Unconstitutional Crisis - Part II

***Cross-posted at What Floats My Boat***

I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents. -- James Madison (As he disapproved of an attempt to appropriate $15,000 for French refugees. 4 Annals of Congress 179 [1794]).

Forever a fascinating subject, perhaps even more so now that Barry and his congressional thugs have strong-armed us with the single largest Porkulus package in US history, I have added a Debt Clock to my site. Currently, our national debt is nearly $11 trillion - or so we are told by the Bureau of Public Debt.

What often happens when a company "cooks the books" is that sometimes things can.... "disappear," making the company's financial position appear stronger than it truly is. This makes the company appear sound, to keep investors' money flowing into the business and keep the doors open. The alternative, obviously, is failure and closure of the business.

Much like bankers and brokers (with the help of friends like Barney, Gregory, and Maxine) disguised the reality of the housing bubble (AKA mortgage crisis) through "leverage," the federal government of the United States disguises the reality of the public debt by striking certain items from the balance sheet. Items known as "unfunded liabilities" are not included in the $11 trillion total. They are, however, liabilities (a debt that must be paid) listed in the budget by the federal government as mandatory expenditures - to be paid by the taxpayer.

In a nutshell, here is how it works: Medicare and Social Security are pay-as-you-go systems. The workers of today pay taxes into these programs and benefits are dispersed to the preceding generation. Simplistically put, our parents paid their parents' way, we pay our parents' way, down the road our children will pay our way, and so on. To give the appearance of being a "dedicated" social insurance program, these tax revenues are listed under the "Social Security Trust Fund." (I highly recommend following this link, as there is additional information crucial to this discussion and the falsehoods underlying this supposed "trust fund," as below.) Unfortunately, this "trust fund" is only that - an appearance:

There is no cash in the Social Security trust fund, and there never has been any.

Unfunded liabilities come into play when more money is projected to be dispersed through the program than is collected via tax revenues. We hear about the baby boomer generation pushing Social Security/Medicare to the breaking point and threatening to bankrupt the program - because there are more of them (the retiring generation) than there are of us (the working and, hence, paying generation). In 2008, budgeted expenditures for Social Security were $612 billion and Medicare $386 billion; Social Security payroll taxes were $658 billion and Medicare payroll taxes $194 billion. We are already closing in on elimination of the trust fund "surplus" and in less than a decade will be operating at a deficit; Medicare has already surpassed that point.

The fact that more money will go out than comes in is irrelevant; a contract has been created between the federal government and We The People, guaranteeing payment for our needs under this program based upon our payment into the system through a lifetime of work. Taking the money then not paying would be frank breach of contract by the Federal Government. This cannot be solved merely by increasing Social Security/Medicare taxes; doing so would only generate further liability and increase the marginal tax rate laid only upon those citizens who work.

As of May 2008, unfunded liabilities related to Medicare and Social Security (the amount of money that MUST be paid based upon the tax revenues collected to date) totaled approximately $99 trillion. That would be on top of the $11 trillion you see in the debt clock.

Who can even conceptualize what a quadrillion is?

By creatively restating its financial position in this manner, the federal government is able to instill "confidence" in the economy and in our social welfare system. After all, how quickly would the flood of angry mail begin flowing into and overwhelming Congressional offices if the public knew:

1. We have, in reality (hidden in plain sight), a QUADRILLION DOLLAR deficit rather than merely an $11 trillion deficit.
2. We pay 15.3% of our income (directly paid in full by those who are self-employed and half of which is paid as part of our income by employers for everyone else who works) for a Social Security/Medicare program that will never - as in NEVER EVER - be able to cover what has been promised in return for that payment - made in good faith - when we could earn multitudes more by investing that same 15.3% in a 401(k) or other investment vehicle.
   
3. We have a Congress and President hell-bent on spending as much as possible as quickly as possible for programs we do not need with money we do not have - covertly packing more useless spending into bills with awe-inspiring and hope-raising names like "American Recovery and Reinvestment Act" and overtly packing more useless spending into bills the public has loudly reiterated to their "representatives" in Congress they want neither created nor passed.
   

Flying in the face of all that a republican democracy such as ours represents ideologically - this is worse than taxation without representation - it is the epitome of tyranny, and almost all of it is unconstitutional as defined and directed by the Constitution itself. In essence, the Constitution allows for the Congress to lay and collect taxes and make expenditures for the defense and safety of the Union - and little more. Everything else falls under States' rights and the federal government has no business meddling. That includes programs like Medicare and Social Security, Medicaid, Housing and Urban Development, education, "energy" policy, health care, and basically everything else that has been corrupted with federal-level interference.

What often happens when a government "cooks the books" is that sometimes things can.... "disappear," making the government's financial position appear stronger than it truly is. This makes the government appear sound, to keep taxpayers' money flowing into the coffers and keep Washington, DC, in business and keep the executive, legislative, and judicial branches operating. The alternative, obviously, is failure and restructuring of the government.