- The Washington Times - Wednesday, November 1, 2000

First of three articles

There was a time when political lies were restricted to verbage. American politicians, the masters of high-flown rhetoric, have promised to "save" Social Security (the mysterious "lockbox"), no longer raise taxes ("read my lips"), and provide cheap, effective health insurance for all. (Remember Hillary Clinton?) And most important, all of this at minimal cost.
We citizens are the perennial, everlasting, original suckers. We've never really learned to cut through rhetoric to find the truth. I had hoped that after 40 years of foggery, we were finally getting the hang of it. Then suddenly our politicians outwitted us again by opening a second front: the arithmetic lie.
Now, that's something we're infinitely not equipped to handle. If you recall, in a recent international contest, American high schoolers came out 19th out of 21 nations in math. Apparently, that is a failing that extends all the way up the line, from voters to even the honest if mathematically challenged politicians.
The newest arithmetic twist involves a lie masquerading as both a "surplus" and a "lockbox." It goes something like this: Social Security will be protected by ensuring that the FICA taxes we pay (12.4 percent of the payroll) are put aside for those who will need it most the Boomers when they start to come on line beginning in 2008, then heavily in 2013. The "surplus," we are told will be used to "strengthen" Social Security.
As someone with some background in math having addressed the American Statistical Association, testified five times before the U.S. House of Representatives and the U.S. Senate on budget and spending, even having eked out an "A" in college calculus, I develop crippling stomach secretions when I listen to the politicians' carefully constructed math lies.
The arithmetic reality is quite simple, and it's the exact opposite of what politicians are telling us. The so-called budget "surplus" that is supposed to "save" Social Security is almost entirely (80 percent) excess FICA-Social Security taxes taken by politicians and immediately spent in the general fund for everyone except the aged and disabled. The Social Security "fund" is then given IOUs in return. That debt, in a twist of math the non-governmental world has yet to master, is counted as cash. As the federal budget calls those IOUs, it is "debt securities held as assets."
(That's quite a trick, much like counting your mortgage debt as cash on your back financial statement, a gimmick that will quickly land you in the clink.)
That idea of debt as surplus is an arithmetic fantasy, unless it takes place in Washington, where this new, new, new math is created by legislation.
The true arithmetic is quite simple. In 1983, the FICA taxes were raised 25 percent in order to save funds to pay the retiring boomers 25 years later. This created an enormous FICA surplus. In 2000, for example, Social Security took in $566 million, including accrued interest, and paid out only $410 billion. That left a Social Security surplus of $156 billion. In addition, the Medicare fund also had a surplus of $25 billion. What happened to that $181 billion? Sad to say, as part of the phony "unified budget," it was put into the general fund and spend on whatever welfare, tanks, fat retirement funds for the members of Congress.
What happened after that? The Social Security "fund" (actually only a bookeeping item) got bonds for $181 billion, IOUs that are now sitting there with no idea of how to redeem them when the time comes. So far, since 1983, $105 trillion has been taken from the Social Security money meant for the aged and disabled, but spent, spent, spent instead.
By the year 2015, when less money will be coming into FICA than going out, there will be $4 trillion of misappropriated money from Social Security that is gone, gone, gone, replaced by IOUs. That figure rises to $6 trillion by 2025 with no way to pay the Boomers except by raising taxes or lowering benefits the ultimate result of the federal Ponzi scheme.
I call the Social Security money "misappropriated," but in such a profile in courage, Sen. Ernest ("Fritz") Hollings, South Carolina Democrat, says the truth: that it is "looted." As he says: "For everyone crying 'Save Social Security,' the first order of business is to stop destroying it by looting the fund."
This idea also came to Sen. Daniel Patrick Moynihan, New York Democrat, and Sen. Robert Kerrey, Nebraska Democrat, who introduced a bill, S 21, which would cut Social Security free from the general fund so the money couldn't be touched. This is much like Al Gore's favorite "lockbox," part of another arithmetic lie since it has two insolvable problems.
One is that S 21 has been bottled up in the Senate Finance Committee since January 1999 with no chance of passing. The second, more insidious problem is that if FICA cash is no longer "looted" and spent in the general fund, then 80 percent of the president's supposed $237 billion "surplus" automatically disappears. It will be hard to strengthen Social Security by using a surplus made up mainly of IOUs.
Not only that, but then the presidential candidates will loose the FICA candy store with which to promise goodies to the gullible voters.
It might help if citizens went back to school to study arithmetic. But not really, so long as there are politicians who now understand that if the big lie of rhetoric falls, there's always " 'rithmetic" with which to fool the voters.

Martin L. Gross is the author of three New York Times best sellers on the federal government. His latest is "Government Racket 2000: All New Washington Waste From A to Z," an original paperback published by Harper Collins.



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