First, this is coming just after the greatest borrowing period America has ever seen. The national debt increased $421 billion in new debt during fiscal 2002 and so far this fiscal year the Bush administration has added another $217 billion for a grand total of $638 billion borrowed in five quarters. And it's just the beginning.

Since January, the U.S. Treasury has been in a holding action on borrowing until we finally hit the debt limit on February 20, 2003 under the supervision of a new Secretary of the Treasury, the last treasurer having left rather abruptly.

Normally, this would be a time of crisis. We would have media commentators acting hysterically. There would be warnings of national bankruptcy, government shut-downs, and all sorts of disaster. This time, there isn't a peep.

We all know why there has been no mention of the national debt. The Fourth Estate, or what passes for news in this country, has been almost totally immersed in promoting the Bush administration's war effort. But you should also notice what this silence says about the former panics and how valid they were.

Foolishly, one little symptom of reality has shown up like a single piece of flack in the latest bombardment to "support our troops in Iraq." Reuters and the Associated Press have been covering congressional arguments over the President's proposed budget for fiscal 2004 and whether it sufficiently covers the cost of war and rebuilding Iraq after we crush the relatively harmless pipsqueak Hussein regime.

Such news is foolish, not only because we have no idea what the war and its promotion has cost taxpayers so far or what it may cost us from this point forward, but because it's what Congress always does anyway. My God, we just passed the budget for fiscal 2003, the year we're already into by six months, and you can safely expect the same sort of congressional bickering to go on well past the time when the new fiscal 2004 budget is supposed to go into effect on October 1, 2003.

As a symptom of reality, however, the fact that Congress is finally concerned about the cost of this war and particularly the cost of occupying and rebuilding Iraq is extremely valid. This is the second point I promised you above.

During the first Gulf War when we drove Saddam's troops out of Kuwait and went no further, the rest of the world was willing to support us financially both in terms of the war itself and cleaning up Kuwait.

This time, we are much more likely to encounter a response from our friends that, to put it bluntly, says; Hey, you wanted this invasion at a time when inspections seemed to be working and could have been improved and amplified if there was a deadline. We could have peacefully accomplished the same thing with containment that had already been working for twelve years. Now you ask us for money. You know what the richest nation in the world can now do with its pleas for financial aid from the rest of us.

This is further complicated by the fact that the Euro has been competing with the dollar for some time and especially in terms of oil from Iraq.

Do you really think Britain, Spain, and Australia are going to come up with a bunch of cash when they've got financial troubles at home? Or that we can pry it out of them with expensive oil through our international oil baron companies? Lots of luck.

The Bush "go it alone" first strike policy is going to come home to roost in a hurry unless we simply turn our backs on the "liberated" people of Iraq, seize our oil that somehow got under their sand, and forget about rebuilding their infrastructure.

The house of cards the U.S. government has built is liable to completely collapse. Fraud and deception that has been going on for years may come unglued. And, as usual and God willing, I'll still be trying to bring it to your attention as it happens.

Mistake #1

Holding at the current debt ceiling of $6.4 trillion not only proves that the government can truly live within its means when it must and could always have achieved balanced budgets, but seems to be a crazy attempt to hold off until April 15th in hopes of a windfall bonus on the annual tax date.

Too many Americans believe that they are among the few filing for refunds by April fifteenth. Last year these refunds averaged about $1,400 per recipient. And somehow, many don't seem to understand that their employer sends a significant portion of their paycheck to the government every month or so, that personal income tax is constantly flowing into government coffers.

Mostly, it's the big guys and the self-employed who pay heavy taxes on the final tax day. This is the time when they must reconcile the quarterly estimates they've been sending and come up with the balance due. And the truly astute big guys hedged their estimates with overpayment safety valves and now fall on the refund side.

Last year, the feds expected an April windfall and it didn't happen. Instead, the government received a significant shortfall in expected tax revenue, a shortfall that led to a great deal of borrowing in order to continue their planned budget spending.

In fiscal 2002, April receipts from corporations were less than half of the previous year, $9.8 billion compared to $23.7 billion the year before. Personal income tax receipts were almost as bad, all due to a sour economy.

You would think that the many people planning the next year's budget would take this into account, but they didn't. The fiscal 2003 budget was established on the false belief that the recession would be over. Things would have returned to normal.

Here's what the government has received so far this year, taken from the U.S. Treasury's Monthly Report for February 2003:

Notice that "Net Receipts" from both individual and corporate taxes so far this year in the middle column "Fiscal Year To Date" are down considerably from last year, and you just saw how bad last year turned out.

Individual income taxes stand at $331.5 billion to date while at the same time last year the figure was $374 billion. Corporate income taxes stand at $33 billion compared to $63 billion last year.

You might also note where "Net Outlays" are up and where they're down, but pay particular attention to "Social insurance and retirement receipts" in the "Net Receipts" area. And remember, payroll taxes produced an $89 billion surplus for Social Security in fiscal 2002 despite high unemployment and all the talk about surpluses disappearing.

Again this year, the phony Social Security trust funds (Federal Old Age & Survivors Insurance and Federal Disability Insurance) have increased. They now stand at a combined total of $1.4 trillion and constitute 21.7 percent of the national debt. And that's only so far this year.

President Bush talks about the unfairness in double taxation on stock holder dividends, but it's nothing compared to the double taxation of the American worker in regard to payroll taxes.

If or when the Social Security Administration must ever draw upon its debit black hole "trust fund" in order to meet obligations to the retired and disabled the American worker or his children will be paying the same taxes, plus interest, that they already paid once before, original payroll taxes that the government took and spent elsewhere.

That's real double taxation. In the case of stockholders, the corporation paid the taxes the first time.

It's happening right now.

The Department of Labor has been drawing down on the Unemployment Trust fund for months now and this trust is in the same condition as the Social Security trust fund. It has no money, only debt with interest added.

In July of 2001, the Unemployment trust fund had about $92 billion. Today, it's down to less than $54 billion. And that means taxpayers have already been double billed for $38 billion that employers paid originally but the government stole and pretended to borrow.

Here are the figures:



Everything in red indicates money that had to come either from current income and corporate taxes that was supposed to go somewhere else or it came from borrowing. Given the increases in the national debt, you can assume it came mostly from borrowing.



May of 2002 was when interest was paid the trust fund without cash involved. The Beltway Bandits simply hand the trust more junk bonds.

Since the government has been unable to borrow for the last 41 days, the month of March, 2003, will be the first time we can be absolutely certain that the shortfall in money to pay the unemployed came solely from the Treasury's general fund of current taxes. In other words, in March a sizeable chunk of your tax money went to pay the unemployed instead of going to education, agriculture, or any other part of discretionary spending. It was not put on the never-never credit card plan for your children and grandchildren to pay later.

In Summary

What is happening is exactly the same thing that would be happening if there were no trust funds at all. Shortfalls would be made up for by taking money from current income taxes, money meant to go elsewhere, or borrowing it from investors. Either that or cut budgeted programs.

In other words, there are at least twenty entitlement trust funds that are a sham, completely fraudulent, and part of a scam set up by the government. The entire "Intragovernmental Holdings" section of the national debt, $2.7 trillion in bogus holdings and 43 percent of the national debt, could be eliminated tomorrow with no harm to anyone but the perpetrators of a scam that makes Enron, WorldCom, and other private sector crooks look like children at play.

Keep your eyes on the war while the government picks your pocket. War is the government's greatest weapon of mass distraction.