Vail Daily column: Can we agree?
Amid the mud slinging and distortions taking place between the two political campaigns, I decided to look for a topic that should be of interest to both political parties —the Social Security Trust Fund. But first, some background.
Trust funds are established so people or organizations can direct assets toward a specified purpose, e.g., a church may raise money for a particular purpose and then establish a trust fund to ensure that the money is used for that purpose and that purpose only, all while adhering to strict and legally binding guidelines.
In the private sector, beneficiaries of a trust own the trust’s income and assets. However, the federal government treats its trust funds differently. Government trust funds are the property of the government — and that includes the mythical Social Security Trust Fund.
Did you know that at it’s own discretion the government can actually change the purpose for which a trust fund was established, and that the U.S. Supreme Court has given its blessing to this practice?
Yes, you read that correctly; as Scott Rasmussen’s writes in his best-selling book “The Peoples Money,” according to the U.S. Supreme Court, the monies in almost all government trust funds such as Social Security, Medicare, government employee pension funds, unemployment funds, highway funds etc., can be diverted to pay for anything and everything the politicians want to spend it on.
We may not understand the government’s rather unique accounting methods, but we can give this matter a sense of perspective by looking at our own checking accounts. The majority of us pay our bills from a single checkbook, electronic or otherwise. Very few people have one checking account to pay the electric bill, a second to pay the phone bill, another for the water bill and so on. The government does it pretty much the same way, just on an almost unimaginably larger scale.
Contrary to what we’ve been told for years, the monies in the Social Security Trust Fund are no more trust fund monies than is the specific amount of money in your checking account that you intend to use to pay your next electric bill. This is why Washington treats the U.S. Treasury as if it’s one big pot of (borrowed) cash.
Yes, there is something called the Social Security Trust fund, but that’s in name only. If there’s a shortfall in one government program Congress simply appropriates the money it needs from a different program. I wasn’t finance major in college, but common sense dictates that this is not a healthy situation. (Perhaps that’s one reason we’re $20 trillion in debt—but let’s save that discussion for another commentary.)
How then to best redress this situation? Chinese philosopher Lao Tzu told us, “The journey of a thousand miles begins with one step” — the message being that any journey or task, however long, begins with one discrete action.
So what discreet action might we take to begin fixing Social Security? Here’s a novel idea—start by telling the America people the truth. Our leaders must level with us and tell us unambiguously that the Social Security Trust fund is a fallacy and that a new or modified funding mechanism must be found if Social Security is remain viable for our children and grandchildren.
It is an egregious injustice that Americans have consistently been misled about Social Security, to wit: Government policy (one pot of money pays everything) does not align with voter expectations (the existence of a real Social Security Trust Fund.)
As Rasmussen suggests, what’s critical at this juncture is for Washington, in concert with the voting public, to create an actual trust fund with tangible and diverse marketable assets. Only then will future retirees be secure in the knowledge that they will actually receive the accrued benefits they’ve earned and are entitled to.
And with a presidential election on the horizon there’s not a better time to discuss the matter. Will Hillary level with us? Will Donald who prides himself on telling it like it is, really “tell it like it is” regarding the third rail of American politics?
A wise man once said, “If you want voters to make bad decisions, give them bad information.” And there aren’t many areas where the government has given us more bad information than about Social Security.
How many times have we heard the fairytale that Social Security benefits are entirely self-financing and that the funds from these taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries?
Why won’t our leaders tell us the truth? Could it be that as soon as one side raises the issue there’s always someone only too eager to engage in hyperbole and begin the demonization process telling the voters, “They want to take your Social Security away,” at which point reasoned discussion ceases?
There’s only one thing certain about this matter — Washington will continue to dance around the problem until we as voters demand they fix it.
Quote of the day: “One old friend is better than two new ones.” — Yiddish Proverb
Butch Mazzuca, of Edwards, writes regularly for the Vail Daily. He can be reached at email@example.com.