages of tax and welfare laws and fiat currency to conceal the
thievery.
Illegal Alien Invasion Compromises
US Workers
No
US worker should be deprived of a job that pays a Living Wage because of
low-wage competition provided by illegal aliens! The primary constitutional
responsibility of the federal government is to defend this country and to
repel INVASIONS.
The illegal residency and invasion of illegal aliens in this country threaten
US job security and living wages. The
invasion undeniably
provide employers an unjust, unfair advantage over employees. Expulsion of
illegal workers would provide a more proper balance in negotiations between US
workers and their employers if immigration laws were enforced. Competition for
sweat labor among US employers would undoubtedly result in significant pay
increases to induce American workers to accept work they currently refuse or
resent for wages below the cost of living.
Illegal job competition would not exist if the federal government were doing the
job its leaders are constitutionally bound to do.
Note: It may be just a
matter of time before workers enjoin in a class action lawsuit against the
federal government because their dereliction of duty has undermined employee
bargaining positions.
The US Congress have given themselves cumulative pay raises that are more than
twice the current minimum wage of $5.15 per hour ($10712 - annual pay) since
1996, the last time minimum wages were increased.
While the US deploys forces around the world on crusades against "Evil", our own
borders are violated. A recent review of government data by the Pew Hispanic
Center puts the number of illegal immigrants in the U.S. as of March 2004 at
10.3 million, up 23% from an estimated 8.4 million in 2000. Pew estimates the
number is now about 11 million, about 30% of the U.S. foreign-born population
with a steady annual inflow of about 485,000.
While Congress squabbles, the INVASION continues unabated. The government is not
doing its job and they should be held accountable.
Vigorous enforcement of existing laws prohibiting hiring of illegal workers is
the solution. A technologically advanced, electronically scan-able Social
Security card would provide an efficient means of identification. The
overwhelming majority of Americans want our borders protected, they want illegal
aliens brought under control and/or deported, and they want action NOW! THE
GOVERNMENT ISN'T LISTENING!
U.S. Constitution
Article IV Section 4. The United States shall guarantee to every State in this
Union a Republican Form of Government, and shall protect each of them against
Invasion;...�
�Article I Section 10.... No state shall, engage in war, unless actually
invaded...�
Note:
This means if the federal government doesn't do its job, the States have the
Constitutional authority to repel invasions of their respective States.
Texas Constitution
Texas is a free and independent State, subject only to the Constitution of the
United States... The Governor of Texas shall be Commander-in-Chief of the
military forces of the State, except when they are called into actual service of
the United States. He shall have power to call forth the militia to execute the
laws of the State, to suppress insurrections, and to
repel invasions.
(Amended Nov. 2, 1999.)
Note: The governor of
Texas has the Constitutional Power and the responsibility to defend the Lone
Star State against invasions. All he need do is exercise it.
Oath of Office
President:
�Article. II. Section. 1. Clause 8: Before he enter on the Execution of his
Office, he (The President of U.S.) shall take the following Oath or Affirmation:
"I
do solemnly swear (or affirm) that I will faithfully execute the Office of
President of the United States, and will to the best of my Ability, preserve,
protect and defend the Constitution of the United States."
Congress:
�Article. VI. Clause 3:
The Senators and Representatives before mentioned, and the Members of the
several State Legislatures, and all executive and judicial Officers, both of the
United States and of the several States, shall be bound by Oath or Affirmation,
to: support this Constitution;...�
Foreign military engagements financed by debt, new, under-funded welfare
programs, low interest rates, job outsourcing to low-wage countries, and open
borders may stimulate business and consumerism; but they are destroying
prosperity of future generations. Some means has to be developed to reverse
these trends and restore POWER to the people before the federal government
bankrupts the country.
�The journey of a thousand
miles begins with the first step.�
Confuscius
Chapter III
Social
Security
Legal and
accounting defects in taxes and benefits
Threaten
program and the US Economy.
Widely popular, Social Security is likely the most abused and misunderstood of
any retirement program ever devised. The "Social Security Act of 1935", was
created to provide an equity based, retirement "Safety Net" for the
working-poor, and for other purposes. It has evolved into a system that
penalizes employees, rewards employers, subsidizes many who enjoy high income
and wealth; short changes the federal government and makes the public look like
a herd of sheep. The herd is being stampeded into an abyss of debt that has no
bottom.
Understanding how Social Security really operates may erode much of the popular
support, unless immediate action is taken to completely transform how it is
funded and how benefits are determined. By identifying program and tax code
defects, essential reforms may be developed that can alter the course from
perpetual debt to perpetual prosperity.
Social Security as it now exists is not sustainable. Those who understand how
the program operates know this and many have said so. The irony is the public
has tuned out undeniable truth. They irresponsibly choose to believe what they
want to believe or what they think may best serve their personal interest. The
well being of future generations is left smoldering on the back burner.
On
August 23, 2006 in an appearance on C-Span, Former Republican majority leader of
the House of Representatives, Dick Armey stated: �Social Security is headed for
the biggest catastrophe in the history of the world.� Mr. Armey is not a
political ideologue. He is a highly respected republican, moderately
conservative, and a former economics professor. He is presently Chairman of
�Freedom Works.� Mr. Armey is one of many knowledgeable
Leaders, who is expressing grave concern. Their warnings do not resonate;
primarily because tax and welfare issues have become so complicated the public
doesn�t know what or who to believe, so they tune them out. And/or, many who do
understand, are heavily subsidized beneficiaries of current laws and therefore
remain silent.
What Mr. Armey, nor any other public official will tell you is: �The
biggest catastrophe
in the history of the world is being produced by the
biggest
tax and welfare
scam in the history
of the world!�
Few politicians and fewer retirees are aware that there really is no surplus
cash to place in Social Security or Medicare Trust Funds and it is their own
children or grandchildren that are being robbed to maintain previous political
commitments. Current workers are compelled by law to pay for overly generous
entitlement programs, while funds for their own retirement are being confiscated
by employers and/or spent by government.
Social Security Trust Fund Surplus - Myth
