President George Bush fully intends to continue moving debt from one credit card to another at the expense of our Social Security, Medicare, gas and other entitlement surpluses. Money that is not supposed to be spent elsewhere, for anything other than the purpose for which it was collected and intended.

The Beltway Bandits will not tighten their belts or pay down the debt from funds presently devoted to pork-barreling, crazy spending or plans for the New World Odor. Why should they, when they can steal our entitlement money.

The Balanced Budget Act of November, 1997, was for a balanced “Unified” budget. Unified because it lumps entitlements in with other receipts and treats entitlement surpluses as discretionary money to spend as they please. (see: Deficits)

Right from the Congressional Budget Office (CBO)

January 31, 2001, Deputy Director Barry B. Anderson presented “CBO Testimony, The Budget and Economic Outlook: Fiscal Years 2002-2011” before the Senate Committee on the Budget.

The CBO’s projections of surplus are as follows:

As you can see, in this report total accumulated surplus is predicted to be $5.239 trillion by 2011, by the end of the fiscal year on September 30, 2010. (Note: This was later changed to a $5.6 trillion total, but the ratios remain the same) $1.923 trillion comes from Income Tax surplus. More than is needed for discretionary spending. $3.316 trillion comes from Entitlement surplus; i.e., more than Social Security, Medicare and others need in order to carry out their commitments.

Last year, fiscal 2000, the total surplus was $237 billion. $87 billion came from income taxes (blue section) and $149.8 billion from entitlements (red section). Of the entitlements, Social Security had a profit/surplus of $94.4 billion that was pirated by the Beltway Bandits. Other entitlements like Medicare, gas taxes, airports and airway taxes, unemployment tax and dozens of other entitlements accounted for $55.4 billion.

The CBO predicts that surpluses for this year, fiscal 2001, will be $281 billion with about $125 billion coming from Social Security, the largest slush fund entitlement. To me, that seems a little too high for Social Security profits, but we'll see.

If President Bush gets his full tax cut of $1.6 trillion over ten years, and if it’s retroactive to January 1, 2001, then the blue section of this table will change considerably.

Right now, the CBO expects income tax surplus, the blue section, to reach $1.923 trillion by the start of fiscal 2011. The tax cut would take away 83.2 percent of this surplus, leaving $323 billion in the blue section and dropping the total surplus by $1.6 trillion to about $3.6 trillion.

Continued Money Laundering

The results of applying our entitlement surpluses to the National Debt follows. I have made several assumptions from the CBO figures. First, I assume that President Bush will get his full $1.6 trillion tax break retroactively and I have deducted that on a percentage from each year. Second, I have assumed that the interest paid entitlement trust funds will be at the same rate as last year, 6.666 percent (see: Number of the Beast). And all of this depends on a fairly strong economy. A significant recession or full depression will have a dramatic effect on surpluses in both areas.

The Investor, blue section, of the debt will probably not go down to the level shown for 2010, depending on the amount of outstanding long term bonds. Paying down most of the blue section is what President Bush refers to as “available” debt. Bonds, bills, notes and securities maturing before 2010 where it’s possible to pay off the Investors and not issue new securities to replace these contracts. As Alan Greenspan warns, many investors still holding long term, 30 and 10 year bonds, at that time will be unwilling to sell back before maturity unless paid a premium. President Bush claims it's "good business" to let these mature in their own time.

In preparation for this, the U.S. Treasury and their lackey Clinton News Network (CNN) last year began to tell us that the 10 year bond would become the index of the bond market. You can expect the 30 year bond to phase out shortly, followed by the 10 year bond.

The red section, Entitlements, rises not only from stolen surpluses replaced by nonmarketable nonsense bonds, but also from annual interest paid each entitlement with more of these bogus bonds passed out like candy from Santa Claus, no money involved. These promissory notes can only be paid off in the same manner as the blue section of Investor securities; i.e., the money to buy them back comes from the Treasury’s General Fund of annual income tax dollars. And it has to be income tax dollars, because stealing more entitlement funds simply results in issuing more bogus bonds. An even tradeoff, something like playing single paddle ping-pong off your bathroom walls.

In the words of William Jefferson Clinton in one section of his fiscal 2000 budget proposal, and echoed by loyal establishment economists:

“Trust fund bonds are not real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.” William Jefferson Clinton, 1999.

This means, send a bigger check, pay later with interest because we'll put it on the credit card, or do without something you would otherwise receive, like defense, education funding or whatever lies in the normal course of discretionary spending.

Opinion

The only thing about this laundering operation that makes any sense at all is that, once the debt has all or mostly been transferred to the entitlement trust fund side of the debt (what the government conveniently calls “Federal Debt” or, since Greenspeak coined the phrase “Governmental Holdings”, the federal government ten years from now will simply wipe nonmarketable bonds from the books. Bankrupt them.

Of course, you will have already paid down the National Debt with more than $7 trillion of your retirement and health care payroll payments. Money that could have been working for you to provide true pension plans and better health care. Just like the Beltway Bandit’s own Thrift Savings Plan and special trust fund perks.

If this were not the intent of the Administration, I think Republicans would be up in arms. Since the wealthy pay most of the income taxes, redeeming entitlement bonds would fall squarely on their shoulders. The working stiffs of America may be losing a good portion of their payroll taxes, but the wealthy would redeem most of the future Entitlement debt.

Another observation is that, during Senate Budget Committee hearings, the subject of placing more nonmarketable bonds in the Social Security Trust Fund and paying interest on top of that, never even comes up. It's ignored entirely. As though it's an unwritten silent code not to discuss in front of C-Span's cameras.

Still further, while only about $2 trillion of "available" Investor Debt (what the pirates call "Public Debt") can be paid off, the obvious balance of Social Security and other Entitlement suplus will probably go to Bush's totally unnecessary and ridiculous "contingency" fund and other spending.

More

I will now go even further out on a limb by saying this. The "personal accounts" that President Bush talks about for young workers will be the exact amount of the difference between the surplus predicted for the date when "available" Investor securities have been paid off and the final $9 trillion at the end of the ten year period.

In other words, you can take the difference between Entitlements that would rise to almost $7 trillion by the end of fiscal 2010, and subtract the difference for the total national debt at the time all available securities have matured, and you will have the exact amount of the "personal account" deal, if such a plan will ever materialize. If you read the President's 10 year budget plan "A Blueprint For New Beginnings" you will find statements diametrically opposed to investing anything in the private sector, even for the younger workers the President talked about.

I claim that this is precisely how Bush can quite rightly claim to give you a $1.6 trillion tax cut, reduce the national debt by more than $2 trillion, set up a contingency fund and "reform" Social Security, all at the same time. All through the outright theft of your entitlement money.

Even More

The same report, oops I’m sorry, the same CBO testimony contained the following:

The gradual rise from about four percent to six percent of GDP over 30 years can be attributed to Cost of Living Adjustments (COLA), people living longer and the fact that Social Security is currently handling the retirement of Depression babies from the Thirties. There were half as many births during the Great Depression. As you can see, the CBO, Congress' own accounting office, predicts that the system adjusts well to it all. No sweat.

You might also notice that by 2030 the public should be receiving almost 15 percent of GDP for retirement and health care costs on the rise. Isn’t this very close to the 15.3 percent every working person has been contributing through FICA payroll taxes? Interesting. Does this also mean we’re being cheated in terms of what we’re contributing today? You bet it does.

Oh, well. Why worry? Be happy. Your government will take care of you.