- The Washington Times - Saturday, March 5, 2005

The U.N. an economic menace

The United Nations fancies itself a vehicle that reduces global poverty and increases economic wellbeing. But, in fact, the U.N. advocates policies that will do the opposite.

U.N. reports and committees issue a steady stream of demands for tax increases. Most would fall on Americans and citizens of other very successful countries, with revenues given to the U.N. and leaders of dysfunctional and corrupt countries.

Edward Mortimer, the U.N. secretary general’s communications director, in a Feb. 16 letter in The Washington Times, disputed some of my statements about the U.N. in a Commentary section column published the preceding week.

Normally, I do not respond publicly to letters about my columns. I am making an exception because people need to be aware of the U.N.’s misrepresentation and deception.

Mr. Mortimer, in effect, made the ridiculous argument that the U.N. did a fine job of administering the Oil-For-Food program. We can wait for the final reports of the Volcker inquiry, and the U.S. House of Representative investigation under California Rep. Dana Rohrabacher, and the U.S. Senate investigation under Minnesota Sen. Norm Coleman to see if my charges of mismanagement and corruption are correct.

Meanwhile, we already have Mr. Coleman’s statement (based on evidence his committee obtained): “The gross mismanagement of almost every aspect of the Oil-for-Food program was simply inexcusable and wasted over $690 million. Every organization has its shortcomings, but I cannot recall any organization where the scope of its problems encompassed every basic management skill needed to ensure an effective program.”

Mr. Mortimer also claimed I was incorrect in saying, “The U.N. keeps pushing for the right to directly tax the world’s citizens and business firms, and has proposals for doing so.”

One merely need go to the U.N. Web site and start reading the various reports and recommendations from its committees to see that Mr. Mortimer is either unaware of what his own organization is doing or is in denial. The only reason these global tax proposals have not been adopted is the stalwart opposition of the Bush administration.

Among the global levies proposed are a tax on international financial transactions, a tax on arms sales, a tax on airline travel, and a tax on CO2 emissions, among others. French President Jacques Chirac disclosed the real agenda when he was asked about opposition to proposed U.N. taxation of financial transactions, etc. He replied no country (i.e., the U.S.) could oppose “a position that had already been approved by 110 countries and would undoubtedly be supported by 150 overall.” Mr. Mortimer can find this statement and the tax proposals in a Sept. 9, 2004, U.N. press release concerning a declaration U.N. Secretary-General Kofi Annan had signed.

Back in June 2001, Mr. Annan provided, with his blessing, the report of the High Level Panel on Financing for Development to the General Assembly. This report called for almost unlimited tax information sharing among U.N. members (even to the most despotic of regimes) and proposed a number of global taxes, including a tax of emigrants (emigration is a fundamental human right — even by U.N. definitions). On July 20, 2004, Ambassador Sichan Siv, U.S. representative to the U.N. Economic and Social Council, commented on a U.N. report:

“We have fundamental concerns with the practicality of global taxation. We do not see how a global tax could be designed and administered in a way that is democratically accountable to the citizens of our countries. Any tax on international economic activity is likely to reduce flows of trade and investment. This is obviously not good for development.”

Subsequently, on Sept. 20, 2004, in reference to another U.N. report, former U.S. Secretary of Agriculture Ann Veneman said: “The report should have given more attention to practical steps to sustain growth. There is too much emphasis on schemes, such as global taxes, to raise external resources. Global taxes are inherently undemocratic; implementation is impossible.”

The U.N. has also called upon the U.S. to increase its development aid manyfold, yet has failed to recognize this money does not come from the tooth fairy but from very hard-working U.S. taxpayers.

The economic evidence is overwhelming that almost all the world’s countries already tax their citizens well above the welfare-maximizing rates. Thus the U.N. should call for lower taxes to maximize world economic growth.

Increasing development aid will not improve the plight of the world’s poor until the rule of law is enshrined, property rights are protected, markets are freed, and tax and regulatory barriers to economic opportunity are removed. Given these reforms, development aid will not be necessary because private capital markets will provide the needed funds.

The U.N. proposal to increase taxes on the citizens of successful countries and transfer the money to U.N. bureaucrats and corrupt and incompetent government officials is a formula for global economic destruction and enslavement. To preserve global economic liberty and progress, the U.N. budget must be reduced to stop it from promulgating these destructive schemes.

RICHARD W. RAHN

Senior fellow,

The Discovery Institute.

Adjunct scholar,

The Cato Institute.

Social Security’s undercover story

“I don’t want to have to tell you again. We have to both stick to our stories. Otherwise, we go down together.” That is Congress, talking to the Social Security Administration (SSA). In collusion, they perpetuate the biggest financial lie in the world. But why? Because the system is set up that way.

Both are duty-bound to keep telling their “story,” but you need to know what the system is covering up for both of them. If you understand how the system works, the advantages for both sides become obvious.

People pay payroll taxes, believing the money will exclusively to cover their Social Security programs. But those payroll taxes come into the SSA, and after most of it is used about 30 percent is left over. That is now around $170 billion this year, $225 billion in 2008, and on up to $280 billion in 2013.

The law requires this money be “loaned” to only one organization: the “on-budget” Congress. Those loans now total more than $1.5 trillion, and are scheduled to total more than $6 trillion, meanwhile earning “interest income” (from Congress) for the SSA, now at a rate of about $80 billion a year, and going above $400 billion in some future years.

In fact, Congress is scheduled to pay more than $10 trillion of total “interest’ to the SSA, to go into that fund, before 2042 (when the trust fund finally runs totally out of money).

So the SSA can say, “We put the money in the trust fund, and we have pieces of paper called ‘bonds’ as evidence that we did, and so we count on getting our principal back, with interest, and writing the checks when we said we would. (But, since we are in effect all one big government family, it isn’t appropriate for us to comment on the complete lack of creditworthiness of the people we ‘loaned’ that money to, even if, off the record, we know better.) We did our part.”

So what about Congress? It has been in the red 45 of the last 50 years, while running up $5 trillion of deficits, $4 trillion of them in the last two decades. The president’s February 2004 budget submission projected further on-budget deficits of another $3 trillion in just the next six years.

As the deficits just keep worsening, Congress now spends about $1.35 to $1.45 every year, for every $1 of its own income tax revenue and has never actually spent less in any year than it did the year before, would therefore need to raise its income tax revenue by about 35 percent-45 percent just to cover its own bills, and therefore has no chance of ever being able to run the surplus necessary to ever pay back what it has, in effect, embezzled from the national retirement plan.

One way the whole game is covered up is by adding the “off-budget” Social Security surplus (the embezzled part) to the “on-budget” Congress deficit part, and calling the total “the budget,” thereby of course making the congressional deficit look smaller than it really is. (If a corporate president got caught adding the retirement fund’s annual surplus cash buildup to his company P&L, to cover up losses, he would go to jail.)

Why doesn’t either side “fess up”?

(1) Well, obviously the retirement fund trustees would have to admit they didn’t really have any “fiduciary responsibility,” as people assumed, and the money really isn’t going to be there to cover retirees’ checks after 2018 (or thereabouts).

(2) And Congress would have to stop ripping off the retirement fund, admit to its spending addiction, and tell people what its problem is after all: “My name is Congress, and I am a spendaholic.”

Remember that, when the trustees release their annual report in March, telling you about those big “trust fund” “asset” balances, and as the Congressional Budget Office keeps saying “2052.” No sirree. No problems at all. “That’s our story, and we’re sticking to it.”

BERT MCLACHLAN

Author, “Saving Social Security (from Congress)”

Katy, Texas

Statecraft and the Gordian knot

After President Bush’s first trip to Western Europe since his re-election, a Gordian knot is coming into focus for him.

Mr. Bush’s domestic and foreign opponents revile him largely because of their condescending attitude toward his faith in God. Mr. Bush, however, understands a basic truth of history and human nature: To achieve greatness, one must believe in something greater and better than oneself.

Alexander the Great undid the Gordian knot with his sword rather than his fingers. The sword can represent his belief in the values of Hellenistic civilization as opposed to the despotism of Persia. Mr. Bush’s faith in God leads him to make the spread of freedom his main political goal.

Both Alexander and Mr. Bush left behind them the conundrums they faced by inspiring others. Alexander conquered much of the known world, and Mr. Bush is furthering democratization of the world so that the governed can replace unjust rulers.

If Mr. Bush’s policy succeeds in the Middle East, the impulse to war will be reduced along with the hankering to obtain weapons of mass destruction. The ability will increase of the region’s peoples to obtain prosperity and security. If Mr. Bush’s effort fails, we will see people will vent their dark impulses and perhaps unleash weapons of annihilation.

Mr. Bush believes in giving power to the people, because he believes in a merciful and just God from whom people derive their rights. This is obvious even in his domestic policy, especially his plans for Social Security reform and his tax cuts.

In our history, four presidents stand out as the greatest: George Washington, Abraham Lincoln, Franklin D. Roosevelt and Ronald Reagan. As a general, Washington defended our liberty against British tyranny. As our first president, he refused kingship and showed our fledgling government how to govern and transfer power peaceably.

Lincoln saved the Union by holding together a tenuous coalition of those who wanted primarily to save the Union and those who wanted primarily to abolish slavery. In victory, his policy was “malice toward none.”

FDR saved the democratic middle from the ravages of the right and the left during the Great Depression. He covertly confronted international tyranny until the American people could also recognize it. After Pearl Harbor, he rallied America and the world to fight and defeat fascism and militarism.

Reagan, like his early idol, saw evil before the general public saw it. He used the bully pulpit and foreign policy to confront the evil of Soviet communism until it was tossed onto the ash heap of history. Domestically, he showed his faith in the people’s ability to govern themselves by championing large, across-the-board tax cuts.

The foundation of the greatness of those presidents was their towering faith in God. It allowed them faith in their fellow men and to use that faith to cut the Gordian knots they faced.

Mr. Bush must address a Gordian knot as formidable as those of his successful predecessors. He can use the power of the people to confront the paralyzing cynicism and bureaucratic mindset of the inside-the-Beltway subculture and its inclination to estrange us from God. In foreign policy, he can proclaim his belief that, to reach the pinnacle of greatness, leaders must seek the best for their people in the context of freedom.

Vladimir Putin, the first world leader to commiserate with us on September 11, 2001, can best lead Russia by showing more faith in the people than in the dark tyrannical forces that have dominated Russia’s history.

Mr. Bush can solve the vexing problem of North Korea by mainly showing the Chinese it serves no one’s interest for Kim Jong-il to have nuclear weapons. It would be like a 4-year-old with a loaded 12-gauge shotgun in a crowded room.

Mr. Bush also needs to convince China’s leaders it is in their national interest to choose cooperation over conflict. China has traditionally been an economic powerhouse in Asia, and it is becoming one again. Conflict will only cut short those gains. A war between China and the United States would devastate and perhaps even destroy the whole world.

If Mr. Bush can cut this Gordian knot he will secure a place alongside Washington, Lincoln, FDR and Reagan. Like them, he will succeed by melding his faith in God with his faith in the people to secure a more perfect union, at home and abroad.

WILLIAM GOLDCAMP

NANCY GOLDCAMP

Mr. Goldcamp is a diplomatic historian and a former intelligence analyst. Mrs. Goldcamp, his wife, is a former analyst and editor.

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