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Using the neo-con frame for Social Security investments

Glenn D. Johnson, Associated Press writer, fell into the journalistic trap set by the neo-con right to describe United States Treasury bonds held by the Social Security trust fund. The following is my mail to him.
Mr. Glenn D. Johnson
Associated Press
Washington, D. C.

Dear Sir

Your article about Stephen Goss, Social Securities chief actuary, was carried in the Kansas City Star this morning. There were several things in that article that concern me.

The fact is that surplus Social Security revenue will decline and,eventually, the government will have to find ways to finance the redemption of trust fund debt, there is no doubt about that. But Mr. Goss was quoted as saying that, “the nation faces budget challenges in less than four years if Congress does not change the [Social Security] program.” That statement implies that the Congress doesn’t have to roll back the Bush tax cuts, but it has to do something to change Social Security so that the President and his Republican Congress may go merrily on their way to deficit spending, financed by surplus Social Security payroll tax revenue.

Social Security is not the problem. The problem is with the Bush tax cuts, huge federal budget deficits in the general fund, and trade imbalances that reduce income tax revenue caused by sending high wage jobs out of the United States to low income countries such as China and India.

Our country has been starved for revenue since George W. Bush pushed his tax cuts through the Republican controlled Congress. He continues to ask for more tax cuts even though our national debt has added over 2 trillion dollars since Bush took office.

The situation will not get better until revenue issues are addressed, but Mr. Bush continues to push for more tax cuts like a witch doctor bleeding his anemic patient to withdraw the evil spirits. George H. W. Bush had a great point when he called the Reagan tax policy, “Voodoo Economics,” but that is the same type of tax-policy quackery that his son is pushing on the American public. So where is the problem? Why, it’s in the only government program that has consistently run surpluses over the last 22 years and will run more surpluses until 2017, of course. No it isn’t! In 1992, the Clinton mantra was, “It’s the economy stupid!” Today, it would be, “It’s the lack of revenue “stupid!”

You have fallen into the same trap that so many other journalists have. You have adopted the neo-con term, IOU to describe United State treasury bonds. Most of us understand that an IOU is a written, informal agreement to repay a certain amount of money. These informal agreements are done between individuals, not the government and the American people, and not between the government and others who loan money by purchasing Treasury securities.

Social Security Trust Fund debt has maturity dates, and stated interest rates as well as the amount that has been loaned to the Treasury. That debt is collateralized by the Full Faith and Credit of the United States as are my EE bonds or HH bonds, the Treasury bonds and notes sold to the public, and those sold to governments and to corporations. Default on the Social Security debt would lead to world economic panic.

Your article states that, “The shift,” from surpluses to redemptions, “would force Social Security to begin cashing in the IOUs Congress has been giving the program since it started spending the excess tax revenue in the 1980s.” There are two things wrong with that statement. First of all, Congress doesn’t give the trust fund the “IOUs,” the money is invested in U.S. Treasury securities by the fund. Treasury bonds are purchased with the surpluses every July. Also, at the same time, bonds that have matured are redeemed and new bonds are issued to the fund. So, each year, the trust fund has two sources of funds with which to purchase Treasury bonds, surplus revenue and bond redemptions.

Congress has always had access to “the excess tax revenue” from Social Security. That is not something that started in the 1980s. From the very beginning of the trust fund in 1937, surplus revenue has been invested in U.S. Treasury bonds and notes. There are no other investments available to the trustees. So, in only 12 out of 68 years has Social Security not contributed surplus revenue to the Treasury department. It is irresponsible to report that Congress has only, "started spending the excess revenue" since the “1980s.”

It was reassuring that Mr. Goss said, “… there is no question that these securities will be redeemed when needed.” If these were only IOUs, might there not be doubt that the bonds would be redeemed? The President of the United States has tried to create that doubt in order to sell his concept of private accounts.

When surpluses begin to dwindle and when redemptions are necessary, the government will have to start to repay a huge debt owed to the working men and women who have paid surplus payroll taxes into the trust fund. Reckless tax cuts and unnecessary war, with a country that was no threat to the United States, have cost this country trillions of dollars that will have to be repaid, not just to the trust fund, but also to private investors, to corporations, and to governments. So, why does Goss assume that there must be a “change in the [Social Security] program”?

Gene W. DeVaux

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Re: Using the neo-con frame for Social Security investments

Mr. DeVaux is right on the money--it's NOT Scial Security running out of money, It's George W. Bush and his Congressional lackeys starving the govenment into deficits by giving the Treasury away to his rich buddies. Get it straight, Mr. Johnson: They're NOT worthless IOU's--they are treasury bonds, the safest investment on earth.

Re: Using the neo-con frame for Social Security investments

For anyone wanting to join local efforts on protecting Social Security, please come to our next coalition meeting. Our coalition, Missourians United to Protect Social Security, needs your help and input.

When: Monday June 6
Time: 6:00 pm
Where: 4526 Paseo, KCMO

Questions? kcprovote (at) sbcglobal.net or 816-753-3044


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