Historic factors

#1- Deficits: Honest borrowing. Openly recorded contracts between lender and borrower. A means of raising extra cash by offering U.S. Treasury securities to investors from the public and other nations. Originally, a safety factor for emergencies and natural disasters. Currently $3.4 trillion of the $5.7 trillion national debt.

Since 1997, and passing the Balanced (Unified) Budget Act, this practice has been curtailed. After years of wrangling, the two political cults agreed that by the year 2002 stealing from entitlements would provide enough booty to replace any deficit ever run. Surpluses from a booming economy made it happen a little early, that’s all.

#2-Entitlement Theft: This side of the national debt is what the government tries to disguise as "Federal" or "Intragovernmental" liability, trying to make it sound as though someone other than the taxpayer will pay it off. Money stolen by Congress and the Administration, spent elsewhere, and replaced by "special obligation" nonmarketable bonds to be redeemed with future income taxes. These bogus bonds are double taxation, with interest, placed in debit black hole accounts deliberately mislabeled as trust funds. Currently, $2.3 trillion or almost 40 percent of the $5.7 trillion national debt. Last year, while the overall debt rose $18 billion, this entitlement debt factor increased $249 billion. (see: Money Laundering)

#3-Interest: If nothing at all happened, if everything in either #1 or #2 were brought to a complete halt for an entire year, the national debt would still rise. And it would rise simply because of the six to seven percent annual interest paid the trust funds (#2, above). Paid by just handing them more bogus nonmarketable bonds. No cash involved.

However, the investor side of the debt (#1, above), the side that receives real cash interest payments, would not cause the debt to rise. Even if these investors rolled over their annual interest profits in more Treasury securities, they would merely be buying securities sold on the open market only to replace those maturing at the rate of four or five billion per day. A holding action. Without a deficit, replacement securities are all anyone can now buy on the daily bond market.

The latter is a little like buying stock on the New York Stock Exchange. Unless you're in on the original issue, you're buying what someone else already owns and is willing to sell. You are not loaning money to the company that issued that stock ages ago. That's why it's known as "the exchange."

Money Laundering

As you can see, there’s a tremendous advantage for the federal government to move debt from the investor side to the trust fund side of the debt. From one credit card to another. One is paid annual interest with real cash. The other is simply handed more bogus bonds. Bonds you and your children must someday redeem, but no strain on current government funds.

I will not dwell on this money laundering subject. It’s been covered thoroughly in previous articles. See: “Money Laundering” and “Six Cents for A Dollar.”

Two New Factors

#4-Employment: The number of workers paying FICA taxes. Surplus or extra annual income taxes paid by individuals and corporations. Since companies build taxes into the price of products and services, it all comes from the public in one way or another. The Department of Labor currently estimates the number of workers in America at 141 million. If the number employed goes seriously down, the debt will rise accordingly. This will happen because of fewer workers paying FICA taxes, the largest entitlement surplus currently thrown against the investor side of the debt. It could also happen by fewer replacement workers entering the workforce or entering at substantially lower pay scales.

#5-Tax Breaks or Increases: Reduction in the surplus currently paid by American taxpayers through annual income taxes or entitlement payments, both producing the surplus. The latter being used in the "money laundering" scheme and the former holding down the debt somewhat. Rises or cuts in these elements effect debt.

These new factors have only to do with surplus. Not being able to keep track of these elements, or daily calculate their effects on the debt, is the reason New York City took down the running national debt marquee that was in Times Square. It was not because the debt was going down, as you are sometimes told by idiot commentators.

Surplus considerations

It’s important to understand that the General Fund system employed by the U.S. Treasury, or any honest not-for-profit organization, will automatically apply any surplus towards reduction of liabilities outstanding at the close of the fiscal year. A time when the books must be brought to a zero balance.

The only way the government can carry cash from one fiscal year to another is through a trust fund. Of the 164 such trusts held by the government (in name only) there is only a single fund that holds real assets. That trust is the privatized Thrift Savings Plan for the investment of federal employee contributions. All of the other 163 trusts hold nothing but bogus nonmarketable bonds. And these promissory notes or markers all add to the national debt.

In other words, all the talk about “lock-boxes” is simply that—just talk. If Congress and the Administration kept their grubby hands off surpluses, especially entitlement surpluses, such funds would automatically go against the national debt at the end of the fiscal year. There needn't be action by anyone except accountants. It can happen accidentally, without forethought.

Absolutely unnecessary was H.R. 3859, a bill that passed the House of Representatives by a vote of 422 to 2, and would have put all Social Security and Medicare surplus against the debt. But this bill died in the Senate in the hands of the democrats. Died under filibuster by Senate democrats. Ended up being sent to committee, and has been buried ever since. The same thing happened to H.R. 1259 after passing the House a year earlier by a vote of 416 to 12. Another "lock-box" bill that would have required a 60 percent vote to spend Social Security money elsewhere.

Apparently, the democrats want as much money as possible on hand for possible spending, despite the fact that the government can raise money overnight. As much money as might be needed for any emergency and any time it’s necessary. The “party of the people” does not often want to give up what they have on hand or might expect in surplus revenue.

Suppositions and illustrations

The tax-cuts proposed and under debate will cause the national debt to rise. All other factors remaining the same.

Had there been a tax-cut in fiscal 2000, or if there had been no surplus from income taxes, the national debt would have risen $105 billion. Instead, $87 billion from surplus income taxes, thrown against the debt, kept it down to a rise of only $18 billion last year. Yes, the debt went up. Not down as you've been told.

Last year, the surplus was $237 billion. Of that money, $149.8 billion came from overpayments to entitlements (#2, above) and $87 billion came from overpayment in income taxes (#4, above).

The substitution of bogus bonds for money stolen from entitlements is on a one-to-one basis. But the debt will not remain constant or at an even level when the government launders money from one credit card to another. The interest paid trust funds annually will cause the debt to rise six to seven percent a year. Six percent of $2.3 trillion is about $137 billion next year.

Last year, the Social Security Trust Fund, by itself, rose $152 billion to a grand total of $1.016 trillion. Of that $152 billion rise, $94.4 billion came from stolen surplus American workers paid in extra Social Security tax. But the government paid interest against the $864 billion Social Security held in bogus bonds at the end of the previous year, fiscal 1999. The interest rate was 6.666 percent, the mark of the beast. So, $57.6 billion came from more bogus bonds the government simply handed the trust fund in interest. No cash involved. Isn't that nice? The government just hands you more debt. That's what you get for your surplus payments. And they call it an "investment," telling you that they are "strengthening" Social Security. Raising the contribution cap from $72,200 salary to $80,000 salary also increases the booty.

In other words, the government saves some of today's cash on hand by issuing about as much in new interest bonds for future taxpayers to pay later. And these are the people wanting to do things for your children.

Since 1998, the government has reduced by about $46 billion the annual interest it must pay investors on the honest side of the debt. They have saved this by using hundreds of billions of your surplus Social Security, Medicare, and other entitlement money to pay down the investor side of the debt, while adding an equal amount to entitlement trust funds. Moving debt from one credit card to another. They save six cents for every dollar you give them. They save it in real interest that must be paid investors. Anyone can see what sort of a bargain that is, right?

If the country now goes into recession or depression, people lose jobs, take cuts in pay, are forced into early retirement, must find jobs at lower wages, simply spend less, or any of the many things that can affect how much they pay in either income or entitlement taxes—then the national debt will rise even more. Without as much from either #4 or #5 above to pay against one part of the debt, the debt will rise if only due to interest paid entitlements. No one but the public can stop bogus bonds from being deposited in entitlement trusts annually.

The only real way to pay down the National Debt is to pay off investor securities as they mature and not issue new bonds anywhere.

On the other hand, if the government were honest and invested entitlement money in anything except Treasury markers, there would be a tremendous boost to a sagging economy. About $15 billion per month is presently being stolen from entitlement surplus.

Of course, the national debt would not go down. But it's not going down anyway. We're just being told lies about a money laundering operation.

Unfortunately, President George W. Bush is not likely to invest Social Security and Medicare excess elsewhere, in real assets, stop the money laundering operation or go against policies that started during his father’s reign as Vice President under the Reagan administration and later as President. Such are the consequences of nepotism or an Aristocracy.