by Peter Bergel
For decades, beginning during the Vietnam War, our elected leaders have tried to mask the size of the national debt they have permitted to accumulate by “borrowing” the surplus from the Social Security Trust Fund. This was done without consulting the public in any way, and largely without public knowledge, even though this money was set aside from all workers’ paychecks in an insurance program guaranteed to provide funds for them in their old age. To be precise, the government purchased U.S. T-bonds with our insurance money.
This practice, it can be argued, was a prudent investment of the Social Security surplus in a very secure financial instrument. That is only true, however, as long as U.S. Treasury Bonds are very secure financial instruments.
How Did We Get Here?
Beginning during the Reagan years, the government permitted the national debt to rise alarmingly in order to finance a huge expansion of military expenditures. I believe that a second — hidden — purpose of this growing indebtedness was to burden the federal government with so much debt that it could never again engage in the free spending social programs that it pursued during the 50s and 60s. This suited the Reaganites’ ideological preference for smaller government. The Reagan claim to “get government off your back” was a cynical shift of wealth from public to private hands, using the mechanism of massive federal spending for “defense.” This shifting mechanism has now become standard operating procedure for the federal government. The national debt rises and the federal government “can’t afford” to do anything other than spend for the military.
That is why Social Security is broken and “needs to be fixed.” It is part of the widespread financial mess our “leaders” have made of our economy in the service of wealth transfers to corporations and billionaires. The T-bonds owned by the Social Security Trust Fund, that are backed by the “by the full faith and credit of the United States,” are poor investments, since they pay almost no interest (right now a one-year bond pays interest of about a quarter of a percent). In order to convert them to the cash our seniors are owed in Social Security payments, they must be sold – which is increasingly difficult both because they are not very good investments and because confidence in the U.S. is weakening around the world.
What Can Be Done?
One measure that would readily “fix” social security would be for the Defense Department to purchase T-bonds back from the Social Security Trust Fund with the tax dollars currently being appropriated to it. That way the military, not our seniors, would have to make do if there was not enough money for the government to meet all its commitments.
Of course this suggestion will provoke outrage from some quarters invoking our need for “security.” What in heaven’s name does “security” mean, though, if it does not mean that seniors who have worked hard all their lives and purchased old age insurance from their government can not receive what is coming to them? That seems like a bigger threat than a few so-called terrorists in Afghanistan.
It’s time to run some wealth transfers the other way for a change. Φ
Peter Bergel is Executive Director of Oregon PeaceWorks and founding editor of The PeaceWorker.