During the mid-thirties, in the midst of the Great Depression, it took the Supreme Court two years to decide that it was legal for the federal government to enter the private enterprise business of running an insurance company known as Social Security. Specifically, that it was legal for the government to forcibly collect one percent of every worker’s wages to establish a supplemental retirement insurance business that would guarantee that anyone who worked in America for at least ten years would never end up in the very real poor house.  

This was not an easy decision for the Supreme Court, and the dissenting arguments by about a third of the judges are well worth everyone’s attention, but it was also a time when it was obvious that a majority of the American people had little or nothing set aside for a rainy decade, to sustain them through an extended recession, much the same condition we have today as the average American working family now has a negative savings rate for the first time since 1933.

To verify this, all anyone has to do is notice the national debt that has been run up by our government since we went off the gold standard and the amount of individual credit card and mortgage debt being carried by almost every household in the country. We’ve gone from being a great creditor nation to being the largest debtor nation in the world and are sitting in a very precarious position with irresponsible fiscal discipline that ranges from huge budget deficits to an enormous negative balance of trade and a falling dollar. Worse conditions than what caused the Great Depression.

Unfortunately, the terms of the original Social Security Act of 1935 allow the Secretary of the Treasury to determine what is done with any surplus payroll tax collected by the government. One, but only one, of the options is that he “may” invest this surplus in U.S. Treasury securities. No one has successfully challenged this part of a very loosely written law and the government that is profiting by it has never chosen an alternative form of investment.

What’s ridiculous and, in fact, a crime is that the federal government has invented a type of Treasury instrument called “special” nonmarketable bonds that mean the very same people who contributed “surpluses” are also responsible for buying back their own money, plus interest. Coupled with black hole debit accounts that have little resemblance to real trust funds, this has resulted in what I call the “Pay-It-Again Sam scam.”

In 1983, the government changed this malappropriation from petty theft that hardly anyone had noticed for 35 years – into grand larceny. It is now, and ever shall be unless the people do something about it, the greatest economic swindle the world has ever seen. Taxpayers who have contributed billions in surpluses now owe their own supplemental insurance program, Social Security, more than $2 trillion. And it’s growing all the time.

Here’s what it looks like in each of the years I’ve been keeping track of it:

And here’s what it looks like in debt accumulated since Social Security began:

Would it be difficult to put an end to this injustice? The pirates would like you to believe that “reforming” Social Security is one of the most difficult tasks before them. But, what else would you expect as an argument from the bandits themselves?

All that really needs to be done is for the government to stop stealing the money. It’s Social Security’s only major problem. And the pirates have even tried to do this without success. Remember lock boxes?

The more effective way to bring this about is to eliminate their tools of fraud. Eliminate nonmarketable bonds, something that could be done overnight, in one fell swoop, or gradually in large enough chunks not to upset the delicate sensitivities of the legitimate bond market.

But the Beltway Bandits will never do this for two reasons.

First of all, there’s too much money involved. Congress and the Administration have become accustomed to this constant flow of “off budget” money that they consider theirs and their natural right to spend.

Second, and much more importantly, the elimination of Social Security’s nonmarketable bonds and phony trust fund is only part of the problem. The entire Intragovernmental Holdings (IH) portion of the national debt is in the same boat with scam variations on the same theme.

While the Social Security scam currently amounts to more than $2 trillion, the total amount represented by 141 (at last count) so-called trusts in IH today amounts to $3.78 trillion and includes smaller entitlement surpluses supplied by taxpayers like Unemployment, Highways, Airports & Airways, and so forth, as well as many perks set up for the government itself. A great many of these are taking taxpayer money from the Treasury's general fund every month.

If the people ever grasped the full impact of what’s been going on, it could mean long prison sentences for just about everyone who has worked in Washington including previous administrations back to 1983 or beyond. We could fill Gitmo and probably most of Cuba.

Abandoning all of the phony trusts in IH would mean the end of the government’s own retirement and health care systems that have so far been supported with monthly taxpayer money because these programs have little if any in contributions from their own beneficiaries. It would be the end of the many “gift” accounts they’ve set up for themselves by simply naming a trust fund and dumping some nonmarketable bonds in it. Even the accounts established by philanthropists like Carnegie would have to be reestablished somehow because the Beltway Bandits spent that donated money too.

Is it any wonder why Bush has put Christopher Cox of Southern California’s Enron fame in charge of the Securities and Exchange Commission and Paul Wolfowitz in charge of the World Bank? Are you still wondering why we’ve lost so many of our Secretaries of the Treasury who have left to “spend more time with their families?”

How long does it take for the people to understand how they are being ripped off?