President Reagan and Social Security Theft

From Cletis' Blog
Raid On Social Security

What Reagan did with the help of Alan Greenspan. Consider the following sequence of events:

1) President Reagan appointed Greenspan as chairman of the 1982 National Commission on Social Security Reform (aka The Greenspan Commission)

2) The Greenspan Commission recommended a major payroll tax hike to generate Social Security surpluses for the next 30 years, in order to build up a large reserve in the trust fund that could be drawn down during the years after Social Security began running deficits.

3) The 1983 Social Security amendments enacted hefty increases in the payroll tax in order to generate large future surpluses.

4) As soon as the first surpluses began to role in, in 1985, the money was put into the general revenue fund and spent on other government programs. None of the surplus was saved or invested in anything. The surplus Social Security revenue, that was paid by working Americans, was used to replace the lost revenue from Reagan’s big income tax cuts that went primarily to the rich.

5) In 1987, President Reagan nominated Greenspan as the successor to Paul Volker as chairman of the Federal Reserve Board. Greenspan continued as Fed Chairman until January 31, 2006. (One can only speculate on whether the coveted Fed Chairmanship represented, at least in part, a payback for Greenspan’s role in initiating the Social Security surplus revenue.)

6) In 1990, Senator Daniel Patrick Moynihan of New York, a member of the Greenspan Commission, and one of the strongest advocates the 1983 legislation, became outraged when he learned that first Reagan, and then President George H.W. Bush used the surplus Social Security revenue to pay for other government programs instead of saving and investing it for the baby boomers. Moynihan locked horns with President Bush and proposed repealing the 1983 payroll tax hike. Moynihan’s view was that if the government could not keep its hands out of the Social Security cookie jar, the cookie jar should be emptied, so there would be no surplus Social Security revenue for the government to loot. President Bush would have no part of repealing the payroll tax hike. The “read-my-lips-no-new-taxes” president was not about to give up his huge slush fund.
The practice of using every dollar of the surplus Social Security revenue for general government spending continues to this day. The 1983 payroll tax hike has generated approximately $2.5 trillion in surplus Social Security revenue which is supposed to be in the trust fund for use in paying for the retirement benefits of the baby boomers. But the trust fund is empty! It contains no real assets. As a result, the government will soon be unable to pay full benefits without a tax increase. Money can be spent or it can be saved. But you can’t do both.
Absolutely none of the $2.5 trillion was saved or invested in anything. That is how the largest theft in the history of the world was carried out. 300M people worked and saved their whole lives to set aside $2.5Tn into a retirement system that, if it were paying a fair compounding rate of 5% interest over 40 years of labor (assuming an even $62Bn a year was contributed), would be worth $8.4Tn today - enough money to give 100M workers $84,000 each in cash! The looting of FICA hid the massive deficits of the last 30 years in the Unified Budget. Presidents and Congresses were able to reduce taxes on the wealthiest Americans without complaint from the deficit hawks, because they benefited. The money went directly from the pockets of average Americans into the pockets of the rich.
Now that it is time to repay those special bonds in the Trust Fund, we are inundated in opinion pieces in the leading newspapers and magazines complaining about Social Security and its horrible impact on the budget. Government finances have been trashed by foolish tax cuts, unpaid wars, tax loopholes for corporations and the very wealthy, the failures of economists, the greedy search for greater returns in financial markets and the collapse of moral values in giant businesses but Social Security is supposed to be the problem that needs fixing…
Social Security is not "broken" the money is in the Trust Fund. But the people who manage the finances of the United States don’t want to repay the bonds held by the Trust Fund. They want to default selectively against average people, their fellow citizens, who paid their taxes expecting to be protected in their retirement. Refusing to repay the $2.54 trillion dollars in bonds held by the Social Security Trust makes the US look like Greece, just another nation unable to govern itself coherently. The people who manage US finances come from the financial elites, the best that Wall Street and enormous corporations have to offer. Selective default exposes them as charlatans. The claims of the economics profession to expertise are puffery. Their theories about the benefits of tax cuts are proven false. Their mathematical proofs about free markets collapse in the real world.


Note from Cletis: The truth really is out there. Source: http://www.philstockworld.com/.../

Victims of Corporate Fraud - a Compensation Fund

In 2002, after the Halliburton no-bid profiteering in Iraq and the Enron bankruptcy revealed the depths of the Cheney-Lay-Skilling predatory mind-set of CEOs willing to pillage their own companies, AB 55 added a new Section to the California Corporation Code. Section 1502.1 establised the Victims of Corporate Fraud Compensation Fund (VCFCF) in the State Treasury administered by the Secretary of State.

The purpose of the Fund is to provide restitution to the victims of corporate fraud. Once a fraud judgment is obtained, if collection efforts are fruitless, victims can turn to the Fund. Apparently, however, since 2002, no victim has recovered.

The Business of Crime

On August 9, 2008, Edison International announced that its NET income nearly TRIPLED, from its publicly-announced second-quarter earnings of one year ago. Edison's President, Theodore Craver Jr., who added the CEO title a week ago, said that this eye-brow raising "success" is the result of "being able to realize our substantial growth potential".

Actually, Mr. Craver, it boils down to being able to be a criminal. You are realizing substantial criminal growth potential, and you are doing it under color of "doing business". Let's look at what Edison is actually achieving:

-- Edison is an "international" entity; it is "off-shore". It is taking money from rate-paying citizens who are always domestic, wherever they are.

-- The rate-payer paying for a utility owned by Edison, and which has No Competition at its point of purchase. The rate-payer is under Edison's monopoly.

-- Edison bought the Congress, and wrote its own laws concerning its "utility" services, building a monopoly for itself into the legal infrastructure. Under Reagan, and then perfected under a series of "conservative" administrations, this public utility proceeded to DE-REGULATE itself, while maintaining its market monopoly. We now have, literally, regulated and restricted Statism for the rate-payer (just TRY generating your own power onto the grid), and un-restricted un-regulated monopolist profiteering by Edison.

-- In the same quarter that Edison announced unprecedented gross profits, and NET profit increases, the price of oil had also increased. In other words, even though the cost to generate electricity increased-- Edison had to pay a lot more for their own fuel costs -- they made even more profit.

-- This same profit increase does not even include a claim made by the IRS (which remains the ONLY "regulator" or government intrusion on Edison's practices) concerning a (wait for it) for ONE AND ONE HALF BILLION in unpaid taxes, involving a "complex lease arrangement" made with a wholly unregulated subsidiary company, and with which Edison's lawyers intend to shield Edison further from tax exposures in the future.

-- This profit increase does not include any purchases of pollution allowances -- even though these costs were supposed to be incurred as part of their own pollution reduction compliance plan. For example, their own Edison Mission Group was required to post $48 million to the program. They clearly signal that won't happen. By setting up unregulated subsidiaries, such as Edison Capital, which supposedly invests in energy and infrastructure, Edison International intends to evade the pollution allowances. They see pollution reduction as an "impairment" to their profits.

-- Edison makes no claim that the profit increase is the result of increased efficiency, a better product or service, a new technology, or a market expansion.

-- Edison also announced its intention to increase rates for 2009, 2010, and 2011. It is almost breath-taking to see their interest in their future profit-taking....

-- The bottom line is that Edison has increased its profits by taking more money from consumers in local arenas served by its monopoly on power delivery, while avoiding the taxes and pollution regulations which would be imposed by the respective public agencies. Proposed rate hikes are based on extortion. There is no free market here. The "hidden hand" is not a free and informed market setting the price, it is Edison's off-shore and unregulated subsidiaries taking the benefits while shifting all the costs and burdens back to ratepayers and tax payers.

This is not Capitalism. This is predation. What ENRON got away with, is what Edison is getting away with: Money, taken under the false pretenses of "business". This profiteering enterprise will collapse because it is predation, it is not actually "business". They produce nothing. There is no informed exchange involved in this "profit".

Where you see the profits increase, in the absence of ANY improved product, service, technology or market expansion, you have to ask just what "business" is Edison in?

Third Pary theory of Liability - as "Enablers" of Crime

It "ought" to be difficult for criminals to carry out their predation. Unfortunately, as so many directors of corporations and even government institutions seem to think that "business" or "regulation" should be blind to frauds. This is a self-defeating attitude, since it erodes the Marketplace upon which our prosperity depends.

Criminals ought to have a more difficult time victimizing the weaker, poorer, and less informed or gullible members of our society. The large institutions -- banks, insurance companies, government agencies -- at this stage of our civilization are actually part of the victimizing culture; they do not prevent fraud on consumers, they enable it.

The only obstacle to wholesale consumer deception is the existance of a few law firms which still handle business frauds, taking cases one at a time. For example, in another suit similar to one I handled 20 years ago, an Orange County jury concluded that U.S. Bancorp "should have known" about fraudulent accounts it opened for fraud operators under the name DFJ Italia Ltd. and awarded $17.6 million. The Bancorp attorneys argued that it should not be held responsible for the actions of criminals. That defense makes great sense EXCEPT WHERE THEIR BANK ENABLED THE CRIMINALS TO DEFRAUD INVESTORS USING BOGUS "ACCOUNTS". This theory of "enabling" is a very strong cause of action.