Saturday, July 2, 2011
Friday, July 1, 2011
If you start a discussion about the future of Social Security, you can be sure that someone will mention the Social Security Trust Fund. This fund is the supposed “lockbox” that holds the taxes paid in until the funds are needed to pay benefits. The idea is that when taxes received exceed benefits paid, money is deposited into the trust fund. That money can then be saved for a time when benefits paid exceed taxes received. By using the Social Security Administration's website, we can see what is contained within this “lockbox.”
Money that comes into the fund is invested into US Government securities. Since these “special issue” securites can be redeemed at any time, it gives the Social Security Administration the ability to invest all money in the trust fund as required by law, but it can still redeem these securities when needed to pay benefits. These securities are backed “by the full faith and credit of the US Government.”
The problem is that the money from these securities is not held by the Treasury, but it is instead used to pay other bills. The SSA's own website states, “The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.” Provided that the government continues to pay its obligations, everything runs smoothly.
However, there are two problems with this system. First, the government gets extra money that it can spend during years of surplus, but the government will be forced to slow down spending or raise revenue when the taxes collected no longer pay all the benefits. As the amount of benefits begins to reach the tax revenue collected, the Treasury will have less available to pay other bills. This will force politicians into either cutting spending, raising taxes, or borrowing even more money from outside sources in order to have the cash to pay all bills. Since the Treasury has borrowed the money in the trust fund in order to pay items that should be paid with our federal withholding dollars, it will one day have to use federal withholding dollars in order to pay back the trust fund it borrowed from.
Second, what happens if the Treasury becomes unable to pay its obligations? Some people say that would never happen, yet the talk around Washington is that a default is imminent if we do not raise the debt ceiling. Should the government default, the trust fund's investments could lose their value or become worthless.
To put it simply, the government has forced everyone to contribute to a ponzi scheme to finance the government's operations. However, just like every ponzi scheme, the success of this system lies in more people contributing to the system than taking money out of it. When benefits paid start to exceed tax revenues, the scheme starts to collapse. Unless the government can cut spending, it will be forced to raise taxes even higher or take on even more debt in order to cover the extra payments to the Social Security system. If we do nothing, we will not have a trust fund, but a “distrust” fund.
Thursday, June 30, 2011
Wednesday, June 29, 2011
Tuesday, June 28, 2011
You can tell how important something is to a person by the price they are willing to pay for it. When you see someone traveling down the street in a high-priced luxury or sports car, you know that person views their car as important. When a person purchases or builds a large house, you know that the house is an important part of that person's life. On a smaller scale, even product choices explain our priorities. For example, I choose a higher-priced brand of shampoo because I prefer that brand over the other brands I have used. I choose to pay a higher price because the brand is important.
Throughout history, each generation of Americans has had to stand and pay the price to defend freedom. In order to win its freedom, America had to fight to repel the world's largest empire. While this war certainly caused division at the time, it unified America's spirit upon its victory over the British. However, it was only 30 years later when Americans had to again defend their freedom against encroachments from the British in Canada. The next generation of Americans were called upon to defend freedom.
It would take only another 30 years before America found itself fighting Mexico in the Mexican-American War. While this conflict was comparatively easy for America to win, it would only be 15 years before the Civil War began at Fort Sumter. While there is no disagreement that this war created great divisions in the country, it is also true that both sides viewed the war as a defense of freedom. The Confederacy was fighting for the freedom to leave the union; the Union was fighting for freedom of the enslaved people. Once again, another generation was being forced to defend freedom.
America enjoyed a period of relative peace between the Civil War and World War I. The Spanish-American War was fought in 1898, but it lasted less than five months. However, just over 50 years after the Civil War, American troops joined the Alliance in Europe. While this war did not represent an immediate threat to America's freedom, several of the reasons for entering the war showed that the Central Powers could one day threaten America. Another generation was sent to war to defend America's freedom.
Then, on December 7, 1941, Pearl Harbor was bombed by the Japanese. Less than 25 years after the end of World War I, America found itself involved in World War II. The country united, and once again, America had to defend its freedom. Following World War II, America entered the Cold War era. Although this was not an actual war, America found its freedom constantly under threat for years. At least two generations of post-World War II Americans had to be recruited in order to be prepared to defend freedom.
However, something happened at the end of the Cold War: America found itself without any major threats. The younger American generation has not had to face the threat to freedom that other generations have had to face. America certainly does still have threats, but there is no nation that can rival America's military power. Since America's enemies know they cannot defeat us in a war, they rely on using smaller surprise attacks, such as the attacks of September 11. We have fought wars to avenge a wrong (Operation Enduring Freedom) and to protect the freedom of others (such as the wars in Iraq and Libya), but since the fall of communism in Russia, we have not had to fight a war that directly impacted our freedom.
Americans under 40 today have little remembrance of the threat of communism. 35-year-olds were only one year old when Reagan cried the famous words, “Mr. Gorbachev, tear down this wall!” They were only five when the Soviet Union collapsed. Although these 30 to 40 year olds may remember the fall of communism, they do not remember the threat of communism. It is only the older generation that remembers the threat of the Cold War.
Since the younger generation of Americans have not had to pay the price for freedom, we are now seeing the devaluation of our freedom. Americans are surrendering their freedom from unwarranted searches to the TSA. Americans are surrendering their right to freedom of speech to the idea of being “politically correct.” Americans are surrendering their right to bear arms to a faction that believes that banning weapons will automatically cause all guns to disappear. Americans are surrendering their right to freedom of religion to atheists who are attempting to force their lack of belief on everyone. This site, among many others, has chronicled the losses of freedom that are taking place on a daily basis.
America is currently headed down a slippery slope. If we do not speak up and fight the battle against our freedoms with words, then we are headed for a time when American will no longer have freedom. If we fail to speak up and lose our freedoms, the only way to reinstate our freedoms may require a second American revolution. Now is the time for Americans to speak out against the loss of freedom. If we wait much longer, it may be too late to speak.