No sooner did I write two articles about how the Washington Post is quite rightly taking up the cause to put Social Security in its proper perspective than Bill Frist, republican Senate Majority Leader, put forth the idea of postponing Bush’s thrust for personal accounts until next year, possibly longer.

My two articles last week, “Don’t Give Up, help is coming” and “More Help from the Washington Post,” are merely a continuation of a subject I’ve been writing about for a decade – but the same thing coming from the Washington Post is a powerful boost. After all, it was this newspaper that uncovered the Watergate Scandal, a subject you can be certain remains clearly in the memory of every politician in Washington .

Naturally, Bush immediately countered Frist with a statement that he was increasing his push by establishing a war room of promotional planners and having Karl Rove set up the campaign strategy for selling personal accounts.

Bush’s “war room” is likely to be, like his 2001 committee, nothing more than an echo chamber where only the ideas Bush wants to hear are spoken.

I think the suggestion Senator Frist made about postponement had little to do with the cool reception Bush is getting from the public and a great deal to do with the fact that the Washington Post is getting too close to the scam both republicans and democrats have been pulling in spades since at least 1983, a scam that makes Enron, Ponzi, and others from the private sector look like amateurs.

Strangely enough, it’s this very scam that also provides the opportunity to show some financial responsibility, provided the pirates can be forced, drugged, or frightened into a state of at least temporary honesty.

Such honesty would be extremely important and timely when, on the world scene, we’ve got a falling dollar, a balance of trade in excess of $650 billion, and the central banks of several countries, including some of our largest creditors, telling the U.S. to get its financial house in order. If some of these holders were to cash-in their treasuries we could be bankrupt overnight.

Instead of letting our politicians slip and slide out of the corner again, it’s time to push even harder from the grass roots. It’s time for the taxpaying public to press for explanations of how we got into this mess in the first place. It’s time to forget or set aside all the distractions and cover stories that have been thrown around the subject and get right to the heart of the matter.

Trust funds and “special obligation” Treasury securities are at the heart of the scam. They are the major tools both republicans and democrats use to swindle us. And the Social Security trust funds (Federal Old Age & Survivors Insurance and Federal Disability Insurance that was added in the fifties) are simply the tip of the iceberg.

The major question that should be asked and a full detailed explanation demanded is – how in the world did surplus payroll taxes America’s workers paid for a specific purpose ever become 22.3 percent of the national debt?

Debt is debt. It doesn’t buy anything, much less count for anything as a legitimate method of sustaining the supplemental retirement system until 2042 or 2052.

In order to cash-in these holdings the government will have to either (1) raise taxes (2) borrow heavily (3) cut programs, including benefits, or any combination of these three. And as the Washington Post points out, these are the same choices the government would have if there were no trust fund at all, if it simply didn’t exist.

That’s where a positive solution lies – abolish the trust fund and all its holdings. It serves no useful purpose other than to double tax us in one way or another with interest added.

It could be done with hardly anyone noticing and our national debt would fall by a huge percentage making the world believe we were finally becoming financially responsible.

Social Security alone currently accounts for 22.3 percent of the national debt. Add other entitlements such as the Federal Employees Retirement trust (FERS) and several more in the same boat and it adds up to 43 percent of the debt.

Solutions

The main solution has always been for the government to stop stealing the money, all of the surplus money taken from Social Security’s dedicated taxes each year (see chart), spent elsewhere, and not doing anything to improve the retirement system.

Once that is done, there are only two logical steps; either (1) cut payroll taxes or (2) invest the surplus money where it will increase and truly help the supplemental retirement system.

The latter may sound similar to President Bush’s personal investment accounts, but it isn’t. I will not delve into this now. (More to come shortly)  

However, I will say that if Bush came clean with the public he’d say something like this; Look, we’ve been taking the extra revenue payroll taxes produce, spending it elsewhere, and here are the amounts. It’s not chicken feed. This borrowing is set to continue until at least 2018 or 2020 when taxes coming in will not be enough for benefits going out. If we stop taking this excess money now and invest it wisely we might have enough to stave off Social Security’s problems. This is the only money I’m talking about investing. It hasn’t hurt benefit payments in the past because it was more than was needed. The retired will still get their full benefits as usual.

It’s a strong and effective argument. The money is certainly coming to invest and will grow as the economy grows. But it’s also a confession. All of the Beltway Bandits fear the results of such a confession. That’s what really makes Social Security the “third rail” of politics and why Bush will not use this argument. It shows what crooks they all are.

What follows here would provide the guilty with a graceful and safe way out of their nefarious activities and dilemma, something they tried unsuccessfully to do themselves when they argued “lock box” legislation for so long in the nineties, and it would also solve or initiate one and two above.

The most immediate solution would be to simply erase all of the “special obligation” nonmarketable non-negotiable bonds in the Intragovernmental Holdings (IH) side of the national debt. This could probably be done with a computer “delete” key and the Parkersburg Papers could be burned.

In a lengthy face-to-face meeting I once proposed this to one of my congressmen who agreed with everything I said up to this point. However, when it came to this particular solution, he felt it would cause a panic in the legitimate contractual bond market, the other “investor” side of the national debt where the government conducts the sale of treasuries and borrowing under contract. It’s also the side where the foreign nations mentioned previously are involved.

He was probably right. Investors in the stock and bond market are a bunch of nervous Nellies who react to anything. When Alan Greenspan belches, the market drops. But it doesn’t have to be done all in one fell swoop. A more gradual “full sweep” could be taken instead.

The very first thing to do would be to stop piling interest on top of the debt the taxpaying public has already inherited. Interest that’s added to the black hole debit account the Beltway Bandits call a “trust fund,” interest that’s added without money involved, and interest that’s added merely to carry on the false idea of having “borrowed” surpluses. It has never made any sense at all to be increasing taxpayer indebtedness just to carry on this part of the borrowing fiction.

Stopping interest deposits that cost the government nothing because they are merely a matter of handing the fictitious trusts more fictitious treasuries, no money involved, would reduce national debt increases by roughly five to six percent a year.

Secondly, the fictitious bonds held by fictitious trusts in the deliberately mislabeled IH side of the national debt could be eliminated in batches, perhaps even tied to the surplus over-taxation coming in monthly. We could do this dollar-for-dollar or some multiple of these enormous surpluses. In the month of January, 2005, the surplus stolen from Social Security overpayments was 16 billion. Last year, fiscal 2004, the total was $71 billion.

In other words, the government could probably erase from fifty to one hundred billion of this debt every month without anyone noticing how it was being done. They haven’t noticed the build-up of debt markers in these black hole accounts and they probably wouldn’t notice the tear-down.

The same would probably apply to foreign creditors and reducing the national debt by the Social Security debit black hole alone would take away more than a fifth of our total national debt and make the U.S. begin to look financially responsible.

Bush could immediately claim that he was paying down the national debt. It's a whole lot better than a promise to "cut the deficit in half" in four years.

If the same thing were done to the other entitlements in the same boat as Social Security, the deduction would be around 43 percent of the national debt. The scam is that widespread (See: Trust List).

As it is today, it’s almost a race between honest corrective action and the worldwide failure of the dollar as well as our reputation as the wealthiest nation in the world and extreme hardships at home once the collapse comes. Last year we legitimately borrowed 80 percent of the world’s savings. And we seem to be continuing this year.

All of the solutions above assume this craziness would cease rather than provide the opportunity for more use of the government’s credit card. It’s not a payment against principal. It’s getting rid of a dishonest scam.

Our government should do this before it loses the option of choice.