This wouldn’t be such a bad deal if the government still had the dollar. If that dollar had been invested and was returning an annual interest of six percent or six cents a year. But it’s gone. Spent. Never to be seen again. The government used it to pay down a debt of its own.

The government, however, would like you to believe that they really do still have the dollar. That they’ve substituted something just as good and put it in a trust fund where it’s gaining interest. But such isn’t true, and in obtuse language they eventually admit to the falsehood.

What they’ve done is to put a marker, a promissory note called a “nonmarketable bond,” in a debit black hole account where someday you or your children will be called upon to pay the same dollar again, a second time, with interest. Every year that this bogus bond sits in the phony trust fund it’s adding more debt.

You not only lost your original dollar. A situation that brought your balance to zero. But you went more than minus 100 percent in the hole by gaining a debt obligation. How much deeper than being 100 percent in the hole you go depends on how long the marker sits there gathering more and more negative interest.

What’s that? You say this can’t possibly be true? Read further.

Last year, fiscal 2000, the “surplus” collected by the government was $237 billion. All of it was applied to paying down the blue section of the National Debt. Where this money came from is as follows:

The $1.6 trillion tax cut currently under debate comes from projections of the income tax surpluses predicted for the next ten years or so, line A. Money over and above what the government requires to run the country. Money President Bush promises to let taxpayers keep. Money taxpayers will not have to pay and may even be retroactive from January 1, 2000.

Paying down the National Debt comes from projected entitlement surpluses expected during the same time period, line B. And it will only be paid against the blue section of the debt held by the Public. Currently $3.2 trillion to pay off. Alan Greenspan warns that it may be difficult for the government to buy back long term bonds in this area since many investors may not want to give them up before maturity, and may need to be given a deal they can’t refuse.

Trouble is, when the government takes money from Social Security, Medicare, and other entitlements under the pretense of “borrowing” it, the red section of the National Debt increases dollar-for-dollar. Bureaucrats claim that they will pay off these red “Intragovernmental Holdings” somehow in the future, under the equally false pretense that payoff money will come from somewhere other than annual income taxes paid by the same people they pretended to borrow from in the first place. The red section is nothing but pure theft. A double taxation scam.

On top of that, the overall National Debt will continue to rise for no reason other than the fact that the government also pays annual interest to trust funds in the red section. And it will rise higher than it would if there wasn’t a tax cut because that tax-cut money would otherwise help to offset this rise. Here’s the way it works.

The Key

The reason your government started this money laundering operation lies in the fact that there is absolutely no cash involved in the issuance of more bogus babble bonds to the entitlement, red side of the National Debt. The government simply hands out more Treasury markers (nonmarketable nonsense bonds) like candy from Santa Claus. Bonds that you and your children will someday have to buy back, with interest.

On the other hand, annual interest paid to investors in the blue sector must be paid with real cash. Real money from the Treasury’s General Fund of income and corporate taxes received every year. This interest typically ranges from six to seven percent depending on when the government contracted with these investors and how desperate the government was for a loan. These are the rates published daily in bond market reports. Mr. Van Zeck, head of the Treasury’s Bureau of Public Debt, claims that the government issues $2 trillion a year of these securities, just to maintain the National Debt level, to replace maturing securities as fast as possible.

Total interest paid blue section Investors in real cash during the past seven years follows:

By moving debt from one credit card to another, the government saved $6.50 with every $100 you donated, or six and one-half cents with every extra dollar workers paid to Social Security and Medicare. And the national debt still managed to rise by $18 billion.

The national debt would have risen a lot more if there had not been $87 billion in income tax surplus thrown against the same blue section of our National Debt chart during fiscal 2000. If this $87 billion had not been available, if the government had already allowed its tax cut last year, then the debt would have risen $105 billion.

Let’s see, in the same hypothetical situation of an income tax cut, you would give the government $150 billion in extra entitlement payments, the national debt would rise $105 billion, and the government would save almost $36 billion. Isn’t that a wonderful return on your money?

On top of that, you would now have $105 billion more in debt on the red side that will collect negative annual interest until it's paid off by you or your children. All part of the Pay-It-Again, Sam plan.

If you think that this is a good, proper, and appropriate use of your entitlement money, your Social Security and Medicare overpayments, then do nothing. Just sit there and silently take it.

If, however, you feel that you are being robbed, then write to and call your Congressmen. Complain. Tell them that you’re not going to take this cheap cheating anymore. Tell them that you are sick of this money laundering movement from one credit card to another. That you want them to do something about it. Demand a fair shake.

They could at least make the Social Security and Medicare trust funds into real trusts the way they have their own Thrift Savings Plan. A privatized system that brought two million federal employees an average 28 percent increase on investment over the last four years because of investment in the private sector. Investment that was made through Barclay Bank of Great Britain.

You might also want to read my book “RIP-OFF” that lays out and explains this dishonest use of your tax dollars in detail, as well as providing a solution that would be good for all of us, particularly our children.