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The Sad Tale of Patricia Black

George Rebane

Ms Patricia Black is one of probably millions across the country who has been taken in by the progressive media and pundits debunking America’s Social Security crisis.  In a letter to the newspaper, she lambasts my 13feb10 Union column for “perpetuating the mistaken idea that Social Security is broke.”  She firmly believes that there is an “amassed surplus of $2.7 trillion” ready to be doled out “with no changes” to beneficiaries “for at least 30 years.”

Lockbox What that poor woman, along with her similarly persuaded cohort, does not understand is that the famous Social Security ‘lock box’, so proudly displayed by Al Gore many years ago, is full of nothing but Treasury bonds.  These are IOUs of the US government that must first be cashed in before the SS recipients can spend it.  As such, they must be paid for by future taxes or future borrowing or future printing.  There simply is no spendable money there, and as fungible Treasuries, the SS recipients have to get in line with all the other holders of Treasuries here and around the world.  And since the Congressional Budget Office projects that our federal government will run in the red to the tune of about $1 trillion a year, literally forever, there is no money set aside to pay for SS or, for that matter, anything else that the government is obligated for.  It will all have to come out of the general fund one way or another.

Ms Black and her ilk join the similarly disadvantaged yet joyful women in Detroit, who when interviewed about where all the economic stimulus money was coming from, said they thought it came from a “stash” that President Obama had access to somewhere.  Does that sound familiar?

The sad tale of this ignorance grows when we consider that it is these millions of duped people who give comfort to the spendthrifts in Congress to continue their spending, while smoke-screening this and about another $100 trillion of unfunded government liabilities from public view.  One could argue that these beliefs are a charming aspect of our backwoods isolation up here, but that would be an oversimplification.  In spite of a legion of articles, analyses, and media interviews with responsible leaders, analysts, and economists (more here and here), the myth of the ‘stash’ or ‘lock box’ survives, and shows itself in letters like the one written by Ms Black.

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24 responses to “The Sad Tale of Patricia Black”

  1. Dave C Avatar
    Dave C

    The SSS is in the same debacle as AIG, Lehman Bros and many banks/institutions are in. Their books looked good with many notes (IOU’s) shown as assets on their bottom lines. The problems began when they started calling in their notes and got stiffed, leading to bankruptcy, bailout and takeover.
    Same with the SSS. If they called in a note from the US government, they too would get stiffed.

    Like

  2. Jeff Pelline Avatar
    Jeff Pelline

    George,
    You can dish it out, but you can’t take it. LOL.

    Like

  3. RL Crabb Avatar
    RL Crabb

    First of all, while there are no doubt many who believe that SS is viable, polls over the last twenty years or so have shown that a good chunk of the population thinks that they will never see their benefits. The way politicians have squandered the “trust fund” over the years is no secret. The question is can it be fixed or should it be fixed?
    I don’t know if it can be fixed but I believe it should be fixed if possible. Maybe not as an answer to all-encompassing retirement, but as a guaranteed supplement to retirement. The objection I have to a Gingrich-type free market approach should be obvious. The market goes through cycles of boom and bust and many retirees have seen their 401k’s decimated by the recent catastrophe.
    I can tell you from personal experience that having SS and medicare made the job of caring for elderly parents a lot less complicated than arguing with insurance companies over every procedure and doctor bill. My parents weren’t rich, but they could live their last years in dignity.
    The question of unions deserves to be looked at. My dad was a lifelong union man, but his pension was modest. The real benefit was his medical insurance. Along with medicare it took care of his bills during his last years.When I see today’s union people retiring at 50 with 80% of their income for life, I do wonder how it can be sustained.
    I must assume that most of you bloggers have pretty good retirements, since you have so much free time to bloviate into cyberspace. How much of that would you be willing to give up?

    Like

  4. Russ Avatar
    Russ

    Jeff,
    Accepting your comment at face value, it would appear that you agree with Ms Black and that George is in error. Now it is my turn to LOL. I thought your were smarter than Ms Black, but we would never know from your comment.

    Like

  5. John S Avatar
    John S

    Think of the Federal (and State)governments as an automobile. This automobile only has a forward gear, there is no reverse, and many will try to convence you that there can be no reverse gear. And as for the gas tank, there is no empty, it is always full. The problem is, the gas line that goes to the their tank has punched through the bottom of the tank and splits into millions of other little pipes that go out to each of our own gas tanks. Thus, it is never empty. They are currently working on sucking your tank dry. We must continue to go forward.
    You will never be able to convence these people about how it all works, and that the money is gone, or where it is.
    For some folks “the party will never be over”.

    Like

  6. George Rebane Avatar
    George Rebane

    Russ, I was going to remove Pelline’s comment because it contained his usual irrelevant snarkiness without addressing the topic. But your comment made me aware that from a different angle Pelline’s remark is indeed relevant to the topic. His ignorance about Social Security and, presumably, about Medicare and similar unfunded entitlement obligations is of a piece with that of Ms Black, and therefore very relevant as it highlights the concerns about the wide spread of such beliefs. Thanks.

    Like

  7. RL Crabb Avatar
    RL Crabb

    Instead of gloating, sniping at each other and “I told ya so”, maybe you geniuses should start addressing what to do when the system crumbles and there are millions of elderly retirees living in shelters and their cars, driven there by the rising costs of healthcare.Will it be prison for those who steal food to stay alive, or refugee camps?

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  8. George Rebane Avatar
    George Rebane

    Bob, that’s a good topic for a follow-on post. But those nostrums will only make sense to people who are first convinced that SS (and other entitlements) are unfunded. Those who see a thirty-year solvent SS will see no point in such a discussion and will continue to ascribe it as fear-mongering and myth-spreading. The current discussion seeks to disabuse the Patricia Blacks out there, of which there seem to be more than a few.

    Like

  9. Scott Obermuller Avatar
    Scott Obermuller

    Bob, there are already a lot of folks that have, for years, been addressing that very awful scenario. It involves either leaving the country or holing up in your bunker with a storehouse full of dry food and thousands of rounds of ammo. George is right. There is no point in trying to move forward with a viable solution if the majority think there is no problem. The Dems usually want to fix it with a scheme of taxing everyone’s full income for SS and not paying out to those who have another, non-SS retirement. Basically, a massive transfer of wealth, from the haves to the have nots. It works great for a while until the haves, have not themselves or enough of the haves put the military up to a violent take-over. That is the way it has played out in countries big and small for centuries. I know that any solution for our country to solve the looming debt crisis that I or George or some kindred soul would put forward would be brushed aside by the masses. So, my wife and I will just try to prepare ourselves as best we can for various kinds of upsets and upheavals.
    And the reason I have time to work full time and read (and sometimes post) on this blog, is because I watch very little TV.

    Like

  10. RL Crabb Avatar
    RL Crabb

    Pretty gloomy assessment, Scott. I know there are some survivalist types out there who actually look forward to the breakdown of civilization as a justification for a major purge of undesirables in our society. George can probably speak to this, since he lived through such times.
    The main reason I rail on so much against conservatives AND liberals is because I see some good from both sides, but too often its lost in the “my way or the highway” approach that prevails in modern political discourse.
    One of the things that gives me hope is looking at the history of our country. It’s not like this is the first time we’ve been divided. W’ve muddled through adversity before, and I believe we can do it again, as long as we have the will.

    Like

  11. Michael Anderson Avatar
    Michael Anderson

    Great points Bob.
    I predict that the first Nevada County blog that adopts a Sixty Minutes-like Point/Counterpoint feature will take off like wildfire.
    Remember SNL’s takeoff on that? I can hear Dan Akroid’s voice now…”Jane, you ignorant slut.”
    Hilarious!

    Like

  12. Bob Hobert Avatar
    Bob Hobert

    Umm…anyone who can read can find the truth. Note the date of this article. Do your own search just for fun.
    It’s Official: The Social Security Trust Fund is Empty
    By Allen W. Smith, Ph.D., 2/26/2010 9:22:26 AM
    It’s official. The Social Security trust fund has no assets. It was declared empty by the Social Security Trustees in the 2009 Social Security Trustees Report, which was signed by Treasury Secretary Timothy Geithner and the other Social Security Trustees. The acknowledgement was in the form of a single sentence, buried deeply in the report. That sentence reads:
    “Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.”
    There is nothing ambiguous about that statement. It says that the government does not receive any income from redeeming the bonds or from the interest that the “bonds” allegedly earn. Even worse, it says that the government must finance redemptions and interest payments by increasing taxes, reducing government spending, or going still deeper into debt.
    Why is it that most Americans know nothing about this? It is because that, with a few exceptions, the media has not reported it. Instead, the media continues to help spread the misinformation that is dispensed by the AARP, other senior organizations, and many politicians. One exception is Allan Sloan, Senior Editor at Large at Fortune Magazine. He agrees with me that the Social Security trust fund contains no real assets.
    If the “trust fund bonds” provide no net income to the Treasury, either in the form of interest payments, or through the redemption of the actual bonds, where is the government going to get the money to replace the $2.5 trillion that it has looted from the trust fund? I believe the American people deserve to have this question asked and answered by the media.
    I appeared on CNN with Lou Waters on September 27, 2000 and tried my best to convince him that the government was spending all the surplus Social Security revenue. He looked at me in disbelief and asked, “Are you a voice crying in the wilderness?” As it turned out, I was a voice crying in the wilderness in 2000, and I continue to be such a voice a decade later. During the ten years that I have been trying to expose the government’s misuse of Social Security revenue, an additional $1.4 trillion has been looted and spent by the government.
    People, who are in a position to know the truth, have been stating the above fact publicly for years. But nobody has been willing to listen. Some examples:
    “I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.”—Paul O’neill, Secretary of the Treasury, June 19, 2001
    “There are no stocks or bonds or real estate in the trust fund. It has nothing of real value to draw down.”—David Walker, Comptroller General of the Government Accountability Office (GAO), Speech in Washington DC, January 21, 2005
    “There is no trust fund, just IOUs that I saw firsthand that future generations will pay—will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.”—President George W. Bush, Speech at West Virginia University at Parkersburg, April 5, 2005
    Such public statements have been rare, and they have not received much news coverage. On the other hand, the AARP and the NCPSSM have no difficulty in getting media exposure for the misinformation they dispense. They bombard their members and the public with the message that Social Security is very solvent and can pay full benefits until at least 2037 without any action. That simply is not true. Although I have been a member of both organizations for years, I am persona nongrata with both of them. They refuse to respond to my letters, emails, or phone calls. Although I have been a vigorous foe of privatization efforts and I have been working hard for more than a decade to save Social Security as we now know it by exposing the looting of Social Security, these organizations perceive me as an enemy and refuse to have anything to do with me. I think their intentions are good and that they just have their heads buried so deeply in the sand that they don’t want to hear anything by their own propaganda.
    The sad fact is that, in just six or seven years, the cost of Social Security benefits will begin to permanently exceed payroll tax revenue, and the government will have to cut benefits or raise taxes. The public just seems to be incapable of accepting the harsh reality that for the past 25 years, our government has spent all of the $2.5 trillion is surplus Social Security revenue that was intended to be used for funding the retirement of the baby boomers. It is true that the government has a moral and legal obligation to repay the looted money, but it seems highly unlikely that it will do so. The primary purpose of the proposed fiscal commission is probably to sweep all the evidence of wrong doing under the rug and proclaim that Social Security must be cut in order to help reduce the deficit. If this happens, the evidence of “the great Social Security fraud” will be covered up and Social Security benefits will be cut under the guise of a patriotic need to reduce the deficit.
    Allen W. Smith, is Professor of Economics, Emeritus, Eastern Illinois University. The author of seven books, Smith has been researching and writing about Social Security financing for the past ten years. Visit his website at http://www.thebiglie.net

    Like

  13. Dixon Cruickshank Avatar
    Dixon Cruickshank

    Brillient post Mr Pelline, the most telling of all

    Like

  14. Mikey McD Avatar
    Mikey McD

    Mr. Hobert, thank you for the very productive comment. Sometimes I wish my personality allowed me to ignore the lies, corruptions and blunders of our government (i.e. like the Patricia Blacks out there). I think it might be more peaceful to trust government to coddle me in its arms from cradle to grave.

    Like

  15. Scott Obermuller Avatar
    Scott Obermuller

    Thank you for the article by Allen Smith. I read blogs and web sites for all sorts of political views and I can tell you that very very few left leaning sites would even bother to give any credence to the facts presented. Now consider that the looming SS shortfall is not even close to being as bad as the coming problems with Medicare, and you start to get the full picture of the coming train wreck. Mr Crabb would like to look at history to see a rainbow after the storm. I would ask why we need to have the storm in the first place? The answer lies with an informed populace demanding an honest accounting of how bad a hole we are in and agreeing to a painful, across the board re-adjustment of taxes and spending. It is not too late to embark on a solution, but that leads back to my remarks above. I think it is the left who want the utter destruction of our economy in order to create the new socialist utopia. Most of them are not evil, they honestly think it is the best way to achieve their goal of “social justice” wherein the govt will allocate resources to all who deserve them. Many are very open and honest about that very goal. Why should I not believe their own words?

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  16. Mikey McD Avatar
    Mikey McD

    Scott, I agree 100%.

    Like

  17. RL Crabb Avatar
    RL Crabb

    When I mention history as a guide to today’s problems, I’m referring to the period between Washington and Jefferson (the not-so-gay nineties) when a new nation not even used to the idea of freedom managed to survive the alien and sedition acts, a possible war with Britain and/or France, the destruction of printing presses by mobs, a mountain of debt, and the proliferation of misinformation and outright lies by scores of anonymous letter writers, who were the bloggers of their time. A lot of people were sure that the election of Jefferson spelled the doom of the Republic. It didn’t happen.
    Of course, we did have a civil war, but considering that today you’d be fighting an army of pacifists who would rather curl up into the fetal position than take up arms, I rather doubt it would last long.
    Chances are that you will see a conservative majority come November. The President will be checked and balanced and, who knows, maybe something will be accomplished to correct our course.
    It’s America. Anything’s possible.

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  18. George Rebane Avatar
    George Rebane

    That’s a hopeful ending Bob, one that I can sign up for. Our government was designed for a slow legislative process with a lot debate and deliberation always in the mix. Nothing had or has to be done in a hurry on Christmas Eve.
    So far I haven’t seen too many ‘fetal position pacifists’ demonstrating from the left. By any comparison, the left wants to and is prepared to get physical rather than, say, those rabid tea party extremists. Most recent example is the education demonstrations going on across the country.
    In any event, we want both sides to keep their cool and let the election process proceed with only the exchange of heated words during these times of economic stress.

    Like

  19. Scott Obermuller Avatar
    Scott Obermuller

    Yes – there was that Civil War thing and the last Great Depression ended with that WW II thing. I’m looking at what’s happening in Greece right now and really, as bad as it is, it’s nothing. Europe has seen far worse in the last few decades. We still have our basic freedoms and we can still elect folks that might say they are fiscal conservatives. I seem to recall an actor with a teutonic accent saying he was fiscally conservative and he started with great ideas and then went right off the edge. Now, he’s prostrate at Barry’s feet, crying like a girlie-man, begging for freshly printed billions. I would like to see an end to the rush to socialism, but does anyone really, honestly foresee in the next national election cycle some one being elected on a platform of what has been discussed in this blog? Look at what has just happened to Jim Bunning. His own party abandoned him and Fox News couldn’t even report the story correctly. He was only trying to get everyone to obey the law. He wasn’t even trying to stop it, just have it paid for properly. I certainly hope that more citizens start seeing the light. Maybe it does take collapse – I pray not.

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  20. RL Crabb Avatar
    RL Crabb

    I’m a child of the sixties. I remember the riots, the SDS, SLA, Yippies, anarchists, civil rights, Vietnam, Nixon, Kent State, etc.,etc.,etc. It wasn’t an easy time to grow up. We were pessimistic about the future back then too.
    They say if you’re twenty and not a liberal, you have no heart, and if you’re forty and not a conservative you have no brain. I’m pushing sixty and believe you need both.

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  21. Scott Obermuller Avatar
    Scott Obermuller

    I would agree, Bob. I’m trying to understand how bankrupting the country with programs proven to be worthless at eliminating poverty and suffering constitutes having a heart. Not talking about you, but the typical liberal vs conservative blather. It’s been shown over and over that it’s conservatives that out do liberals at voluntarily digging into their own pockets to help those that need it. Heart vs brain is a false choice to begin with and both have nothing to do with politics. I know plenty of brain-dead folks that call themselves conservatives and lots of libs that wouldn’t walk across the street to feed a starving child as it would interrupt their speech about how compassionate they consider themselves to be. Best leave it alone and judge folks individually on how they act, not on what their politics are. It just gets too close to name calling and you have already pointed out (correctly) that we are best off with out it.
    Cheers
    Scott

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  22. RL Crabb Avatar
    RL Crabb

    We’re agreeing. That’s a start.

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  23. Michael Anderson Avatar
    Michael Anderson

    I agree. Judge the individual, not the inferred alliance. We are all snowflakes, everyone different. That’s been my experience, anyway.
    Good discussion here.

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  24. George Rebane Avatar
    George Rebane

    Good discussion indeed. May I respectfully disagree with the ‘only judge the individual’ prescription. One of the most powerful capacities of a human is to observe the topical (here ‘individual’) and generalize to the synoptic (the broader ‘class’ of attributes displayed by the ‘individual’).
    My point about Ms Black’s beliefs would be an anecdotal triviality if a connection could not be made between her as a visible sample of a class with similar/identical beliefs and the class itself. It is the inferred numbers that matter. Were she to be an isolated extreme, my point would not have been worth making. Nor would hers have been, if she were not worried about an entire population being misled.

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