Now that New York's crusading attorney general, Eliot Spitzer, has attacked wrongdoing in the mutual fund, investment banking and insurance industries, he should turn his attention to a financial fraud that dwarfs those he has exposed thus far–a scam that makes Enron's accounting scandal look like petty theft.
Mr. Spitzer should sue the federal government to recover the $1.8 trillion or so that Uncle Sam embezzled from our so-called Social Security "trust fund."
For years now, we've been paying way more in Social Security taxes than is needed to cover current benefits, and that fact won't change for at least a decade. Unfortunately, however, Al Gore never had a chance to create his "lock box" to secure the surplus for future benefit payments. Instead, the government has been "borrowing" this excess revenue to spend on general expenses and handing us IOUs in the form of Treasury bills in return.
The only problem is President Bush and Congress both pretend they don't owe us a dime. Indeed, we are being told Social Security is in a "crisis"–and that we must accept benefit cuts and raise the taxable earnings ceiling to "save" the system.
What the government is not telling us is why we can't simply cash in our T-bills to pay benefits when outlays exceed tax revenues. Instead, we're being handed the classic con man's line: "Lend me 20 bucks until Friday and I'll give you my IOU. If I don't pay you back, you can keep the IOU."
The bottom line is that Washington has been digging a fiscal hole for years, all the while absconding with Social Security's surplus funds to camouflage the size of the real federal budget deficit. Now that the time is approaching to pay off on our promissory notes, the government is telling us to literally take a hike–a tax hike, that is.
Washington wouldn't dare renege on T-bills sold to private individuals, institutions or foreign governments. To do so would cripple the government's ability to finance public debt and undermine our entire financial system. Why should Social Security recipients be treated any differently than any other T-bill holder?
Had Washington not broken into our Social Security piggy bank to pay off the government's other bills, Congress would have had to raise income taxes, cut the federal budget and/or sell T-bills in the open market to remain solvent. It was a lot easier to take out a "loan" from Social Security, especially if Washington felt no particular pressure to return what it "borrowed."
The government played a shell game, scamming taxpayers out of their hard-earned Social Security money. We shouldn't let Washington get away with this. It's time to call in our IOUs and sue if Uncle Sam refuses to pay us back.
Before our representatives in Washington vote on private investment accounts or any other proposed "reform" of Social Security, Congress should hold hearings on the real reason why the program is in trouble–because Washington won't make good on the T-bills they sold us.
It's time for our elected officials to come clean with the American people and repay the loans Social Security provided in good faith. If Congress will not hold itself accountable for perpetrating the greatest financial scandal of all time, then a fearless, politically ambitious public defender like Mr. Spitzer should take the lead. He certainly wouldn't let an insurer get away with such behavior.
The federal government owes us $1.8 trillion and counting. It's payback time.
Sam Friedman
Editor-In-Chief
Quotebox, with Sam's mug:
"Congress should hold hearings on the real reason why the Social Security program is in trouble–because Washington won't make good on the T-bills they sold us."
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