From : pomi 
Subj : Debt
Date : Sat, 18 Nov 1995 15:18:14 -0500 (EST)


I am more informed now about what Rubin actually did to get the funds
he needed to prevent a government default on billions of due interest
payments.

You'll recall that the Sec of Treasury accessed pension and trust
funds under the government's control. But, as with social security and
other such funds, these had no money in them but only IOU's. The IOU's
were in the form of non-negotiable Treasury securities.

Defined in that way, these IOU's counted as government debt.
Remember, the government had reached its debt limit and could borrow
no more to pay the interest payments.  Rubin did an accounting
manuever and changed the type of securities that were in the accessed
funds.

The change resulted in those funds not being considered as government
debt.

So this reduction in government debt meant that the debt ceiling had
not been reached and so money could still be borrowed.  And that's
what happened. Rubin went into the market and borrowed money to pay
the interest due to our creditors.

The question arises, as with social security, as to what will be done
with empty trust funds when their beneficiaries become entitled to
what is supposed to be in there.  I have heard before and I've heard
again that "the law requires that these be invested in government
securities.  You would not them to just sit idle not drawing
interest."

So they're invested in government securities.  But what really happens
is that they're borrowed by the government and replaced with IOU's.
The social security fund (and maybe medicare) have as their sole
contents IOU's. Although it may be true that we would not want trust
funds to not achieve their potential value by accruing interest, it
seems to me that the choice is really between having the principal in
the fund or having the principal removed from the fund for later
repayment, with interest, by the taxpayers of this country.

I am not an economist, but I'd prefer the latter. I'd much rather have
the actual money that I want to be available in the future remain in
the form in which I deposited it and in the form that I will need it
in the future than to replace my deposits with promises to pay, with
interest, from a debtor who already owes four trillion dollars.

The issue here is unfunded liabilities of the US government.  These
are massive, far exceeding anything you've heard about what we owe.  I
can't remember the number, but it's about twice our current public
debt.  And of course it's in addition to the public debt.

These are liabilities like congressional, military, and the many other
pensions as well as the private sector pensions that are underfunded
but guaranteed again by the taxpayers.

One last point. Is anyone who has talked really going to balance the
budget? Or are they going to have a balanced UNIFIED budget ?

A unified budget takes into account all government receipts and
outlays and seeks to equalize them.  But receipts include social
security taxes that come into the government for a specific purpose,
not for general expenses. Presently, much more is coming in than is
needed to pay beneficiaries. The surplus is supposed to be there to
pay the greater number of baby boomer retirees coming up.

But the unified budget counts social security in its balance. As has
been constantly done, the surplus is used to hide the size of the
deficit. A unified budget is what is being proposed.

And the fact is there's nothing in these funds anyway but IOU's that
must be paid back by future taxpayers. Such is how the crooks and
traitors who take our money fulfill their fudiciary duties.

---SnetMgr 0.60 [r0001]
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