This is, after all, a rather trying time of the year. For those who worry about their weight, there is the fear that the obligatory feasting occasioned by Thanksgiving can mean additional unwanted pounds. However, as the poet says,
"Stuff your gut with tons of food,
And then collapse while muscles pound.
Don’t claim Thanksgiving’s the reason,
You eat this way all year ’round."
Christmas also undoes the dieting of an entire year, and then makes short work of one’s budget as well, what with all that we spend on presents. As compensation, we have New Year’s Day, on which resolutions may be made to undo the damage, to lose the pounds, and then some, and to pay off the bills, and really start saving next year. It is most agreeable to be virtuous in the future, while indulging one’s vices in the present.
But the holiday whose passing I wish to celebrate today is that of the payroll tax holiday, for the word is that regardless of what happens in the fiscal cliff negotiations, this holiday is about to end, and the tax will be raised from 4.2% back to 6.2%, where it belongs. This is important, because the one thing that makes it difficult for lawmakers to cut Social Security is the 2.7 trillion dollars that has accumulated in the trust fund over the years. Prior to the payroll tax cut, every dollar in that trust fund came either from the payroll tax or from interest on the bonds in the trust fund. Unfortunately, for the last two years, the shortfall resulting from the tax cut has been offset by money coming from general revenue. As a result, some of the bonds now in the trust fund are tainted. Were the payroll tax holiday to be extended, this continued adulteration of the trust fund would slowly transform Social Security from an entitlement into welfare. It would cease to be money to which we have a right, and it would become a dole for which we would have to be grateful, with our heads bowed, hat in hand. By restoring the payroll tax, we restore the principle that Social Security is a benefit for the working class, paid for by the working class.
Now, there are those who take exception to all this talk about the trust fund. “There is no money in the trust fund,” we are told, usually in a patronizing manner, “because the money has already been spent. There is nothing there but just a bunch of worthless IOUs.” They remind me of that fellow I knew who lent his brother-in-law $5,000 to start up a business making organic toothpaste. Needless to say, the enterprise fell through, and the brother-in-law had to give it up, and go back to working for someone else. After a decent interval, the fellow who had lent the money delicately broached the subject of the loan one evening, in hopes of being repaid. The brother-in-law was crestfallen. He could not believe that he was being asked to repay the loan. “What do you want from me?” he asked indignantly. “The money was invested in the business, and now it’s gone.” It is sometimes said that all men are brothers. There are times, however, when I fear that all men are just brothers-in-law.
The problem with the trust fund, apparently, is that it only has bonds in it instead of money. That is, instead of little pieces of paper with an ink design, and some lettering forming the words, “legal tender for all debts public and private,” there are other little pieces of paper with a very different ink design on them, and with different lettering, forming the words, “full faith and credit of the U.S. Government.” Never mind that the lettering on the first kind of paper allows for the purchase of the second, and that the lettering on the second kind of paper allows for redemption in terms of the first; and never mind that neither of these two types of paper is redeemable for anything of intrinsic value, like gold; somehow, the one type of paper is more valuable than the other, and only a fool confuses the two.
Those who disparage the bonds that are presently in the trust fund presumably envision the following scenario: Some day in the near future, the Board of Trustees of the Social Security trust fund, finding that receipts will not be enough to cover benefits, will send one of their members to the Federal Reserve to cash one of the bonds. The clerk, upon being presented with the bond for redemption, will look nervously around the room, and then admit to being embarrassed. “I am afraid we do not have enough money to redeem this bond,” he will say apologetically. The following day, the president of the United States will give a speech. “I come before you today to announce, with regret, that we must take the step of repudiating the bonds in the Social Security trust fund. However, I want to make it perfectly clear that this will in no way affect the bonds presently being held by the Chinese. Despite the fact that they are a communist dictatorship, they will get every dollar in principal and interest they have coming to them. It is only the bonds being held on behalf of the working man and woman of the United States of America that are hereby rendered null and void. Thank you.” Meanwhile, back at the Federal Reserve, down the hall from where we left the embarrassed clerk, arrangements are being made to purchase another large batch of Treasuries, in accordance with the policy of quantitative easing.
During the Bush administration, efforts were made to prevent the press from taking pictures of the caskets of soldiers who died in battle, lest the images disturb the public, and lessen their propensity to go shopping, which was their patriotic duty. In a similar vein, those who are pro-life always look for ways to present pregnant women with pictures of fetuses, in some cases their own, so as to arouse in them an aversion to “taking a life.” Images, in other words, are much more powerful arguments than those couched in words. With this in mind, I suggest the following: We take the bonds in the trust fund to the Federal Reserve, and, notwithstanding the preposterous scenario outlined above, we cash them in. Now, this could be done with a mere bookkeeping entry, but I propose that we have the trustees take actual cash. They would then put the cash in a warehouse, and having notified the media of the event, with cameras running, the trustees would swim around in the money, much in the way Uncle Scrooge used to do in his eponymous comic books. These pictures would make the nightly news, and then YouTube. After the images had saturated our consciousness, so that all could be convinced that there was money in the trust fund after all, the Board of Trustees would announce that the money would be used to purchase special government bonds, so that the fund could benefit by receiving interest, returning us to our present situation. Only now the visceral impact of seeing all that money in the warehouse would put to rest the facile claim that the trust fund does not have any money in it.
Well, I suspect we won’t be seeing those images any time soon. Still, if the payroll tax holiday is actually going to end, along with the other holidays of this season, that will be good enough for now. Social Security is a wonderful government program. Let’s make sure we continue to pay for it.