Professional Documents
Culture Documents
A program to remove the radicals from Congress,
fix Social Security, end our dependence on
imported oil, and restore the Republic.
Lester Townsend
The dog pictured above requires periodic maintenance from his master. If he is not taken
for a walk he will make a mess.
Congress requires periodic maintenance from the citizens of this country. Because of a
lack of oversight, of Congress, by the voters. Congress has created a monumental mess.
The Obama administration and the radicals who control Congress are making the
situation much worse, and are causing the deficit to increase at an exponential rate. The
people of this country must replace all Congress critters, who are not honoring their
oath of office.
The pending collapse of Social Security does not have to happen. There is a way to fix
Social Security and we can end our dependence on imported oil.
This book gives details on how these needed changes can be made.
A Call for Action
by
Lester Townsend
I wish to thank Joe Sanger CPA, Gloria Sanger and Dr. Ronald
Graeser DO, for their input into this book.
I have tried to present this information in a format which can be
understood by people who do not have a background in actuarial
and pension issues. To the extent this book fails in that regard,
and to the extent the report contains any errors, I am solely
responsible.
This book is titled “A Call for Action”, because the people must
act.
Copyright © 2009 by Lester Townsend. All rights reserved.
Published by lulu.com
TABLE OF CONTENTS
INTRODUCTION
THE PROBLEMS! 1
POLITICAL ACTION
IT'S A GERRYMANDERED COUNTRY 3
IT'S AN OATH 6
HOW PEOPLE VOTE DOES MATTER
A HISTORY OF FISCAL MISFEASANCE 11
IGNORE WHAT THEY SAY!, WATCH HOW THEY VOTE! 14
CHECKS AND BALANCES 21
EXCEPTIONS AND REGULATIONS 26
STOPPING THE CULTISTS
THE GLOBAL WARMING CULT 33
CONSERVATIVE, NOT REGRESSIVE 42
SOCIAL SECURITY
HOW TO FIX THE SOCIAL SECURITY SYSTEM 48
BACKGROUND OF SOCIAL SECURITY 52
WHAT IS A PENSION PLAN? 58
EVALUATION OF THE SOCIAL SECURITY FUNDING
MODEL 65
EVALUATION OF MEDICARE FUNDING MODEL 81
EVALUATION OF COMBINED FUNDING MODEL 87
PROPOSALS TO RAISE TAXES OR CUT BENEFITS 89
OTHER IMPENDING THREATS TO THE SOLVENCY
OF SOCIAL SECURITY 93
i
CONSTITIONAL PROBLEMS WITH SOC. SEC.
THE PAYROLL TAX 95
THE 1937 SUPREME COURT CASES 104
THE 1960 SUPREME COURT CASE 115
ENERGY
ENDING OUR DEPENDENCE ON IMPORTED OIL 119
A CALL FOR ACTION
ANSWER THE CALL 126
ADDENDUMS
NOT YOURS TO GIVE 132
MY THIRD PARTY EXPERIENCE 140
ABOUT THE AUTHOR 144
END NOTES 146
INDEX OF TABLES AND ILLUSTRATIONS 155
ALPHABETICAL INDEX 156
ii
INTRODUCTION
THE PROBLEMS!
There are many other problems but this book will be primarily
1
directed at providing ways to solve the problems listed above.
The first section will address political issues and suggest how
Americans can answer a call to take action, and fix our
problems. We must replace politicians, who place special
interest groups over the American people. We can end the
overspending by replacing the pork barrel politicians with
patriots who will honor their oath of office.
The last section of the book will cover the Social Security and
Medicare Programs and the use of our energy resources to end
our dependence on imported oil. We can fix the Social Security
and Medicare funding problems, without raising taxes or cutting
benefits, by using the oil and gas properties owned by the
Federal Government.
2
POLITICAL ACTION
IT'S A GERRYMANDERED COUNTRY
3
vote, in the general election, in excess of 50 percent.
David Horowitz lays out the details of what has happened to the
Democrat Party in The Shadow Party2. This book details how a
relatively small group of voters were able to elect extremists,
and take control of the Democrat Party. This strategy was
possible because of the low voter turnouts in partisan primaries.
A small number of activist voters can elect a candidate in a
primary election.
4
We are now living in a country where radicals rule, and the
Patriots must rise up and remove the radicals. If this is not
done, this country will not long endure.
5
IT'S AN OATH
Congress
“The Senators and Representatives before mentioned, and the
Members of the several State Legislatures, and all executive and
judicial Officers, both of the United States and of the several States,
shall be bound by Oath or Affirmation, to support this Constitution;
but no religious Test shall ever be required as a Qualification to any
Office or public Trust under the United States.”
All who take this oath need to understand what taking the oath
entails.
6
The individual promises to support and defend the Constitution
of the United States against all enemies, foreign and domestic .
The person taking the oath promises to bear true faith and
allegiance to the Constitution. The word allegiance imposes an
obligation of loyalty to the Constitution. This allegiance
supersedes loyalty to any political party, or special interest
group.
The statement that the person taking the oath takes the
obligation; “freely, without any mental reservation or purpose of
evasion”, requires the oath taker to make a solemn vow without
any unvoiced exceptions to the oath.
Any Congress person who votes for a bill he or she has not been
given time to read is violating the Oath of Office.
7
Judges
The oath of office for Judges6 is different than the oath for
members of Congress and the Executive Branch.
This oath does not include any provision allowing the laws of
other nations to be used. The U.S. Constitution is the
preeminent law of our country.
President
The President must also recite an oath of office. The oath for
the President is the only oath for which the wording is
8
specifically contained in the Constitution.
Military
The oath for officers is, first and foremost, an oath to support
and defend the U.S. Constitution. The oath is not a vow of fealty
to a specific individual, such as a President who is engaged in
developing a cult of personality.
“I, (state your name), do solemnly swear (or affirm) that I will
support and defend the Constitution of the United States
against all enemies, foreign and domestic; that I will bear true
faith and allegiance to the same; and that I will obey the orders
of the President of the United States and the orders of the
officers appointed over me, according to regulations and the
Uniform Code of Military Justice. So help me God.”
9
The military oath is similar to the oath taken by Congress and
the oath for enlisted personal includes following orders from
superiors. It must be noted that the first item stated in this oath
is allegiance to the U.S. Constitution.
10
HOW PEOPLE VOTE DOES MATTER
A HISTORY OF FISCAL MISFEASANCE
revised: 4/14/09
11
This table ( which shows debt held by the public, and
apparently does not show debt held by foreign governments
such as China ) shows a pattern of ever increasing budget
deficits over the last 40 years. The only on budget surplus
occurred in 1999 and 2000 which were the last years of the
Clinton administration. The total budget surplus in 1998 and
2001 occurred because the Social Security surplus is included in
government revenue.
We currently have a group of professional politicians in
Washington who think their job is to bring home the Bacon. The
deficits occur because they want to have money spent in their
home districts to show they are working for their constituents.
The taxpayers and voters are responsible for this sorry state of
affairs. Pork barrel projects are not paid for with free money
from Washington. They are paid for with tax dollars, or with
borrowed money, which will ultimately be our children's tax
dollars. All government borrowing puts the taxpayers on the
wrong side of the compound interest equation. The amount
needed to pay off this debt will be far in excess of the amount
borrowed because of interest added to the debt.
The earmarks and pork barrel projects usually benefit very few
people. When your Congress Critter boasts about how much
money is being spent in your Congressional District ( or state in
the case of a Senator ), ask yourself how much of this money
will benefit you? The answer is probably “none”. You need to
realize that Congress is spending your money to benefit others.
These others are probably individuals, or special interest
groups, who make campaign contributions to help the politician
get reelected.
Taxpayers and voters are ultimately responsible for our
government's current financial problems. As long as we reelect
Congress Critters who spend money on projects, which are not
limited to the legitimate functions of the Federal Government
set forth in the Constitution, this mess will continue. This book
is a call for action!
We need to remove all of the porkers in Congress. The Chapter
titled “Ignore what they say, watch how they vote!” contains a
copy of the roll call vote on the veto override of the pork laden
2007 Water Bill. By their vote on this bill, the porkers have
identified themselves. The list also details the individuals who
voted against the veto override. These individuals should be
12
praised.
We need to educate ourselves about the issues, positions and
voting record of candidates. If we fail to educate ourselves, we
are part of the problem. If we do not vote we are part of the
problem. If we are eligible to vote and have not registered to
vote, we are both irresponsible and a part of the problem.
We as taxpayers, and voters, need to elect representatives who
will limit spending to the necessary functions of government.
We need to elect patriots who will honor the oath of office.
13
IGNORE WHAT THEY SAY!
WATCH HOW THEY VOTE!
14
Roll Call Vote No. 1040 Tally – Vote to Override Veto of 2007 Water Bill
Yea : 361 Members
15
Roll Call Vote No. 1040 Tally – Veto Override Vote 2007 Water Bill Yea Votes
16
Roll Call Vote No. 1040 Tally – Veto Override Vote 2007 Water Bill Yea Votes
17
Nay : 54 Members Roll Call Vote 1040 – Vote to Override Veto of 2007 Water Bill
Not Voting : 17 Members Roll Call Vote 1040 – Vote to Override Veto of 2007 Water Bill
18
SENATE VOTE ON VETO OVERRIDE OF 2007 WATER BILL
Yea : 79 Members
Nay : 14 Members
19
In deciding how you will vote, you need to ignore what the
politicians say and watch how they vote. There is a group of
representatives in the Democrat Party who claim to be fiscally
conservative. None of these alleged Blue Dog democrats voted
against the veto override. To be fair, there were some who
simply did not vote. They apparently did not want to vote
against the party leadership. This 2007 Water Bill vote indicates
that most of these politicians will say what they think voters
want to hear, and in fact are not fiscally conservative. It is your
job as a voter to hold our politicians accountable, by ignoring
what they say and watching how they vote.
20
CHECKS AND BALANCES!
Honoring the oath of office requires our representatives to apply
the checks and balances contained in the Constitution 1. This
includes more than just voting against bills which violate the
Constitution.
The House of Representatives shall chuse their Speaker and other
Officers; and shall have the sole Power of Impeachment.
The Senate shall have the sole Power to try all Impeachments. When
sitting for that Purpose, they shall be on Oath or Affirmation. When
the President of the United States is tried, the Chief Justice shall
preside: And no Person shall be convicted without the Concurrence of
two thirds of the Members present.
Judgment in Cases of Impeachment shall not extend further than to
removal from Office, and disqualification to hold and enjoy any
Office of honor, Trust or Profit under the United States: but the Party
convicted shall nevertheless be liable and subject to Indictment, Trial,
21
Judgment and Punishment, according to Law.
The President, Vice President and all civil Officers of the United
States, shall be removed from Office on Impeachment for, and
Conviction of, Treason, Bribery, or other high Crimes and
Misdemeanors.
The judicial Power of the United States shall be vested in one supreme
Court, and in such inferior Courts as the Congress may from time to
time ordain and establish. The Judges, both of the supreme and
inferior Courts, shall hold their Offices during good Behavior, and
shall, at stated Times, receive for their Services a Compensation,
which shall not be diminished during their Continuance in Office.
Treason against the United States shall consist only in levying War
against them, or in adhering to their Enemies, giving them Aid and
Comfort. No Person shall be convicted of Treason unless on the
Testimony of two Witnesses to the same overt Act, or on Confession in
open Court.
The Congress shall have Power to declare the Punishment of Treason,
but no Attainder of Treason shall work Corruption of Blood, or
Forfeiture except during the Life of the Person attained.
Article VI.
The Senators and Representatives before mentioned, and the Members
of the several State Legislatures, and all executive and
judicial Officers, both of the United States and of the several States,
shall be bound by Oath or Affirmation, to support this Constitution;
but no religious Test shall ever be required as a Qualification to any
Office or public Trust under the United States.
22
These sections are extracted from the language in the U.S.
Constitution and are relevant because they apply to the power
of impeachment.
Bribery:
“The offering, giving, receiving,or soliciting of any thing
of value to influence action as official or in discharge of
23
legal or public duty. The corrupt tendering or receiving
of a price for official action. The receiving or offering of
any undue reward by or to any person or a public officer
to influence his behavior in office. The taking or giving a
reward for public office.”3
High Crimes:
High; “This term, as used in various compound legal
phrases, is sometimes merely an assignation of dignity,
not importing a comparison; but more generally it means
exalted, either in rank or location, or occupying a position
of superiority, and in a few instances it implies superiority
in respect to importance, size, frequency or publicity of
use”4
Felony:
“A crime of a graver or more atrocious nature than those
designated as misdemeanors. Generally a crime
punishable by death or imprisonment in a penitentiary.
And at common law, an offense occasioning total
forfeiture of land or goods to which capital or other
punishment might be superadded according to degree
of guilt.”5
Misdemeanors:
“Offenses lower than felonies and generally those
punishable by fine or imprisonment otherwise than in a
penitentiary.” “An act committed or omitted in violation
of a public law either forbidding or commanding it.”6
Civil Officer:
“The word 'civil', as regards civil officers, is commonly
used to distinguish those officers who are in public
service but not of the military. Hence, any officer of
the United States who holds appointment under the
national government, whether his duties are executive
24
or judicial, in the highest or the lowest departments of
the government, with the exception of officers of the
army or navy, is a 'civil officer.' ”7
25
EXCEPTIONS AND REGULATIONS
The previous chapter dealt with impeachment. Our Constitution
provides other checks which apply to the Judiciary. These
checks include the power to strip the Federal Courts of
appellate jurisdiction and to write regulations on appellate
Jurisdiction.
“The judicial Power shall extend to all Cases, in Law and Equity,
arising under this Constitution, the Laws of the United States, and
Treaties made, or which shall be made, under their Authority;to all
Cases affecting Ambassadors, other public Ministers and Consuls;to
all Cases of admiralty and maritime Jurisdiction; to Controversies to
which the United States shall be a Party; to Controversies between two
or more States; between a State and Citizens of another State; between
Citizens of different States; between Citizens of the same State
claiming Lands under Grants of different States, and between a State,
or the Citizens thereof, and foreign States, Citizens or Subjects.
In all Cases affecting Ambassadors, other public Ministers and
Consuls, and those in which a State shall be Party, the supreme Court
shall have original Jurisdiction. In all the other Cases before
mentioned, the supreme Court shall have appellate Jurisdiction, both
as to Law and Fact, with such Exceptions, and under such
Regulations as the Congress shall make.”
26
other than a simple majority vote of both houses of Congress, is
required. Also there is no provision for any appeal of the
decision. This action by Congress would be final.
You may ask yourself what is to stop the courts from simply
striking down any such exception or regulation passed by
Congress. The answer is simple, if any Judge were to try to
strike down such a law, that Judge would be committing a High
Crime. Any action by a Judge against a resolution restricting
appellate jurisdiction would be an attempt to strike down a
provision which is specifically allowed by the Constitution. Such
an act would be the highest of high crimes because it would be
an assault on the Constitution itself.
This is different than other areas where Congress has the power
to pass laws. Other laws are passed under the general
legislative power in Article I of the U.S. Constitution, which
requires a Presidential signature, and which are subject to
Judicial Review.
27
Representatives, and the Senate as a separate branches of
government with their own specified powers.
You may ask. Why do we need to limit the power of the courts?
The obvious answer can be demonstrated by the well known
case of Roe v. Wade. We have a case where an unconstitutional
decision by a District Court Judge is ultimately upheld by the
Supreme Court. This case then became the law of the land,
because lower courts are bound by Supreme Court Decisions.
This case was unconstitutional because it violated both the 5 th
and 14th Amendments to the constitution. The 5th and 14th
Amendments both provide that no person shall be deprived of
life, liberty or property without due process.
28
dozens of activist judges who need to be impeached.
29
A regulation is a set of rules, to provide individuals trying to
apply a law, and/or comply with a law, guidance regarding the
proper course of action required by the law. The regulation is
effectively a law and is binding.
You may ask yourself what is to stop the courts from simply
striking down any such Regulation passed by Congress. The
answer is the same as given for an exception stated previously.
If any Judge were to try to strike down such a Regulation, that
Judge would be committing a High Crime. Any action by a Judge
against such a Regulation, would be an attempt to strike down
30
guidance which is specifically allowed by the Constitution. Such
an act would be the highest of high crimes because it would be
an assault on the Constitution itself.
You may ask. Why do we need to limit the power of the courts?
The obvious answer is that the Federal Courts cannot be trusted
to properly interpret the U.S Constitution. There have been a
number of Federal Court decisions in recent years which violate
the U.S Constitution.
When this power is first used, it will probably require that some
federal judges be fired. Our judges are used to having god like
power to determine what the Constitution means, and they will
not share this power willingly. Voters need to elect
representatives and senators who will act to stop the abuse of
the Constitution by the judiciary.
31
The exceptions and regulations discussed here would put the
federal judges on notice that they are subject to restrictions.
Such notice is needed in the normal course of business, to allow
the necessary latitude, for our federal judges to do their jobs.
32
STOPING THE CULTISTS AND THEIR
PUPPET MASTERS
There are two groups of radicals who will destroy our country if
they are not stopped. When a person considers the final result
of the actions being pursued, it is apparent that our destruction
is intended. Both of the groups have used the big lie strategy
promulgated by Hitler's propaganda minister Joseph Goebbels.
The idea of the big lie is that, if you tell a lie often enough,
people will begin to believe it.
Cults develop when their puppet masters sound sincere and use
carefully tailored half truths, to get their followers to believe the
lie. These people can then be developed into a cult of true
believers who will spread the lie. The followers of cults usually
believe that their actions are for the good of the the country
and the world. Because they believe they are doing good, it is
essential that they be brainwashed, or not exposed to other
ideas, so that they will reject any inconvenient facts.
33
environmentalists, who should be considered as eco-terrorists,
will probably wait until construction has started, before filing
suit. This wait would occur, because they want to inflict the
maximum amount of financial pain.
The cult of global warming, and it's variations, has given us the
environmental extremists. I have labeled these individuals as
eco-terrorists. Eco4 is a combining form for ecology and the
environment. A terrorist is a person who commits acts of
terrorism. Terrorism5 is “the use of violence and threats to
intimidate or coerce, especially for for political purposes”.
_______________________________________________________________
JOINT RESOLUTION
34
WHEREAS: In recent years, the courts have been used to block
the development of oil, mineral and other resources.
_______________________________________________________________
The damage being done is real and getting worse. The eco-
terrorists who have been elected to positions of power in our
government have recently taken control of General Motors and
Chrysler. After this takeover they have terminated the
franchises of 789 Chrysler dealerships 6 and 1,100 GM
dealerships7 will be terminated by 2010. These dealers are not
part of the corporations, and there is no valid business reason
to eliminate a large portion of a company's sales outlets.
This action will force the auto dealers into an action they would
not otherwise pursue.
35
to achieve their political ends. The observer may think that the
goal is to promote a specific, if misguided, environmental
agenda. This may be true for the global warming cultists, but
the political goal3 of the puppet masters behind the cult is even
more sinister. The real political agenda of the eco-terrorists is
discussed in the chapter titled Conservative not Regressive.
The effort to control and limit the level of carbon dioxide is even
more absurd. Carbon dioxide is essential for life on earth. Life
on this planet is carbon based. The plants and animals are
carbon based life forms. We breath in oxygen and exhale
carbon dioxide. Plants breath in carbon dioxide, and extract the
carbon through a process known as photosynthesis 8. The plants
then exhale oxygen. This carbon and oxygen life cycle is grade
school science.
36
global warming deniers. This is further proof that global
warming is a religion, and worse yet, a cult.
37
FINAL VOT E RESULT S FOR ROLL CALL 477
Ayes 219
38
Ayes - Continued
Nays 212
39
Nays - Continued
40
Nays - Continued
NOT VOTING
Any patriot, who was one of the auto dealers stripped of his
franchise in a Congressional District represented by one of the
people who voted for this bill, should consider answering the
call made by this book. You will already have name recognition
in your community, and you have a personal reason to act.
41
CONSERVATIVE, NOT REGRESSIVE
A previous chapter discussed the global warming cultists.
Another cult, trying to destroy the U.S.. is the group of people
who worship at the altar of free trade. Many of the followers of
this cult claim to be conservative. These individuals are
promoting policies and actions which are destroying our
manufacturing base and our middle class. Such policies and
actions are not conservative. A conservative 1 is one who is
disposed to preserve existing conditions, institutions, etc., or to
restore traditional ones, and to limit change.
This trade is not free for the United States, and the job losses
we have suffered over the last several decades is the cause of
our current financial distress. The loss of a good paying
manufacturing job, with benefits, forces most workers
into service jobs, at low pay with no benefits. Most of these
people must then refinance their homes, to get a lower
payment, so they can survive. This migration of workers, down
the income ladder, is the source of most of the sub-prime
mortgage market. When we then have a large increase in food
42
and fuel prices, these individuals must choose between eating
and paying the mortgage. The spike in food and fuel prices,
during the summer of 2008, tipped us over the edge and
precipitated the current nationwide financial distress.
The free traders are shipping our plants, and jobs, to countries
like China and India, to promote the growth of other countries'
economies. Wanting other countries to have growing economies
and to prosper is a noble purpose. The problem is that the
43
globalists are promoting the growth of other countries at the
expense of America's workers and middle class.
The members of the global warming cult, and the free trade cult
are working together to destroy America. They will deny this
contention, but the final result of their actions will be the
destruction of our economy and of our way of life.
The actions taken are allegedly for our good, while having an
underlying purpose of destroying our country and our
Constitution. The ultimate goal is to have a one world
government where nations will not be able to make war against
each other. This may sound like a good idea, but is not. It will be
necessary to destroy our Constitution, before the U.S. can be
part of a one world government. When our Constitution is
destroyed, there will be no freedoms or personal liberties.
44
and political parties, is shown by the efforts of the Republican
Party to promote the so called Fair Tax. This tax was very slickly
promoted with a lot of half truths and disinformation. After a
career in the IRS where I worked in every noncriminal
enforcement position, I have some knowledge of how taxes
work.
The Fair Tax is a national sales tax, on goods and services, and
is being promoted as a way to get rid of the Income Tax and the
IRS. It will do neither. A sales tax on both goods and services
will be a flat tax on the gross income ( not net income ), of
every business owner and professional person. This type of tax
would shift the collection, and paying, of the entire tax burden
onto the backs of our business owners and professionals.
45
would be through the use of a revenue tariff on all imports of
goods and services. This would shift the tax burden onto the
backs of the globalist multi-national corporations, who are
shipping our manufacturing plants, and jobs, to third world
countries. This action would also level the playing field in
international trade, and stop the outsourcing of our jobs.
Most nations around the world use a value added tax on their
manufactured goods. This tax is a hidden sales tax, which is
calculated on the value added to the product at each step of
the manufacturing and distribution process. This tax is then
rebated to the business which exports the product. The effect of
this action is to provide a government subsidy for exports.
The income tax system in the United States does not provide a
subsidy for exports, and as a result our companies are at a
competitive disadvantage in international trade. Free trade does
not exist in international commerce.
The repeal of the 16th Amendment to get rid of the income tax
and the use of a revenue tariff is a much better approach to
meaningful tax reform. Tariffs are collected by the Customs
Department, not the IRS. This action, combined with the
restructuring of Social Security described in this book, would
allow for the complete and permanent elimination of the IRS.
46
Sarah Palin as his choice for Vice President. The globalists
looked at her, and decided they would not be able to control
her. They did not want to consider the possibility of having a
person, who had not signed on to the globalist agenda, in the
Oval Office.
47
SOCIAL SECURITY
48
corporation would be funded by charging a fee to the
trust fund in the same way Insurance Companies and
Mutual Fund Companies charge an expense against
assets under management.
This book was prepared because the Social Security System can
be fixed without raising taxes or cutting benefits. The chapters
containing evaluations of the Social Security and Medicare
systems contain an explanation of the benefit computation and
illustrations showing the asset accumulation and benefit
payments for a hypothetical average participant. For those who
don't want to go over the details, the proposal to fix Social
Security can be summarized by saying we must stop Congress
from spending the contributions to the system, by setting up an
actual pension type of trust fund, and then we must fund the
trust fund.
49
The needed funding of an actual pension style trust can be
accomplished without raising taxes or cutting benefits, which is
the proposal being made by our elected representatives, who
want to be able to continue to spend the Social Security
Surplus.
The only reason there is a pending problem with Social Security
is that Congress has spent all of the money 2. This problem
occurred because Congress did not set up an actual trust fund
to invest the contributions ( payroll and self employment taxes )
made by participants and employers. This has resulted in what
has been described as an unsustainable socialist Ponzi scheme.
The current structure was allowed by a Supreme Court which
was responding to severe financial distress during the
depression of the 1930s. In allowing the current system to
stand, the court ignored provisions in the U.S. Constitution and
is partly responsible ( along with Congress ) for the current
financial problems afflicting this country. Because the Supreme
Court ignored explicit restrictions in the Constitution, we can
add unconstitutional to our description of the current system.
For more details on the Supreme Court decisions, review the
chapters on the decisions.
These problems with the Social Security System can be fixed, so
that the system will be self sustaining, and no longer in
violation of the Constitution. We need to set up a pension style
trust fund, which holds actual income producing assets which
can be used to pay for Social Security benefits. By using the
rights to oil and gas properties now owned by the federal
government, we can also end our dependence on oil imported
from the middle east. The potential leasing and royalty revenue
from our oil properties will provide a stream of revenue which
will increase with inflation, and can be used to pay for Social
Security benefits.
These changes will eliminate almost half of the Federal Budget
and pave the way for the complete, total, and permanent
elimination of the IRS. We can then repeal the 16 th Amendment
and replace the Income Tax with a Revenue Tariff, which was
the primary source of tax revenue for the first 140 years of our
country's history.
Tariffs are collected by the Customs Department and not the
IRS, which collects Income, Payroll and Excise Taxes. Using a
Revenue Tariff, as the primary source of our country's tax
50
revenue, will level the international playing field and stop the
outsourcing of our jobs to third world sweat shops.
This change to the tax structure will get the government out of
the lives of most citizens because the income tax is used to
micromanage our lives.
51
HISTORICAL BACKGROUND OF SOCIAL SECURITY
52
out of 224 American factories investigated, 71, or almost one
third, had fixed maximum hiring age limits; in 4 plants, the
limit was under 40; in 41, it was under 46. In the other 153
plants, there were no fixed limits, but in practice few were
hired if they were over 50 years of age. With the loss of savings
inevitable in periods of idleness, the fate of workers over 65,
when thrown out of work, is little less than desperate. A recent
study of the Social Security Board informs us that
53
Social Security and the 4th quintile receives 2/3 of their income
from Social Security and pension programs. Only the highest
quintile receives most of it's income from assets and earnings
on those assets.
My personal experience, during the 15 years of my career in the
IRS spent working with pension plans and the 10 years in
private industry as a third party pension administrator, indicate
that individuals in the bottom half of the income spectrum do
not save for retirement. As an individual in the top half of the
income ladder has an increase in his/her level of income, he/she
will also have in increase in the contributions to a retirement
savings program. The reason for the lack of retirement saving at
the lower levels of income is simple. The poor can not afford to
save for retirement. Without the Social Security System, these
individuals would end up on welfare or as a burden to their
families.
Our retirees need the dignity that comes from receiving an old
age pension that they paid for with their own contributions.
Another major consideration is that we need to have the power
of compound interest working to cover the cost of these
benefits. A pay as you go welfare plan costs 5 times as much as
a properly funded pension plan.
The 1935 Social Security Act provided unemployment
insurance5 and old age and survivors benefits6. Disability
benefits7 were added in 1957 and medical benefits ( Medicare )8
was added in 1965. There have been other enhancements over
the life of the program, such as the indexing 9 of benefits for
inflation in 1975. Prescription drug coverage 10 was added to
Medicare starting in in 2006.
Both the rate of taxation to fund the program and the amount
of income subject to the payroll tax for retirement and disability
benefits have been steadily increased. There has never been a
cap on the amount of income subject to the Medicare Tax. The
following tables from the 2009 OASDI Annual Report, officially
Titled “The 2009 Annual Report of the Board of Trustees of the
Federal Old-Age and Survivors Insurance and Federal Disability
Insurance Trust Funds”, show how much the tax and the income
subject to taxation has been increased.
The following table11 shows the contribution rates for the OASDI
and Medicare programs combined.
54
Table VI.F1.—Contribution Rates for the OASDI and HI Programs[In percent]
Employees and employers, each Self employed
Calendar years OASDI HI Combined OASDI HI Combined
1966 3.85 0.35 4.2 5.8 0.35 6.15
1967 3.9 0.5 4.4 5.9 0.5 6.4
1968 3.8 0.6 4.4 5.8 0.6 6.4
196970 4.2 0.6 4.8 6.3 0.6 6.9
197172 4.6 0.6 5.2 6.9 0.6 7.5
1973 4.85 1 5.85 7 1 8
197477 4.95 0.9 5.85 7 0.9 7.9
1978 5.05 1 6.05 7.1 1 8.1
197980 5.08 1.05 6.13 7.05 1.05 8.1
1981 5.35 1.3 6.65 8 1.3 9.3
198283 5.4 1.3 6.7 8.05 1.3 9.35
19841 5.7 1.3 7 11.4 2.6 14
1985 5.7 1.35 7.05 11.4 2.7 14.1
198687 5.7 1.45 7.15 11.4 2.9 14.3
198889 6.06 1.45 7.51 12.12 2.9 15.02
1990 and later 6.2 1.45 7.65 12.4 2.9 15.3
55
T able VI.A1.—Cont ribut ion and Benefit Base and Cont ribut ion Rat es
Calendar Contribution Contribution rates (percent)
Years and benefit Employees and employers, each Self-employed
base OASDI OASI DI OASDI OASI DI
1937-49 $3,000.00 1 1— — — —
1950 $3,000.00 1.5 1.5 — — — —
1951-53 $3,600.00 1.5 1.5 — 2.25 2.25 —
1954 $3,600.00 2 2— 3 3—
1955-56 $4,200.00 2 2— 3 3—
1957-58 $4,200.00 2.25 2 0.25 3.38 3 0.38
1959 $4,800.00 2.5 2.25 0.25 3.75 3.38 0.38
1960-61 $4,800.00 3 2.75 0.25 4.5 4.13 0.38
1962 $4,800.00 3.13 2.88 0.25 4.7 4.33 0.38
1963-65 $4,800.00 3.63 3.38 0.25 5.4 5.03 0.38
1966 $6,600.00 3.85 3.5 0.35 5.8 5.28 0.53
1967 $6,600.00 3.9 3.55 0.35 5.9 5.38 0.53
1968 $7,800.00 3.8 3.33 0.48 5.8 5.09 0.71
1969 $7,800.00 4.2 3.73 0.48 6.3 5.59 0.71
1970 $7,800.00 4.2 3.65 0.55 6.3 5.48 0.83
1971 $7,800.00 4.6 4.05 0.55 6.9 6.08 0.83
1972 $9,000.00 4.6 4.05 0.55 6.9 6.08 0.83
1973 $10,800.00 4.85 4.3 0.55 7 6.21 0.8
1974 $13,200.00 4.95 4.38 0.58 7 6.19 0.82
1975 $14,100.00 4.95 4.38 0.58 7 6.19 0.82
1976 $15,300.00 4.95 4.38 0.58 7 6.19 0.82
1977 $16,500.00 4.95 4.38 0.58 7 6.19 0.82
1978 $17,700.00 5.05 4.28 0.78 7.1 6.01 1.09
1979 $22,900.00 5.08 4.33 0.75 7.05 6.01 1.04
1980 $25,900.00 5.08 4.52 0.56 7.05 6.27 0.78
1981 $29,700.00 5.35 4.7 0.65 8 7.03 0.98
1982 $32,400.00 5.4 4.58 0.83 8.05 6.81 1.24
1983 $35,700.00 5.4 4.78 0.63 8.05 7.11 0.94
1984 $37,800.00 5.7 5.2 0.5 11.4 10.4 1
1985 $39,600.00 5.7 5.2 0.5 11.4 10.4 1
1986 $42,000.00 5.7 5.2 0.5 11.4 10.4 1
1987 $43,800.00 5.7 5.2 0.5 11.4 10.4 1
1988 $45,000.00 6.06 5.53 0.53 12.12 11.06 1.06
1989 $48,000.00 6.06 5.53 0.53 12.12 11.06 1.06
1990 $51,300.00 6.2 5.6 0.6 12.4 11.2 1.2
1991 $53,400.00 6.2 5.6 0.6 12.4 11.2 1.2
1992 $55,500.00 6.2 5.6 0.6 12.4 11.2 1.2
1993 $57,600.00 6.2 5.6 0.6 12.4 11.2 1.2
1994 $60,600.00 6.2 5.26 0.94 12.4 10.52 1.88
1995 $61,200.00 6.2 5.26 0.94 12.4 10.52 1.88
1996 $62,700.00 6.2 5.26 0.94 12.4 10.52 1.88
1997 $65,400.00 6.2 5.35 0.85 12.4 10.7 1.7
1998 $68,400.00 6.2 5.35 0.85 12.4 10.7 1.7
1999 $72,600.00 6.2 5.35 0.85 12.4 10.7 1.7
2000 $76,200.00 6.2 5.3 0.9 12.4 10.6 1.8
2001 $80,400.00 6.2 5.3 0.9 12.4 10.6 1.8
2002 $84,900.00 6.2 5.3 0.9 12.4 10.6 1.8
2003 $87,000.00 6.2 5.3 0.9 12.4 10.6 1.8
2004 $87,900.00 6.2 5.3 0.9 12.4 10.6 1.8
2005 $90,000.00 6.2 5.3 0.9 12.4 10.6 1.8
2006 $94,200.00 6.2 5.3 0.9 12.4 10.6 1.8
2007 $97,500.00 6.2 5.3 0.9 12.4 10.6 1.8
2008 $102,000.00 6.2 5.3 0.9 12.4 10.6 1.8
2009 $106,800.00 6.2 5.3 0.9 12.4 10.6 1.8
56
This shows both the need for a retirement program and the
steady increase in both the benefits and the cost of the
program.
The Medicare tax has been increased several times and has no
earnings cap on salary, to limit the amount being paid for
Medicare. The problem is that payroll taxes have already been
increased to a level which is intolerable for the self employed
who pay both halves of the tax, and very painful for employees.
There is a limit to the amount of payroll taxes the public can
tolerate.
The ability of Congress to impose these intolerably high taxes is
explained, by analogy, with the instructions for cooking a live
frog. If you toss the frog into a pot of hot water, the frog will
jump out. If you put the frog into a pot of unheated water, and
slowly increase the heat, the frog will not notice what is
happening and you will soon have a cooked frog.
57
WHAT IS A PENSION PLAN?
58
made at present. We are very close to reaching the time
when these contributions will not be sufficient to pay the
benefits due the Social Security and Medicare recipients.
2. Earnings on invested assets. Currently, the only assets in
the so called trust funds, are special issue government
securities1,2. These securities are nothing more than an
accounting entry on the books at the Treasury
Department. The interest is being credited at the rate of
return for short term treasury bonds. The crediting of this
interest is nothing more than a bookkeeping entry which
increases the amount in the so called trust fund. Any
payment of benefits from the earnings will require
additional taxes, because there are no actual assets
currently generating income needed to pay benefits. The
taxpayers are on the hook for all payments from the
earnings on these, so called, assets. Borrowing to pay
these benefits will simply defer, and increase, the
amount of taxes needed.
3. The assets being held by the pension plan. Currently, the
only assets are the special issue government securities
mentioned above. Paying down these assets will require
additional taxes, because these so called securities are
liabilities of the U.S. Government. These assets already
represent amounts which have been borrowed.
We need to exchange the special issue securities, for actual
assets earning income which can be used to pay benefits. If this
exchange is not made, we will have a massive increase in taxes.
There is a way to fix the Social Security System. The way we
can fix this problem, is by electing representatives to Congress
who will commit to setting up a pension style trust fund and
transferring income producing assets into the trust. Assets
producing income, which can be used to pay benefits.
Exchanging the current special issue government securities for
assets, which can produce income to pay benefits, will both
reduce the amount of the national debt, and solve the funding
problems of the Social Security System.
Another reason, we need to have actual assets in an actual
Social Security Trust Fund, is that the recent actions by the
Federal Reserve to stimulate the economy, and Congress to bail
out the major banks, will result in much higher inflation rates
and higher interest rates. The trust fund will need actual assets
59
such as the drilling rights in ANWR, the continental shelves and
the mineral rights on properties located in the inter-mountain
west, since actual assets will increase in value and compensate
for inflation. Other properties which can be transferred to the
trust fund are the stocks the Treasury Dept. received in
exchange for the bailout funds. Transferring stocks held by the
government to a pension trust will remove the companies,
affected by the transfer, from the control of the government. A
pension trust will either hold the stocks as an investment, or
sell the stocks to raise cash for reinvestment.
The pension funds are what is known as institutional investors.
The purpose of institutional investors is to professionally
manage investments for the beneficiaries of the assets being
invested. These institutional investors are the backbone of our
capitalist economic system, because they buy the stocks and
bonds issued by our corporations.
A prudently invested pension portfolio would have a far larger
return on investments, than the current investments in special
issue government securities.
The following illustration comparing the returns from the
California Personal Employment Retirement Program3 with the
returns on the Special Issue Government Securities 4, shows that
a prudently invested pension plan can be reasonably expected
to have an 8% or higher average rate of return on invested
assets.
Royalty and lease income from oil and gas properties currently
owned by the Federal Government will result in a substantially
higher return on investment.
60
HISTORICAL RATES OF RETURN FROM INFO ON CALPERS3 AND SOCIAL SECURITY SITES4
SOC. SEC. CALPERS CALPERS
YEAR END YEAR END YEAR END
12/31 6/30 12/31
1984 12.40% 3.10% 12.90%
1985 10.78% 35.40% 28.00%
1986 7.91% 24.60% 15.90%
1987 8.40% 13.80% 4.30%
1988 8.82% 3.90% 12.80%
1989 8.66% 15.70% 21.30%
1990 8.63% 9.70% 0.80%
1991 7.96% 6.50% 23.00%
1992 7.08% 12.50% 6.50%
1993 6.06% 14.50% 13.40%
1994 7.05% 2.00% 1.00%
1995 6.88% 16.30% 25.30%
1996 6.59% 15.30% 12.80%
1997 6.59% 20.10% 19.00%
1998 5.63% 19.50% 18.50%
1999 5.87% 12.50% 16.00%
2000 6.24% 10.50% 1.40%
2001 5.23% 7.20% 6.20%
2002 4.87% 5.90% 9.50%
2003 4.07% 3.90% 23.30%
2004 4.27% 16.70% 13.40%
2005 4.31% 12.70% 11.10%
2006 4.82% 12.30% 15.70%
2007 4.66% 19.10% 10.20%
2008 3.64% 4.90% 27.10%
167.40% 276.40% 257.40%
DIV BY 25 DIV BY 25 DIV BY 25
AVERAGE 6.70% 11.06% 10.30%
============ ============ ============
The above figures are for the periods ended on June 30 and
December 31 of the years from 1984 through 2008. These
figures for return on assets demonstrate that an actual trust
fund can earn substantially more than the amounts being
credited to the Social Security accounts. A simple average was
used to keep the methodology the same for the comparison
between the return on the Social Security assets and the
CALPERS assets. A weighted average is more appropriate when
calculating the rate of return. The News Release issued with the
release of the 2009 OASDI Annual Report indicates the
effective annual rate of return was 5.1% in 2008.
To further demonstrate that the interest rate of 8% percent
which is used in illustration number 9 ( in the chapter
61
evaluating a combined Social Security and Medicare funding
model ), I have listed the valuation interest rate used by several
large defined benefit plans. Pension plans of U.S. corporations
must file a Form 5500, which is public information. The
Schedule B of this return contains the actuarial information for
these plans. This information is from the Schedule B of these
returns. The plans listed have nothing in common except that
they all have assets of several billion dollars. All of these plans
are using interest of 8% or higher to project the rate of return
on invested assets. The 2007 years were used because these
were the latest years for which the forms were available at the
time this book was written.
INTEREST RATES USED TO ESTIMATE FUTURE EARNINGS BY SOME LARGE DEFINED BENEFIT PLANS
VALUATION
COMPANY YEAR ASSETS INT RATE
62
cycles. This type of investment fund does not currently exist,
because all interest and principal payments from the current
system, must come from the taxpayers, not from invested
assets.
An illustration showing the hypothetical growth of a social
security trust fund which earned just 90% of the return shown
by the California Personal Employment Retirement Program 3
( CALPERS ) trust fund, shows assets would be almost 1.5 trillion
dollars larger than the current trust fund, which is invested is
special issue government securities.
HYPOTHETICAL TRUST FUND EARNING 90 PERCENT OF THE CALPERS RETURN
RETURN AT BALANCE
CALPERS 90.0% OF SOC SEC FORWARD
RATE OF CALPERS SURPLUS PLUS
RETURN RATE FOR YR SURPLUS
IF THE SOCIAL SECURITY TRUST FUND HAD BEEN INVESTED IN FINANCIAL ASSETS
EARNING 90% OF THE YIELD ON THE CALPERS TRUST FUND. THERE WOULD HAVE
BEEN ALMOST 1.5 TRILLION DOLLARS MORE IN THE FUND. THIS COMPUTATION
CONSIDERS THE YEARS WHERE CALPERS HAD LOSSES.
63
The rate of return for the California Personal Employment
Retirement Program is much higher than the return for the
current Social Security account at the Treasury Department.
The inclusion of royalties from the Oil and Gas properties held
by the federal government can substantially improve the return
on assets. A further consideration is that the royalty income will
increase as oil prices increase with inflation. The failure to
diversify the investment mix, and have a reasonable rate of
return on assets indicates the current system would not meet
the fiduciary standards expected from corporate plans. The
investment of assets in an employer's securities at very low
rates of return would be considered a prohibited transaction in a
corporate plan.
Establishing a pension style trust fund would also give us a
vehicle which can be used to remove government ownership
from companies like General Motors and Chrysler. An
institutional investor such as a pension plan will hold company
stock for dividends or capital appreciation. This stock would be
sold when necessary to raise capital for investment in other
investments necessary to provide a diversified investment
portfolio. Our government has no business owning or running
individual companies, and government ownership of these
companies must end.
When an actual pension style trust fund is established, it will be
a gigantic pool of investment capital and spur the development
of our economy.
64
EVALUATION OF THE SOCIAL SECURITY FUNDING MODEL
65
for Short Term Government Bonds ). The resulting balance on
the books at the Treasury Department constitutes the OASDI
and Medicare Trust Funds. These securities are not the Short,
Intermediate or Long Term Bonds which are purchased on the
open market, or from the Government directly, to fund
corporate pension plans. Actual government bonds can be
bought and sold on the open market, and pay periodic interest
payments which can be reinvested.
There are no actual Trust Funds, with assets earning a
reasonable rate of return, being prudently invested for the
benefit of the participants in the system. The crediting of
interest at the rate on Special Issues is a sweetheart deal for
government, and a very poor deal for Social Security, because
the rate of earnings is not sufficient to provide the needed
funds to pay projected benefits. To illustrate this we have
prepared a set of illustrations showing the benefit computation
for a hypothetical average participant in Social Security, who
started working at age 18 earning the minimum wage, and
retired at age 66 earning the average wage in 2008 per figures
from the Social Security Annual Report 2.
The computation of the benefit is based on a complicated
formula using an index based on the increases in average
wages over a workers lifetime. There is a work sheet, and a
benefit calculator, available on the Social Security Web Site 3.
The following computation is based on the worksheet for a
person retiring at the end of 2008. The index amounts change
every year and the bend points in the computation are adjusted
for inflation every year also. The beginning salary for our
hypothetical average participant is based on 40 hours per week
at 1 dollar per hour ( the minimum wage in 1960 ) for 52
weeks. An annual increase in salary is applied each year to get
the Social Security average salary for 2008 at retirement.
The benefit is calculated on the high 35 years of indexed
earnings. It is interesting to note that in our computation, for a
hypothetical average participant, the high 35 years are not the
last 35 years. Anyone who uses the worksheet on the Social
Security Web Site should use care in making the computation of
their own benefits.
This salary and benefit calculation is being made to analyze the
funding model for Social Security. I was taught by an IRS
actuary in one of my classes on auditing Defined Benefit Plans
66
that, if the funding model will work for the average participant
in a large Defined Benefit Plan, the model will work for the
entire plan. Also, the accumulation of assets and the amount of
benefits can be comprehended for a single individual. It is
simply not possible for a non actuary to comprehend the figures
for the entire Social Security System.
The computation of the Social Security Benefit uses what are
referred to as indexed earnings. A person's actual wages are
adjusted for the increase in wages over the individual's working
lifetime. The highest 35 years are then determined and added
up. This total is then converted to the person's AIME ( Average
Indexed Monthly Earnings ). This is done by dividing the total by
420 ( 35 years times 12 months per year ) to get an average
monthly earnings figure. If the person has less than 35 years of
salary, the method effectively uses a zero for every year with
no earnings. The monthly benefit is then calculated by applying
the benefit formula to the resulting AIME. For 2008 this formula
provides for 90% of the first $744, 32% of the amount between
$744 and $4,483 of AIME, and 15% of the amount of the AIME
above $4,483. The computation for our hypothetical participant
is shown in the first spreadsheet illustration.
The second illustration in this report indicates that the assets
accumulated using the actual contribution percentages for our
average participant would only last 16 years. This is significant
since the actuarial tables used by the social security system
indicate a male will have a life expectancy of 15.64 years and a
female will have a life expectancy of 18.43 years for a
participant retiring at age 66. Since we are making calculations
for an average participant, and not for a male or female, our
target for life expectancy is 18 years because it is between the
male and female ages and somewhat closer to the female age.
Also it is a round number to use as a target, and sufficiently
conservative to prevent our hypothetical average participant
from outliving our projected assets. We want to determine if the
current contributions are sufficient to pay for the benefits of our
hypothetical average participant.
The third illustration indicates that, if the current tax rates were
applied to all years, the assets would last well past our
participant's life expectancy. Since the assets will last longer
than our average participant is expected to live, there is no
need to raise taxes or cut benefits. If the plan is provided the
necessary funds to cover the current shortfall caused by the
67
spending of assets, which should have been invested, the
current level of contributions will be enough to adequately fund
the old age pension portion of the plan.
Illustration 3, shown below, ends with a computation which
shows our average participant will receive benefits which are
over 5 times the amount of the contributions. This difference
should be paid out of the earnings on assets invested over the
participant 's 49 year working lifetime. Because there are no
assets in the so called trust accounts, the taxpayers will have to
pay 5 dollars to cover each 1 dollar looted from the Social
Security Funds by Congress. This payment is in addition to the
payments already made by the participant during his working
career.
Both illustration 2 and illustration 3 use a 6% estimate for
return on post retirement assets and a 4% adjustment for
inflation. These amounts were chosen because it is probable
that we are moving into an era of higher inflation and higher
interest rates. The use of 6% is an estimate of probable future
earnings using the special issue securities.
The tax rates shown in these examples include the cost of the
survivor and disability benefits which are being subtracted
before the pension contribution is computed. The survivor and
disability cost is a true insurance benefit. The life insurance
benefits are paid to a surviving spouse and minor children in
the form of an annuity. The disability benefit pays a monthly
payment to a disabled individual and to minor children of the
individual. These insurance benefits do not lend themselves to
the type of analysis that is applied to pension benefits since
death and disability can occur at any age. Because of these
facts, disability and survivor costs are being subtracted from
assets shown in the illustrations. The history and experience
with the Survivors and Disability Trust Fund indicates that the
proposed changes to the Old Age ( pension ) Trust fund will
correct any potential problems with the Survivors and Disability
Trust Fund.
These illustrations are set up using a computerized
spreadsheet. This method allows the use of linked cells in the
spreadsheet so that changing the value of a cell set up with a
variable will change the computations in the entire spreadsheet.
Using this methodology, we can estimate how long the assets
contributed will last, if invested in an actual trust fund.
68
ILLUSTRATION 1
69
Illustrations 2 through 5 are designed to determine how long
the assets from a participant's Social Security contributions will
last using various scenarios. These projections are set up using
conservative assumptions because we want to be certain that
our hypothetical Social Security Beneficiary will not outlive
his/her assets.
70
ILLUSTRATION 2
WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INTEREST ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT $ COST $ CONT $ RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 5.00% 104.00 37.44 66.56 NA 66.56
19 1961 2,214.04 4,800.00 2,214.04 6.25% 138.38 39.85 98.52 3.854% 167.65
20 1962 2,356.72 4,800.00 2,356.72 6.25% 147.29 42.42 104.87 3.854% 278.99
21 1963 2,508.59 4,800.00 2,508.59 7.25% 181.87 45.15 136.72 3.906% 426.60
22 1964 2,670.25 4,800.00 2,670.25 7.25% 193.59 48.06 145.53 4.135% 589.77
23 1965 2,842.33 4,800.00 2,842.33 7.25% 206.07 51.16 154.91 4.198% 769.43
24 1966 3,025.49 6,600.00 3,025.49 7.70% 232.96 54.46 178.50 4.948% 986.01
25 1967 3,220.46 6,600.00 3,220.46 7.80% 251.20 57.97 193.23 4.958% 1,228.12
26 1968 3,427.99 7,800.00 3,427.99 7.60% 260.53 61.70 198.82 5.479% 1,494.24
27 1969 3,648.90 7,800.00 3,648.90 8.40% 306.51 65.68 240.83 6.594% 1,833.59
28 1970 3,884.04 7,800.00 3,884.04 8.40% 326.26 69.91 256.35 7.260% 2,223.06
29 1971 4,134.34 7,800.00 4,134.34 9.20% 380.36 74.42 305.94 5.979% 2,661.92
30 1972 4,400.77 9,000.00 4,400.77 9.20% 404.87 79.21 325.66 5.927% 3,145.35
31 1973 4,684.36 10,800.00 4,684.36 9.70% 454.38 84.32 370.06 6.646% 3,724.45
32 1974 4,986.23 13,200.00 4,986.23 9.90% 493.64 89.75 403.88 7.490% 4,407.30
33 1975 5,307.56 14,100.00 5,307.56 9.90% 525.45 95.54 429.91 7.396% 5,163.17
34 1976 5,649.59 15,300.00 5,649.59 9.90% 559.31 101.69 457.62 7.313% 5,998.37
35 1977 6,013.66 16,500.00 6,013.66 9.90% 595.35 108.25 487.11 7.083% 6,910.34
36 1978 6,401.19 17,700.00 6,401.19 10.10% 646.52 115.22 531.30 8.198% 8,008.15
37 1979 6,813.70 22,900.00 6,813.70 10.16% 692.27 122.65 569.63 9.115% 9,307.72
38 1980 7,252.79 25,900.00 7,252.79 10.16% 736.88 130.55 606.33 11.000% 10,937.90
39 1981 7,720.17 29,700.00 7,720.17 10.70% 826.06 138.96 687.10 13.333% 13,083.35
40 1982 8,217.68 32,400.00 8,217.68 10.80% 887.51 147.92 739.59 12.865% 15,506.11
41 1983 8,747.24 35,700.00 8,747.24 10.80% 944.70 157.45 787.25 10.135% 17,864.91
42 1984 9,310.94 37,800.00 9,310.94 11.10% 1,033.51 167.60 865.92 12.396% 20,945.36
43 1985 9,910.95 39,600.00 9,910.95 11.40% 1,129.85 178.40 951.45 10.781% 24,154.93
44 1986 10,549.64 42,000.00 10,549.64 11.40% 1,202.66 189.89 1,012.77 7.906% 27,077.38
45 1987 11,229.48 43,800.00 11,229.48 11.40% 1,280.16 202.13 1,078.03 8.396% 30,428.83
46 1988 11,953.13 45,000.00 11,953.13 12.12% 1,448.72 215.16 1,233.56 8.823% 34,347.13
47 1989 12,723.42 48,000.00 12,723.42 12.12% 1,542.08 229.02 1,313.06 8.656% 38,633.27
48 1990 13,543.34 51,300.00 13,543.34 12.40% 1,679.37 243.78 1,435.59 8.625% 43,400.99
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 7.958% 48,382.95
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 7.083% 53,436.49
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 6.062% 58,407.21
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 7.052% 64,369.07
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 6.875% 70,756.18
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 6.594% 77,510.01
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 6.594% 84,843.75
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 5.625% 91,982.17
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 5.865% 99,895.36
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 6.240% 108,809.56
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 5.229% 117,352.69
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 4.865% 126,099.26
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 4.073% 134,468.38
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 4.271% 143,652.97
63 2005 34,558.68 90,000.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 4.312% 153,510.51
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 4.823% 164,813.61
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 4.656% 176,637.89
66 2008 41,679.58 102,000.00 41,679.58 12.40% 5,168.27 750.23 4,418.04 3.635% 187,476.72
-----------------
TOTAL 65,629.92 6.716% AVG RATE
71
ILLUSTRATION 2 CONTINUED
72
ILLUSTRATION 3
SPREADSHEET TO ILLUSTRATE THE GROWTH IN ASSETS USING CURRENT SOCIAL SECURITY CONTRIBUTION LEVELS.
WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INTEREST ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT COST CONT RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 12.40% 257.92 37.44 220.48 NA 220.48
19 1961 2,214.04 4,800.00 2,214.04 12.40% 274.54 39.85 234.69 2.917% 461.60
20 1962 2,356.72 4,800.00 2,356.72 12.40% 292.23 42.42 249.81 3.813% 729.01
21 1963 2,508.59 4,800.00 2,508.59 12.40% 311.07 45.15 265.91 3.854% 1,023.02
22 1964 2,670.25 4,800.00 2,670.25 12.40% 331.11 48.06 283.05 3.906% 1,346.02
23 1965 2,842.33 4,800.00 2,842.33 12.40% 352.45 51.16 301.29 4.135% 1,702.97
24 1966 3,025.49 6,600.00 3,025.49 12.40% 375.16 54.46 320.70 4.198% 2,095.16
25 1967 3,220.46 6,600.00 3,220.46 12.40% 399.34 57.97 341.37 4.948% 2,540.20
26 1968 3,427.99 7,800.00 3,427.99 12.40% 425.07 61.70 363.37 4.958% 3,029.51
27 1969 3,648.90 7,800.00 3,648.90 12.40% 452.46 65.68 386.78 5.479% 3,582.28
28 1970 3,884.04 7,800.00 3,884.04 12.40% 481.62 69.91 411.71 6.594% 4,230.20
29 1971 4,134.34 7,800.00 4,134.34 12.40% 512.66 74.42 438.24 7.260% 4,975.56
30 1972 4,400.77 9,000.00 4,400.77 12.40% 545.70 79.21 466.48 5.979% 5,739.53
31 1973 4,684.36 10,800.00 4,684.36 12.40% 580.86 84.32 496.54 5.927% 6,576.25
32 1974 4,986.23 13,200.00 4,986.23 12.40% 618.29 89.75 528.54 6.646% 7,541.85
33 1975 5,307.56 14,100.00 5,307.56 12.40% 658.14 95.54 562.60 7.490% 8,669.33
34 1976 5,649.59 15,300.00 5,649.59 12.40% 700.55 101.69 598.86 7.396% 9,909.37
35 1977 6,013.66 16,500.00 6,013.66 12.40% 745.69 108.25 637.45 7.313% 11,271.50
36 1978 6,401.19 17,700.00 6,401.19 12.40% 793.75 115.22 678.53 7.083% 12,748.38
37 1979 6,813.70 22,900.00 6,813.70 12.40% 844.90 122.65 722.25 8.198% 14,515.75
38 1980 7,252.79 25,900.00 7,252.79 12.40% 899.35 130.55 768.80 9.115% 16,607.65
39 1981 7,720.17 29,700.00 7,720.17 12.40% 957.30 138.96 818.34 11.000% 19,252.83
40 1982 8,217.68 32,400.00 8,217.68 12.40% 1,018.99 147.92 871.07 13.333% 22,690.89
41 1983 8,747.24 35,700.00 8,747.24 12.40% 1,084.66 157.45 927.21 12.865% 26,537.28
42 1984 9,310.94 37,800.00 9,310.94 12.40% 1,154.56 167.60 986.96 10.135% 30,213.79
43 1985 9,910.95 39,600.00 9,910.95 12.40% 1,228.96 178.40 1,050.56 12.396% 35,009.65
44 1986 10,549.64 42,000.00 10,549.64 12.40% 1,308.16 189.89 1,118.26 10.781% 39,902.30
45 1987 11,229.48 43,800.00 11,229.48 12.40% 1,392.46 202.13 1,190.32 7.906% 44,247.30
46 1988 11,953.13 45,000.00 11,953.13 12.40% 1,482.19 215.16 1,267.03 8.396% 49,229.34
47 1989 12,723.42 48,000.00 12,723.42 12.40% 1,577.70 229.02 1,348.68 8.823% 54,921.53
48 1990 13,543.34 51,300.00 13,543.34 12.40% 1,679.37 243.78 1,435.59 8.656% 61,111.13
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 8.625% 67,910.07
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 7.958% 74,940.94
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 7.083% 81,980.40
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 6.062% 88,793.03
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 7.052% 97,016.46
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 6.875% 105,774.51
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 6.594% 114,972.01
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 6.594% 124,919.22
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 5.625% 134,464.36
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 5.865% 145,031.43
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 6.240% 156,934.87
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 5.229% 168,178.35
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 4.073% 178,261.36
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 4.271% 189,316.34
63 2005 34,558.68 90,000.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 4.312% 201,142.88
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 4.823% 214,743.29
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 4.656% 228,892.30
66 2008 41,679.58 102,000.00 41,679.58 12.40% 5,168.27 750.23 4,418.04 3.635% 241,630.58
----------------
TOT 69,554.79 6.96% AVG
73
ILLUSTRATION 3 CONTINUED
ANNUAL INFLATION ADJ USTED EARN ON ACCUM YEARS
AGE YEAR BENEFIT FACTOR BENEFIT ASSETS BALANCE RETIRED
241,630.58
67 2009 14,145.42 1.000 13,714.13 14,497.83 242,414.28 1
68 2010 14,145.42 1.040 14,711.24 14,544.86 242,247.90 2
69 2011 14,145.42 1.082 15,299.69 14,534.87 241,483.09 3
70 2012 14,145.42 1.125 15,911.67 14,488.99 240,060.40 4
71 2013 14,145.42 1.170 16,548.14 14,403.62 237,915.88 5
72 2014 14,145.42 1.217 17,210.07 14,274.95 234,980.77 6
73 2015 14,145.42 1.265 17,898.47 14,098.85 231,181.15 7
74 2016 14,145.42 1.316 18,614.41 13,870.87 226,437.61 8
75 2017 14,145.42 1.369 19,358.98 13,586.26 220,664.88 9
76 2018 14,145.42 1.423 20,133.34 13,239.89 213,771.43 10
77 2019 14,145.42 1.480 20,938.68 12,826.29 205,659.04 11
78 2020 14,145.42 1.539 21,776.22 12,339.54 196,222.36 12
79 2021 14,145.42 1.601 22,647.27 11,773.34 185,348.42 13
80 2022 14,145.42 1.665 23,553.16 11,120.91 172,916.17 14
81 2023 14,145.42 1.732 24,495.29 10,374.97 158,795.84 15
82 2024 14,145.42 1.801 25,475.10 9,527.75 142,848.49 16
83 2025 14,145.42 1.873 26,494.11 8,570.91 124,925.30 17
84 2026 14,145.42 1.948 27,553.87 7,495.52 104,866.94 18
85 2027 14,145.42 2.026 28,656.03 6,292.02 82,502.93 19
86 2028 14,145.42 2.107 29,802.27 4,950.18 57,650.84 20
87 2029 14,145.42 2.191 30,994.36 3,459.05 30,115.54 21
88 2030 14,145.42 2.279 32,234.13 1,806.93 -311.66 22
89 2031 14,145.42 2.370 33,523.50 -18.70 -33,853.86 23
90 2032 14,145.42 2.465 34,864.44 -2,031.23 -70,749.53 24
91 2033 14,145.42 2.563 36,259.01 -4,244.97 -111,253.51 25
92 2034 14,145.42 2.666 37,709.37 -6,675.21 -155,638.10 26
74
matured to the point where a substantial amount of benefits
were being paid out. This situation allowed tax rates to be low
and relatively painless ( even though no amount of tax is
painless ). The increase in rates over time caused the level of
pain from this regressive tax, imposed on every dollar earned
by our average participant, to increase sharply. In 1983 the
benefit formula was changed to raise the retirement age for full
benefits from 65 to 67. An additional requirement was made to
the benefit formula to require 35 years of covered service to get
a full benefit. The change in the retirement age was phased in
over time with the retirement age of 67 applying to individuals
born after 1954.
The tax rate was also increased effective in 1984 and again in
1985, 1988 and 1990. In addition to the increase in tax rates,
there has been a continuous increase in the amount of a
person's salary subject to the tax. In 1960 when our
hypothetical participant entered the work force the maximum
salary subject to this tax was $4,200. In 2008 when our
participant retired the maximum salary subject to the tax was
$102,000. These maximums have always been above the
average pay levels and result in higher income individuals
subsidizing the benefit of the people at the lower end of the pay
scale, because the benefit formula only generates a 15%
benefit from the higher levels of income.
The reduction in benefits, combined with the increase in the tax
rates from the 1983 law changes, resulted in a surplus which
should have been invested to pay for future benefits. Instead of
setting up an actual trust fund, Congress spent the money and
created a fictitious trust fund which is nothing more than an
accounting entry on the books at the Treasury Department.
I once had a concurrent examination of a pension plan with a
Department of Labor criminal investigator. When discussing the
actions of Congress in regard to spending the Social Security
surplus, this individual stated that, if he found a corporate plan
where the assets were raided like Social Security funds are
being raided, he would write up the case to have the plan
trustees prosecuted for embezzlement. This action is not
currently an option with Social Security since the tax revenue
collected is put in the General Fund where Congress has the
ability to spend it. If the contributions to OASDI/Medicare were
put in an actual trust fund, where the money was required to be
invested under strict fiduciary standards, any looting of the
75
funds would subject those responsible for absconding with the
money to prosecution for embezzlement.
The only way to describe the actions of Congress is to say they
are criminal. It is going to cost the taxpayers $5 to replace
every $1 dollar pilfered by Congress. We must change the
system to stop the fiscal misfeasance of Congress. If the voters
do not replace the people responsible for the current mess, this
country will be facing national bankruptcy. The working people
simply can not tolerate an increase in the payroll tax, which is
what our current representatives in Washington will pass, if we
leave them in office.
76
ILLUSTRATION 4
SPREADSHEET TO ILLUSTRATE GROWTH IN ASSETS FROM SOCIAL SECURITY CONTRIBUTIONS WITH EARNINGS AT 8%
WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INTEREST ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT COST CONT RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 4.50% 93.60 37.44 56.16 NA 56.16
19 1961 2,214.04 4,800.00 2,214.04 6.00% 132.84 39.85 92.99 8.000% 153.64
20 1962 2,356.72 4,800.00 2,356.72 6.00% 141.40 42.42 98.98 8.000% 264.92
21 1963 2,508.59 4,800.00 2,508.59 6.25% 156.79 45.15 111.63 8.000% 397.74
22 1964 2,670.25 4,800.00 2,670.25 7.25% 193.59 48.06 145.53 8.000% 575.09
23 1965 2,842.33 4,800.00 2,842.33 7.25% 206.07 51.16 154.91 8.000% 776.00
24 1966 3,025.49 6,600.00 3,025.49 7.25% 219.35 54.46 164.89 8.000% 1,002.97
25 1967 3,220.46 6,600.00 3,220.46 7.70% 247.98 57.97 190.01 8.000% 1,273.22
26 1968 3,427.99 7,800.00 3,427.99 7.80% 267.38 61.70 205.68 8.000% 1,580.75
27 1969 3,648.90 7,800.00 3,648.90 7.60% 277.32 65.68 211.64 8.000% 1,918.85
28 1970 3,884.04 7,800.00 3,884.04 8.40% 326.26 69.91 256.35 8.000% 2,328.71
29 1971 4,134.34 7,800.00 4,134.34 8.40% 347.28 74.42 272.87 8.000% 2,787.87
30 1972 4,400.77 9,000.00 4,400.77 9.20% 404.87 79.21 325.66 8.000% 3,336.56
31 1973 4,684.36 10,800.00 4,684.36 9.20% 430.96 84.32 346.64 8.000% 3,950.12
32 1974 4,986.23 13,200.00 4,986.23 9.70% 483.66 89.75 393.91 8.000% 4,660.05
33 1975 5,307.56 14,100.00 5,307.56 9.90% 525.45 95.54 429.91 8.000% 5,462.76
34 1976 5,649.59 15,300.00 5,649.59 9.90% 559.31 101.69 457.62 8.000% 6,357.40
35 1977 6,013.66 16,500.00 6,013.66 9.90% 595.35 108.25 487.11 8.000% 7,353.10
36 1978 6,401.19 17,700.00 6,401.19 9.90% 633.72 115.22 518.50 8.000% 8,459.84
37 1979 6,813.70 22,900.00 6,813.70 10.10% 688.18 122.65 565.54 8.000% 9,702.16
38 1980 7,252.79 25,900.00 7,252.79 10.16% 736.88 130.55 606.33 8.000% 11,084.67
39 1981 7,720.17 29,700.00 7,720.17 10.16% 784.37 138.96 645.41 8.000% 12,616.85
40 1982 8,217.68 32,400.00 8,217.68 10.70% 879.29 147.92 731.37 8.000% 14,357.57
41 1983 8,747.24 35,700.00 8,747.24 10.80% 944.70 157.45 787.25 8.000% 16,293.43
42 1984 9,310.94 37,800.00 9,310.94 10.80% 1,005.58 167.60 837.98 8.000% 18,434.89
43 1985 9,910.95 39,600.00 9,910.95 11.10% 1,100.12 178.40 921.72 8.000% 20,831.40
44 1986 10,549.64 42,000.00 10,549.64 11.40% 1,202.66 189.89 1,012.77 8.000% 23,510.68
45 1987 11,229.48 43,800.00 11,229.48 11.40% 1,280.16 202.13 1,078.03 8.000% 26,469.56
46 1988 11,953.13 45,000.00 11,953.13 11.40% 1,362.66 215.16 1,147.50 8.000% 29,734.63
47 1989 12,723.42 48,000.00 12,723.42 12.12% 1,542.08 229.02 1,313.06 8.000% 33,426.45
48 1990 13,543.34 51,300.00 13,543.34 12.12% 1,641.45 243.78 1,397.67 8.000% 37,498.24
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 8.000% 42,026.21
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 8.000% 47,014.89
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 8.000% 52,507.48
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 8.000% 58,551.06
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 8.000% 65,196.88
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 8.000% 72,500.80
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 8.000% 80,523.59
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 8.000% 89,331.44
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 8.000% 98,996.39
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 8.000% 109,596.83
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 8.000% 121,218.05
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 8.000% 133,952.86
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 8.000% 147,902.19
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 8.000% 163,175.81
63 2005 34,558.68 87,900.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 8.000% 179,893.09
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 8.000% 198,183.83
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 8.000% 218,189.10
66 2008 41,679.58 102,000.00 41,679.58 2 12.40% 5,168.27 750.23 4,418.04 8.000% 240,062.26
-----------------
TOTAL 65,228.92 8.00% AVG RATE
77
ILLUSTRATION 4 CONTINUED
78
ILLUSTRATION 5
SPREADSHEET TO ILLUSTRATE GROWTH IN ASSETS USING CURRENT SOCIAL SECURITY CONTRIBUTION RATES.
WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INT ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT COST CONT RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 12.40% 257.92 37.44 220.48 NA 220.48
19 1961 2,214.04 4,800.00 2,214.04 12.40% 274.54 39.85 234.69 8.000% 472.81
20 1962 2,356.72 4,800.00 2,356.72 12.40% 292.23 42.42 249.81 8.000% 760.44
21 1963 2,508.59 4,800.00 2,508.59 12.40% 311.07 45.15 265.91 8.000% 1,087.19
22 1964 2,670.25 4,800.00 2,670.25 12.40% 331.11 48.06 283.05 8.000% 1,457.21
23 1965 2,842.33 4,800.00 2,842.33 12.40% 352.45 51.16 301.29 8.000% 1,875.07
24 1966 3,025.49 6,600.00 3,025.49 12.40% 375.16 54.46 320.70 8.000% 2,345.78
25 1967 3,220.46 6,600.00 3,220.46 12.40% 399.34 57.97 341.37 8.000% 2,874.81
26 1968 3,427.99 7,800.00 3,427.99 12.40% 425.07 61.70 363.37 8.000% 3,468.17
27 1969 3,648.90 7,800.00 3,648.90 12.40% 452.46 65.68 386.78 8.000% 4,132.40
28 1970 3,884.04 7,800.00 3,884.04 12.40% 481.62 69.91 411.71 8.000% 4,874.70
29 1971 4,134.34 7,800.00 4,134.34 12.40% 512.66 74.42 438.24 8.000% 5,702.92
30 1972 4,400.77 9,000.00 4,400.77 12.40% 545.70 79.21 466.48 8.000% 6,625.63
31 1973 4,684.36 10,800.00 4,684.36 12.40% 580.86 84.32 496.54 8.000% 7,652.23
32 1974 4,986.23 13,200.00 4,986.23 12.40% 618.29 89.75 528.54 8.000% 8,792.95
33 1975 5,307.56 14,100.00 5,307.56 12.40% 658.14 95.54 562.60 8.000% 10,058.98
34 1976 5,649.59 15,300.00 5,649.59 12.40% 700.55 101.69 598.86 8.000% 11,462.56
35 1977 6,013.66 16,500.00 6,013.66 12.40% 745.69 108.25 637.45 8.000% 13,017.01
36 1978 6,401.19 17,700.00 6,401.19 12.40% 793.75 115.22 678.53 8.000% 14,736.90
37 1979 6,813.70 22,900.00 6,813.70 12.40% 844.90 122.65 722.25 8.000% 16,638.10
38 1980 7,252.79 25,900.00 7,252.79 12.40% 899.35 130.55 768.80 8.000% 18,737.95
39 1981 7,720.17 29,700.00 7,720.17 12.40% 957.30 138.96 818.34 8.000% 21,055.32
40 1982 8,217.68 32,400.00 8,217.68 12.40% 1,018.99 147.92 871.07 8.000% 23,610.82
41 1983 8,747.24 35,700.00 8,747.24 12.40% 1,084.66 157.45 927.21 8.000% 26,426.89
42 1984 9,310.94 37,800.00 9,310.94 12.40% 1,154.56 167.60 986.96 8.000% 29,528.00
43 1985 9,910.95 39,600.00 9,910.95 12.40% 1,228.96 178.40 1,050.56 8.000% 32,940.80
44 1986 10,549.64 42,000.00 10,549.64 12.40% 1,308.16 189.89 1,118.26 8.000% 36,694.33
45 1987 11,229.48 43,800.00 11,229.48 12.40% 1,392.46 202.13 1,190.32 8.000% 40,820.20
46 1988 11,953.13 45,000.00 11,953.13 12.40% 1,482.19 215.16 1,267.03 8.000% 45,352.85
47 1989 12,723.42 48,000.00 12,723.42 12.40% 1,577.70 229.02 1,348.68 8.000% 50,329.76
48 1990 13,543.34 51,300.00 13,543.34 12.40% 1,679.37 243.78 1,435.59 8.000% 55,791.73
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 8.000% 61,783.18
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 8.000% 68,352.42
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 8.000% 75,552.01
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 8.000% 83,439.15
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 8.000% 92,076.03
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 8.000% 101,530.27
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 8.000% 111,875.42
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 8.000% 123,191.42
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 8.000% 135,565.17
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 8.000% 149,091.11
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 8.000% 163,871.87
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 8.000% 180,018.99
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 8.000% 197,653.60
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 8.000% 216,907.34
63 2005 34,558.68 90,000.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 8.000% 237,923.14
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 8.000% 260,856.28
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 8.000% 285,875.35
66 2008 41,679.58 102,000.00 41,679.58 12.40% 5,168.27 750.23 4,418.04 8.000% 313,163.41
----------------
TOT 69,554.79 8.00% AVG
79
ILLUSTRATION 5 CONTINUED
SPREADSHEET TO ILLUSTRATE GROWTH IN ASSETS USING CURRENT SOCIAL SECURITY CONTRIBUTIONS EARNING 8%
80
EVALUATION OF THE MEDICARE FUNDING MODEL
The following illustrations show the structural problems in the
Medicare system.
ILLUSTRATION 6 – MEDICARE ASSETS AND PAYMENTS USING HISTORICAL CONTRBUTIONS AND RATES.
81
ILLUSTRATION 6 CONTINUED
THE ANNUAL HEALTH COST OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE IS ONE VARIABLE LISTED AT THE TOP OF THE SPREADSHEET.
THE 11899.44 HEALTH CARE COST IS FROM INCREASING THE PRIOR YEARS COST BY 8%.
THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.
82
ILLUSTRATION 7 – MEDICARE ASSETS AND PAYMENTS USING HISTORICAL CONTRBUTIONS AT AN 8% EARNINGS RATE.
83
ILLUSTRATION 7 CONTINUED
THE ANNUAL HEALTH COST OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE VARIABLE IS LISTED AT THE TOP OF THE SPREADSHEET.
THE HEALTH CARE COST IS INCREASED FRON THE PRIOR YEAR AT AN 8% RATE.
THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.
84
ILLUSTRATION 8 – MEDICARE ASSETS AND PAYMENTS USING CURRENT CONTRIBUTION LEVELS EARNING 8%
SPREADSHEET TO ILLUSTRATE HOW MEDICARE CONTRIBUTIONS AND COSTS WOULD HAVE GROWN USING CURRENT
CONTRIBUTION PERCENTAGES AND A 8% EARNINGS RATE. MEDICARE STARTED IN 1985.
85
ILLUSTRATION 8 - CONTINUED
THE ANNUAL HEALTH COST OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE IS A VARIABLE LISTED AT THE TOP OF THE SPREADSHEET.
THE $11,899.44 HEALTH CARE COST IS FROM INCREASING THE PRIOR YEARS COST OF $11,018 BY 8%.
THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.
This illustration shows that if Medicare had been in place for the
entire working career of our hypothetical participant, with an
average rate of return on assets at 8%, the assets would only
fund retiree health care for 8 years when an 8% inflation
adjustment is used for cost increases caused by medical
inflation.
These illustrations demonstrate that the current funding model
for Medicare is simply not adequate to cover projected costs.
When we consider that the Old Age pension portion of Social
Security is over funded, we can consider using a combination of
both funds to cover the combined costs of both Social Security
and Medicare.
86
EVALUATION OF A COMBINED FUNDING MODEL
ILLUSTRATION 9 – SHOWING THE EFFECT OF COMBINING SOCIAL SECURITY AND MEDICARE FUNDS
SPREADSHEET TO SHOW HOW SOCIAL SECURITY AND MEDICARE CONTRIBUTIONS AND COSTS WOULD HAVE
GROWN USING CURRENT CONTRIBUTION PERCENTAGES OVER A PARTICIPANT'S ENTIRE CAREER.
THIS PORTION OF THE SPREADSHEET SHOWS THE ASSET ACCUMULATION FOR OUR AVERAGE
PARTICIPANT WITHOUT THE PORTION APPLICABLE TO DISABILITY AND SURVIVORS INSURANCE WHICH IS
BEING TREATED AS AN ANNUAL EXPENSE FOR INSURANCE. NO ADJUSTMENT HAS BEEN MADE
FOR MEDICARE WAGES ABOCE THE MAXIMUM SOCIAL SECURITY WAGE SINCE OUR HYOTHETICAL AVERAGE
PARTICIPANT DOES NOT HAVE ANY INCOME ABOVE THE LIMIT.
87
ILLUSTRATION 9 – CONTINUED
THE HEALTH COST PAYMENT OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE IS A VARIABLE LISTED AT THE TOP OF THE SPREADSHEET.
THE 11,038.68 HEALTH CARE COST IS FROM INCREASING THE PRIOR YEARS COST OF $11,018 BY 8%.
THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.
88
PROPOSALS TO RAISE TAXES OR CUT
BENEFITS
During the last presidential campaign, candidates were asked
about saving Social Security. A couple of candidates ( Fred
Thompson and Mitt Romney ) proposed de-indexing salaries
from inflation. Their candidacies immediately went down in
flames. Others ducked the issue or proposed a bipartisan
commission to study the issue. A bipartisan commission is
political cover for politicians who plan on doing something the
voters won't like.
89
A fourth proposal is to eliminate the cap on the amount of
earned income subject to the Social Security and Disability
portion of the payroll tax. This would also be a tax increase so
Congress can continue to spend the excess. This proposal is an
attempt to tax the rich, which will not actually raise much
revenue for the Social Security System. The rich and super rich
do not receive their income in a form which is classified as
earned income. They receive income from capital gains,
interest, dividends and rent. They make money on invested
money, which is why they are rich.
90
ILLUSTRATION 10
91
When we compare the annual benefit of $14,145 from the
computation using indexed wages, with the benefit of $10,384
from non-indexed wages listed above, we can see a very large
cut in benefits.
92
OTHER IMPENDING THREATS TO THE
SOLVENCY OF SOCIAL SECURITY
Another major threat to Social Security is the proposal to
include illegal immigrants in the system 1,2. The current system
requires 10 years of covered service before a person becomes
eligible for a benefit. The system also requires 35 years of
service for a full benefit and the computation formula reduces
benefits for less than 35 years of service.
93
The decreasing level of income and loss of jobs will continue
until the voters start electing individuals to all levels of
government who will obey their oath to support and defend the
Constitution. The people have always risen to the occasion,
when confronted with major problems, and we will do so again.
This is the United States of America and we can solve these
problems.
94
CONSTITUTIONAL PROBLEMS WITH
SOCIAL SECURITY
THE PAYROLL TAX
"The Congress shall have power to lay and collect taxes on incomes,
from whatever source derived, without apportionment among the
several states, and without regard to any census or enumeration.".
95
drying up as a source of revenue since the United States was
changing from an agricultural society, to a self sufficient
manufacturing nation.
"No capitation, or other direct, Tax shall be laid unless in Proportion
to the Census or Enumeration herein before directed to be taken.".
This provision still prohibits a per capita excise tax, since the
16th Amendment only allowed an income tax, and did not
remove the prohibition on other types of per capita taxes.
96
(b) Hospital insurance
(1) with respect to wages received during the calendar years 1974
through 1977, the rate shall be 0.90 percent;
(2) with respect to wages received during the calendar year 1978,
the rate shall be 1.00 percent;
(3) with respect to wages received during the calendar years 1979
and 1980, the rate shall be 1.05 percent;
(4) with respect to wages received during the calendar years 1981
through 1984, the rate shall be 1.30 percent;
(5) with respect to wages received during the calendar year 1985, the
rate shall be 1.35 percent; and
(6) with respect to wages received after December 31, 1985, the
rate shall be 1.45 percent.
(a) Requirement
The tax imposed by section 3101 shall be collected by the employer of the
taxpayer, by deducting the amount of the tax from the wages as and when
paid. .........
97
(b) Hospital insurance
(1) with respect to wages paid during the calendar years 1974
through 1977, the rate shall be 0.90 percent;
(2) with respect to wages paid during the calendar year 1978, the
rate shall be 1.00 percent;
(3) with respect to wages paid during the calendar years 1979
and 1980, the rate shall be 1.05 percent;
(4) with respect to wages paid during the calendar years 1981
through 1984, the rate shall be 1.30 percent;
(5) with respect to wages paid during the calendar year 1985, the
rate shall be 1.35 percent; and
(6) with respect to wages paid after December 31, 1985, the rate
shall be 1.45 percent.
The total of sections 3101 and 3111 is the total amount paid
into the OASDI/Medicare program for each employee. Section
3111 on the employer's matching portion is specifically labeled
as an excise tax, not an income tax.
98
it is a power which belongs to the various states.
Section 3102 of the Internal Revenue Code ( IRC ) requires the
payroll tax to be withheld from wages when paid. This is similar
to the withholding treatment for the Income Tax, but does not
make the payroll tax an Income Tax. The Income Tax
withholding is an estimate which will apply to an annual tax
liability. The payroll tax is a fixed percentage of the amount of
wages paid for the payroll period. The heading of the Code
section, imposing the tax, labels this tax as being for the
OASDI/Medicare programs. The fixed percentage for the
OASDI/Medicare program is excised ( carved out ) of the
employees paycheck before the employee receives his net
paycheck. The Income Tax is applied to the employees wages
which include the amount of the payroll tax. This is the same
type of arrangement which applies to a sales tax applied to
alcohol or tobacco. The excise tax on these items is included in
the price of the product, and the sales tax is applied to the total
which includes the amount of the excise tax.
There are two options available to correct the fact that the
current system violates the Constitution. The first way to
address the problem is to get candidates elected to Congress
who will work to change the law in accord with the proposals in
this book. The second option is to try to get the courts to rule
99
that the Social Security Payroll Tax is unconstitutional.
I support the option of getting the law changed and not going to
court.
100
does recognize that the current payroll tax does violate the
constitution, the resulting court decision would provide an
incentive for Congress to make the changes outlined in this
book.
"The Congress shall have power to lay and collect taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the common
Defense and general Welfare of the United States; but all Duties,
Imposts and Excises shall be uniform throughout the United States;”
101
Constitution. The denial of these claims could become the basis
of court action. In our tax and court system, the action of the
court, on a specific court case, will only apply to the plaintiffs in
that case, unless the IRS agrees to apply the court decisions to
all taxpayers. It is doubtful most individuals will be in a position
to pursue claims in court. They should consider filing a
protective claim contingent on the results of the pending
litigation of the individuals who are in a position to go to court.
The preparation of a Form 8431 should be considered by
individuals, who want to protect their right to any potential
refunds of payroll taxes and employers in the employer's
portion of the payroll taxes. The litigation process for this type
of issue can take years. Because there is a statute of limitations
on claims for refund, the use of a protective claim will protect
the right to a refund, if the citizens and taxpayers can get the
issues decided by a court which is willing to abide by the
Constitution.
102
Generally, the IRS will delay action on the protective claim until
the contingency is resolved. Once the contingency is resolved,
the IRS may obtain additional information necessary to process
the claim and then either allow or disallow the claim.
Mail your protective claim for refund to the address listed in the
instructions for Form 1040X, under Where To File.”
A claim for refund of payroll taxes should use form 843, since
the 1040X Form is designed for Income Tax claims.
103
THE 1937 SUPREME COURT CASES
The focus of the Steward Machine case was the federal portion
of the system of unemployment insurance established by the
Social Security Act of 1935. The focus of the Carmichael v.
Southern Coal and Coke was the state portion of the
unemployment tax. The Helvering v. Davis case considered the
old age and survivors portion of the Social Security Act.
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such coercive effect. As the Social Security Act is
not coercive in its operation, the Unemployment
Compensation Act cannot be set aside as an
unconstitutional product of coercion. The United
States and the State of Alabama are not alien
governments. They coexist within the same territory.
Unemployment within it is their common concern.
Together the two statutes now before us embody a
cooperative legislative effort by state and national
governments for carrying out a public purpose common
to both, which neither could fully achieve without
the cooperation of the other. The Constitution does
not prohibit such cooperation.”
105
Constitution.
The first part of this finding by the court is that the law does not
violate the requirement of uniformity because the law is the
same in all parts of the United States. This requirement is
contained in the first paragraph of Article I, Section 8 of the
Constitution. The mention of this requirement shows that the
Court was aware of the constitutional requirements. The written
decision makes specific mention of the requirement that an
excise tax must be uniform throughout the country, while
ignoring the fact that different employers will be subject to
different levels of tax. This is an example of deliberate and
malicious misreading of the Constitution which requires “all
Duties, Imposts and Excises” to be uniform.
The second part of the finding provides that the Social Security
Act does not violate the Fifth Amendment. The problem with
this conclusion is that the individual protections in the Fifth
Amendment are simply not at issue for a tax being imposed on
employers. The item appears to be an effort to include a valid
opinion in the decision in an effort to support questionable parts
of the overall finding.
106
tax. For more information on these items, see the chapter on
the Constitutional problems with Social Security.
The Helvering v. Davis case, and the Steward Machine Co. case
came to the U.S. Supreme Court through the Federal Court
System. Helvering v. Davis ruled that the Social Security System
was not a violation of the 10th Amendment which reserves to
the states any power not delegated to the Federal Government
by the Constitution. The court found that the general welfare
clauses, in the preamble to the Constitution and in Article I,
Section 8 of the Constitution, gave the federal government the
power and authority to set up the Social Security System. The
decision did not rule on the constitutionality of the payroll tax
imposed on employees by the Social Security Act. The following
information and quotes from the decision is presented to show
what the decision did and did not rule on.
107
relation to the tax on employees taking the ground that the
employer not being subject to tax under those provisions, may not
challenge their validity, and that the complainant shareholder,
whose rights are no greater than those of his corporation, has
even less standing to be heard on such a question. The
intervening defendants also filed an answer which restated the
point raised in the motion to strike, and maintained the validity
of Title VIII in all its parts. The District Court held that the
tax upon employees was not properly at issue, and that the tax
upon employers was constitutional. It thereupon denied the prayer
for an injunction, and dismissed the bill. On appeal to the
Circuit Court of Appeals for the First Circuit, the decree was
reversed, one judge dissenting. The court held that Title II was
void as an invasion of powers reserved by the Tenth Amendment to
the states or to the people and that Title II in collapsing
carried Title VIII along with it. As an additional reason for
invalidating the tax upon employers, the court held that it was
not an excise as excises were understood when the Constitution
was adopted. Cf. Davis v. Boston & Maine R. R. Co.,--F. (2d)--,
decided the same day.
(1) "whether the tax imposed upon employers by Section 804 of the
Social Security Act is within the power of Congress under tile
Constitution", and
This excerpt from the decision indicated that the case was
brought by a shareholder of the corporation. The corporation
had decided to obey the Act and was not contesting the tax
when it answered the shareholders request for an injunction
against the payment of the tax.
While the case was pending in the Federal District Court, the
United States Commissioner of Internal Revenue and the United
States Collector for the District of Massachusetts, were allowed
to intervene.
108
The IRS asked the court to remove the portion of the suit which
applied to the tax on employees on the grounds that the
shareholder lacked standing to contest this issue.
The District Court held that the tax upon employees was not
properly at issue, and that the tax upon employers was
constitutional. It thereupon denied the request for an injunction,
and dismissed the case.
109
“The Social Security Act is challenged once again.
110
accordance with accepted actuarial principles, and based upon
such tables of mortality as the Secretary of the Treasury shall
from time to time adopt, and upon an interest rate of 3 per
centum per annum compounded annually."
Section 201 (a). Not a dollar goes into the Account by force of
the challenged act alone, unaided by acts to follow.
The actual decision rendered by the Court did not rule on the
validity of section VIII of the Social Security Act. Instead of
ruling on the tax section of the act., the court ruled that Title II
of the Act was allowed by the General Welfare clauses
contained in the Constitution.
111
“Held:
(2) The tax upon employers is a valid excise or duty upon the
relation of employment. Steward Machine Co. v. Davis, ante, p.
548. P. 645.
The obvious answer is that the Court did not want to include an
issue which would show an obvious violation of the Constitution.
112
unemployment tax system could be easily addressed by
Congress. All that is necessary to correct this issue is for
Congress to eliminate the exceptions which exclude some
income from the tax, and to substantially lower the tax rate.
This would result in a uniform rate of tax based on the entire
amount of payroll, and eliminate the per-capita computation of
the amount of the tax. The way to fix the old age portion of the
tax is contained in the chapter on how to fix the Social Security
system.
A current issue from the last election illustrates that these types
of actions, by the courts, are still a problem and we can not rely
on the courts to solve major problems.
113
questions.
114
THE 1960 SUPREME COURT CASE
On June 20, 1960 the Supreme Court issued an opinion which
held that there was no contractual right to a social security
benefit. The case was Flemming v. Nestor, 363 U.S. 603 (1960)1.
“We think that the District Court erred in holding that § 202(n)
deprived appellee of an "accrued property right." Appellee's
right to Social Security benefits cannot properly be considered
to have been of that order.
The general purposes underlying the Social Security Act were
expounded by Mr. Justice Cardozo in Helvering v. Davis. The issue
here, however, requires some inquiry into the statutory scheme by
which those purposes are sought to be achieved. Payments under
the Act are based upon the wage earner's record of earnings in
employment or self-employment covered by the Act, and take the
form of old-age insurance and disability insurance benefits
inuring to the wage earner (known as the "primary beneficiary"),
and of benefits, including survivor benefits, payable to named
dependents ("secondary beneficiaries") of a wage-earner. Broadly
speaking, eligibility for benefits depends on satisfying
statutory conditions as to (1) employment in covered employment
or self-employment; (2) the requisite number of "quarters of
coverage" -- i.e., three-month periods during which not less than
a stated sum was earned -- the number depending generally on age;
and (3) attainment of the retirement age. Entitlement to benefits
once gained is partially or totally lost if the beneficiary earns
more than a stated annual sum, unless he or she is at least 72
years old. Of special importance in this case is the fact that
eligibility for benefits, and the amount of such benefits, do not
in any true sense depend on contribution to the program through
115
the payment of taxes, but rather on the earnings record of the
primary beneficiary.
The program is financed through a payroll tax levied on employees
in covered employment, and on their employers. The tax rate,
which is a fixed percentage of the first $4,800 of employee
annual income, is set at a scale which will increase from year to
year, presumably to keep pace with rising benefit costs. The tax
proceeds are paid into the Treasury "as internal revenue
collections, and each year an amount equal to the proceeds is
appropriated to a Trust Fund, from which benefits and the
expenses of the program are paid. It was evidently contemplated
that receipts would greatly exceed disbursements in the early
years of operation of the system, and surplus funds are invested
in government obligations, and the income returned to the Trust
Fund. Thus, provision is made for expected increasing costs of
the program.
The Social Security system may be accurately described as a form
of social insurance, enacted pursuant to Congress' power to
"spend money in aid of the general welfare, " Helvering v.
Davis”, whereby persons gainfully employed, and those who employ
them, are taxed to permit the payment of benefits to the retired
and disabled, and their dependents. Plainly the expectation is
that many members of the present productive work force will in
turn become beneficiaries rather than supporters of the program.
But each worker's benefits, though flowing from the contributions
he made to the national economy while actively employed, are not
dependent on the degree to which he was called upon to support
the system by taxation. It is apparent that the noncontractual
interest of an employee covered by the Act cannot be soundly
analogized to that of the holder of an annuity, whose right to
benefits is bottomed on his contractual premium payments.
It is hardly profitable to engage in conceptualizations regarding
"earned rights" and "gratuities". The "right" to Social Security
benefits is in one sense "earned," for the entire scheme rests on
the legislative judgment that those who in their productive years
were functioning members of the economy may justly call upon that
economy, in their later years, for protection from "the rigors of
the poor house as well as from the haunting fear that such a lot
awaits them when journey's end is near." But the practical
effectuation of that judgment has of necessity called forth a
highly complex and interrelated statutory structure. Integrated
treatment of the manifold specific problems presented by the
Social Security program demands more than a generalization. That
program was designed to function into the indefinite future, and
its specific provisions rest on predications as to expected
economic conditions which must inevitably prove less than wholly
accurate, and on judgments and preferences as to the proper
allocation of the Nation's resources which evolving economic and
social conditions will of necessity in some degree modify.
To engraft upon the Social Security system a concept of "accrued
property rights" would deprive it of the flexibility and boldness
116
in adjustment to ever-changing conditions which it demands. It
was doubtless out of an awareness of the need for such
flexibility that Congress included in the original Act, and has
since retained, a clause expressly reserving to it "[t]he right
to alter, amend, or repeal any provision" of the Act. That
provision makes express what is implicit in the institutional
needs of the program. See Analysis of the Social Security System,
Hearings before a Subcommittee of the Committee on Ways and
Means, House of Representatives, 83d Cong., 1st Sess., pp. 920-
921. It was pursuant to that provision that § 202(n) was enacted.
We must conclude that a person covered by the Act has not such a
right in benefit payments as would make every defeasance of
"accrued" interests violative of the Due Process Clause of the
Fifth Amendment.”
117
disability. As stated in a recent House Report:
"The old-age and survivors insurance system is the basic program
which provides protection for America's families against the loss
of earned income upon the retirement or death of the family
provider. The program provides benefits related to earned income
and such benefits are paid for by the contributions made with
respect to persons working in covered occupations."
This Supreme Court decision does in fact follow the current law.
The current system is a pay as you go welfare plan.
The Social Security System can be changed from a welfare
program where Congress can decide to reduce or eliminate
benefits at any time, by changing the system to a defined
benefit pension plan. In a pension plan a person does have a
contractual right to an accrued benefit. A pension plan provides
a contractual right to the benefits provided by the pension
document. This contractual right is appropriate in view of the
fact that Social Security recipients have already paid for the
benefits.
We need to make the changes discussed in the chapter titled
How to Fix Social Security, and cover our senior citizens with a
defined benefit pension plan which does provide a vested
accrued benefit. We will then need to fund the plan with income
producing assets such as oil, gas and other mineral producing
properties so that the trust fund will have the assets needed to
pay all future benefit requirements.
118
ENERGY
ENDING OUR COUNTRY'S DEPENDENCE ON
IMPORTED OIL
The U.S. Government holds property all over this country which
can be transferred to a Social Security Trust Fund. This property
includes closed military bases as well as wilderness areas rich in
natural resources which can be developed to end our
dependence on imported oil. The price of oil will increase as the
world wide demand continues to push the price up. There is an
enormous amount of potential revenue available if the drilling
rights in such areas as ANWR ( the Arctic National Wildlife
Refuge ) and the continental shelves off our coasts are
transferred to an actual Social Security Trust Fund, which can
license drilling rights to oil companies on favorable terms to the
trust. In addition there are oil rich properties including oil shale,
and oil sands, in the inter mountain areas of the west which can
be tapped. We need to tap the cash flow, from our own reserves
of petroleum, to solve the Social Security funding problems. In
the long term we will have to increase our use of alternative
energy sources such as hydrogen, wind and solar, but in the
short term ( the next few decades ) this country will rely on
petroleum.
119
Properties such as closed military bases and unneeded federal
real estate can be transferred to the trust fund and then seller
financed. This method of sale will minimize any impact on credit
markets and return the property to the trust fund in the event of
any default. As an alternative, the property can be leased to
companies for use as wind farms or for solar arrays.
120
hardware, and having a potential foreign enemy own a
company manufacturing networking hardware, with hidden
back doors into our country's computer networks, would be a
major national security problem. Communist China is not a
friend of the U.S. and is playing us for a sucker by manipulating
the value of the yuan and generating a 200 billion dollar trade
surplus with the United States each year. This surplus is being
used to buy up our companies, and puts the U.S. into the debt
of Communist China.
121
value of projected future contributions, to the program, from
the present value of the projected benefits. Presenting only half
of the facts is not helpful in addressing the problem, because
the numbers are so large that people are frightened into
believing there is no possible way to solve the problem.
ALASKA ANWR 14
10,400,000,000 10,400,000,000 $100 16.666% $173,326,400,000.00
BAKKEN FORMATION 15
1,500,000,000,000 3,645,000,000 $100 16.666% $60,747,570,000.00
The big ticket items listed above are the Bakken Formation and
the Green River Oil Shale deposits.
122
western North Dakota.
The Green River Oil Shale deposits are located in the inter
mountain west and cover parts of Wyoming, Utah and Colorado.
The existence of these deposits has been known for over a
hundred years and the material in the oil shale was used to
lubricate wagon wheels by early settlers. The term oil shale is
not very descriptive because the rock in question is not shale
and the mineral is not oil. The mineral is a substance called
Kerogen, which is geologically younger than oil, and must be
heated to be converted into oil. This heating process is normally
performed by the pressure of the earth above, for normal oil
formations. The Green River Oil Shale is located at the surface
and has not been subjected to the pressure necessary to
convert the Kerogen into oil. Developing this resource will be
expensive because the material will have to be mined and then
cooked to convert the Kerogen into petroleum. The process, of
extracting the oil, is similar to what is currently being used to
extract oil from the Alberta Oil Sands in Canada. The process is
both capital and labor intensive, and requires a lot of water to
cool the heated rock after the oil is removed.
123
The area, where these reserves are located, is one of the most
arid parts of this country and it might be necessary to run a
pipeline to the Pacific, to get the water needed to process the
oil.
The U.S. uses an enormous amount of oil, and our own oil and
natural gas reserves need to be tapped. We will probably still be
importing oil from Canada after these resources are developed,
but we can eliminate imports from countries which are not our
friends.
124
The available resources are far in excess of the amount needed
to fix the funding problems with the Social Security / Medicare
System. There are enough resources to allow the establishment
of a debt elimination trust to pay off our national debt, in
addition to solving the problems of Social Security. First we must
fix Congress by electing people to Congress who will stop the
out of control spending and balancing the budget.
We must answer a call for action and stop the decline of our
country!
125
CALL FOR ACTION!
ANSWER THE CALL!
The people need to replace all of our legislators who are part of
the problem. This book contains a copy of the roll call vote on
the veto override of the 2007 water bill. The big spenders in
Congress have identified themselves by voting to override the
veto of this pork laden bill.
The Senate has a six year term because the senators were
supposed to represent the various states. The 17 th Amendment
to the Constitution provided for the direct election of senators
instead of appointment by the the various states. This has given
us an elected aristocracy because many senators continually
get reelected and serve for life. The important thing to note is
that a senator is elected, and can be replaced every 6 years by
voters.
The people can elect patriots, who will make the changes
needed to take back this country from the extremists. Our
elected Congress persons are people the same as you and me.
They are not divinely appointed to positions of power. They are
elected. This country needs patriots who will answer the call to
take action, and who will remove the incumbents.
126
The Constitution provides the following requirements for
Representatives in the House and for Senators.
Article I, Section 2
No Person shall be a Representative who shall not have attained the
Age of twenty five Years, and been seven Years a Citizen of the United
States, and who shall not, when elected, be an Inhabitant of that State
in which he shall be chosen.
Article I, Section 3
No Person shall be a Senator who shall not have attained the Age of
thirty Years, and been nine Years a Citizen of the United States, and
who shall not, when elected, be an Inhabitant of that State in which
he shall be chosen.
If you have attended a Tea Party, you are one of the people.
If you are a Member of the Campaign for Liberty, you are one of
the people.
If you are a Member of the 9-12 project, you are one of the
people.
If you are a mother who has raised children, you are one of the
people, and you have experience in the most important job in
127
our society.
You, as a Patriot, and one of the people, can answer the call to
take action.
If you can not abide with the pro-abortion, anti-family and anti-
Christian policies of the Democrat party, you will need to run as
a Republican.
People who normally identify with one party, or the other, need
to reconsider the party labels. The actual choice is between an
incumbent or a non-incumbent. You may wish to think of the
choice as being between a Porker or a Patriot.
128
jobs, which will not require you to leave your current job. You
will have to check out you local election laws to determine how
to proceed.
129
and defend the Constitution. We need candidates who will vote
against any spending or programs which are not specifically
allowed by the Constitution.
This book is a call for action. I am asking you to answer the call
and run for office. If you can not run and if you have a good
candidate in your district who will honor his or her oath of
office, then support that candidate, and get all of your friends,
neighbors and relatives to support that candidate. If the
candidate is in another party, then register in the other party so
you can support the candidate of your choice. You are voting for
the candidate, not the party. If there are good candidates
running for different offices in different parties, you will have to
decide which candidate is running for the position most
important to you, because you will only be able to vote in the
primary of one party. In many states you will need to make this
choice in advance of the primary, because you may need to
register as a member of the party in which you wish to vote.
130
incumbents, and stop the spending, are patriots. We Americans
need to encourage and support them in their efforts. The
people also need to monitor public officials' performance after
they are elected, and remove them, if they betray us.
131
Not Yours to Give
Col. Davy Crockett
"Mr. Speaker --- I have as much respect for the memory of the
deceased, and as much sympathy for the suffering of the living,
if suffering there be, as any man in this house, but we must not
permit our respect for the dead or our sympathy for a part of
the living to lead us into an act of injustice to the balance of the
living. I will not go into an argument to prove that Congress has
no power to appropriate this money as an act of charity. Every
member upon this floor knows it. We have the right, as
individuals, to give away as much of our own money as we
please in charity; but as members of Congress we have no right
to appropriate a dollar of the public money. Some eloquent
appeals have been made to us upon the ground that it is a debt
due the deceased. Mr. Speaker, the deceased lived long after
the close of the war; he was in office to the day of his death,
and I have never heard that the government was in arrears to
him."
132
appropriation, Crockett gave this explanation:
'Yes, I know you; you are Colonel Crockett, I have seen you once
before and voted for you the last time you were elected. I
suppose you are out electioneering right now, but you had
better not waste your time or mine. I shall not vote for you
again.'
133
expressing it in that way. I did not intend to avail myself of the
privilege of the constituent to speak plainly to a candidate for
the purpose of insulting or wounding you.
'I admit the truth of all you say, but there must be some
mistake about it, for I do not remember that I gave any vote last
winter upon any constitutional questions.'
'Well, my friend, I may as well own up. You have got me there.
But certainly nobody will complain that a great and rich country
like ours should give the insignificant amount of $20,000 to
relive its suffering women and children, particularly with a full
and overflowing Treasury, and I am sure, if you had been there,
you would have done just as I did.'
134
where the weight centers, for there is not a man in the United
States who can ever guess how much he pays to the
government. So you see, that while you are contributing to
relieve one, you are drawing it from thousands who are even
worse off than he. If you had the right to give anything, the
amount was simply a matter of discretion with you, and you had
as much right to give $20,000,000 as $20,000.
If you had the right to give to one, you have the right to give to
all and as the Constitution neither defines charity nor stipulates
the amount, you are at liberty to give to any and everything
which you may believe, or profess to believe, is a charity, and
to any amount you may think proper. You will very easily
perceive what a wide door this would open for fraud and
corruption and favoritism on the one hand, and for robbing the
people on the other. No, Colonel, Congress has no right to give
charity.
135
beyond the limits of the Constitution, there is no limit to it and
no security for the people. I have no doubt you acted honestly,
but that does not make it any better, except as far as you are
personally concerned and you see that I cannot vote for you.'
'I tell you I felt streaked. I saw if I should have opposition, and
this man should go talking, he would set others to talking and in
that district I was a gone fawn-skin. I could not answer him and
the fact is, I was so fully convinced that he was right, I did not
want to. But I must satisfy him and I said to him:
Well, my friend, you hit the nail upon the head when you said I
had not sense enough to understand the Constitution. I
intended to be guided by it and thought I had studied it fully. I
have heard many speeches in Congress about the powers of
Congress, but what you have said here at your plow has got
more hard, sound sense in it than all the fine speeches I ever
heard. If I had ever taken the view of it that you have, I would
have put my head into the fire before I would have given that
vote; and if you will forgive me and vote for me again, if I ever
vote for another unconstitutional law, I wish I may be shot.'
'If I don't, I said, I wish I may be shot, and to convince you that I
am in earnest in what I say, I will come back this way in a week
or ten days, and if you will get up a gathering of the people, I
will make a speech to them. Get up a barbeque and I will pay
for it.'
No, Colonel, we are not rich people in this section, but we have
plenty of provisions to contribute for a barbeque and some to
spare for those who have none. The push of crops will be over in
a few days and we can afford a day for a barbeque. This is
Thursday. I will see to getting up on Saturday week. Come to my
house on Friday and we will go together and I promise you a
136
very respectable crowd to see and hear you.'
'Well, I will be there. But one thing more before I say good-bye. I
must know your name.'
'Yes.'
'Well, Mr. Bunce, I never saw you before though you say you
have seen me, but I know you very well. I am glad I have met
you and very proud that I may hope to have you for my friend.'
I have known and seen much of him since, for I respect him -
no, that is not the word - I reverence and love him more than
any living man, and I go to see him two or three times every
year; and I will tell you, sir, if every one who professes to be a
Christian lived and acted and enjoyed as he does, the religion of
Christ would take the world by storm.
137
But, to return to my story. The next morning I went to the
barbeque and to my surprise, found about a thousand men
there. I met a good many whom I had not known before, and
they and my friend introduced me around until I had got pretty
well acquainted - at least, they all knew me. In due time notice
was given that I would speak to them. They gathered up around
a stand that had been erected. I opened my speech by saying:
I went on to tell them about the fire and my vote for the
appropriation and then told them why I was satisfied it was
wrong. I closed by saying:
And now, fellow citizens, it remains only for me to tell you that
most of the speech you have listened to with so much interest
was simply a repetition of the arguments by which your
neighbor, Mr. Bunce, convinced me of my error. It is the best
speech I ever made in my life, but he is entitled to the credit for
it. And now I hope he is satisfied with his convert and that he
will get up here and tell you so. He came upon the stand and
said:
He went down, and there went up from that crowd such a shout
for Davy Crockett as his name never called forth before. I am
not much given to tears, but I was taken with a choking then
and felt some big drops rolling down my cheeks. And I tell you
now that the remembrance of those few words spoken by such
a man, and the honest, hearty shout they produced, is worth
more to me than all the reputation I have ever made, or ever
138
shall make, as a member of Congress."
139
MY THIRD PARTY EXPERIENCE
The idea of using federal property to pay for the cost of Social
Security Benefits was originally proposed by Howard Phillips,
the founder of the Constitution Party. His proposal was to phase
out the Social Security System, and use the property owned by
the Federal Government as a source of funds, to pay off existing
recipients. The proposal to phase out the Social Security System
is simply not workable in my opinion. We need a system which
provides a social safety net for retirees.
140
promotes a pervasive and continuing form of corruption.
141
of their own desire for personal or party power above the
interest of the voters and taxpayers is a very pernicious form of
institutionalized corruption, and must be ended.
If the voters in this country are not willing to make the effort to
elect third party or independent candidates, they will get more
of the same from Congress. The special interest groups know
how the system is structured, and they will continue to buy the
favor of various Committee Chairman, so they can continue to
have the power to influence legislation.
142
willing to cover third party candidates, and voters are willing to
elect third party candidates. A person must get elected before
he can propose the necessary legislation.
143
ABOUT THE AUTHOR - LES TOWNSEND
I was on pain pills and not able to do much of anything after the
surgery, to remove the cancerous prostate. During this period, I
failed to file a required change of address notice with the State
Insurance Commissioner, and as a result my license to sell
insurance was revoked. Because of the loss of the license, I was
144
forced to turn most of my pension administration clients over to
a different pension administration firm. The bottom line is that I
survived the battle with cancer ( my last PSA test was 0.03 ),
but my business did not survive the cancer and the tender
attentions of our government regulators.
145
THE PROBLEMS
2. The Shadow Party: How George Soros, Hillary Clinton and Sixties
Radicals Seized Control of the Democratic Party
by David Horowitz and Richard Poe
http://www.amazon.com/Shadow-Party-Hillary-Radicals-
Democratic/dp/1595551034/ref=sr_1_1?
ie=UTF8&s=books&qid=1255817062&sr=1-1
OATH OF OFFICE
3. Ibid; p 223
4. Ibid; p 265
5. Ibid; p 94
146
A HISTORY OF FISCAL MISFEASANCE
3. Ibid; p 239
4. Ibid; p 861
5. Ibid; p 744
6. Ibid; p 1150
7. Ibid; p 1235
147
THE GLOBAL WARMING CULT
5. Ibid; p 1263
2. Ibid; p 990
3. Ibid; p 991
148
2. Forbes - Bruce Bartlett, 05-15-09
The 81% Tax Increase To pay for government's promises on Social
Security and Medicare.
http://www.forbes.com/2009/05/14/taxes-social-security-opinions-
columnists-medicare.html
2. Ibid;
8. Ibid; p. 259
9. Ibid; p. 175
11. 2009 Medicare Annual Report Officially Titled “2009 Annual Report of
the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds Page 178.
12 Ibid; p. 137
149
2. CALPERS Facts at a Glance
http://www..ca.gov/index.jsp?bc=/about/facts/home.xml
1 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Http://www.ssa.gov/OACT/TR/2009/index.html
1 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Page 107, Table V.C1
Http://www.ssa.gov/OACT/TR/2009/index.html
1 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Page 107, Table V.C1
Http://www.ssa.gov/OACT/TR/2009/index.html
150
PROPOSALS TO RAISE TAXES OR CUT BENEFITS
1. Fox News article dated Feb. 20, 2003 2008 with an example of how
illegal aliens are in fact qualifying for benefits.
http://www.foxnews.com/story/0,2933,79013,00.html
151
3. U.S. Supreme Court Case
Carmichael v. Southern Coal and Coke Co., 301 U.S. 495
http://supreme.justia.com/us/301/495/
4. 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Http://www.ssa.gov/OACT/TR/2009/index.html
152
10. Bureau of Land Management Coal
http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy.html
Coal
http://www.eia.doe.gov/neic/infosheets/coalreserves.html
13. Ibid
153
NOT YOURS TO GIVE
2. Library of Congress
Main Title: The life and adventures of Colonel David Crockett.
Published/Created: New York, London, Beadle and company [1862]
http://catalog.loc.gov/cgi-bin/Pwebrecon.cgi?
DB=local&BBID=7368168&v3=1
154
INDEX OF TABLES AND ILLUSTRATIONS
Revenues, outlays and debt held by the public from 1969 to 2008 11
House Roll Call Vote on 2007 water bill 15 – 18
Senate Roll Call Vote on 2007 water bill 19
House Roll Call Vote on American Clean Energy and Security Act 38 – 41
Sources of Retirement Income for various income groups 53
Social Security and Medicare Contribution Rates 55
Income subject to OASDI from 1937 to present 56
Historical rates of return on CALPERS and Social Security Trust Fund 61
Sample of Interest rate assumptions used by some large corporate plans 62
Hypothetical asset growth at 90% of the CALPERS rate of return 63
Illustration 1 – Benefit Computation for Average Participant 69
Illustration 2 – Asset accumulation using historic contribution rates 7172
Illustration 3 – Asset accumulation using current contribution rates 7374
Illustration 4 – Asset accumulation using historic contribution rates at 8% 7778
Illustration 5 – Asset accumulation using current contribution rates at 8% 7980
Illustration 6 – Medicare with historical rates and earnings 8182
Illustration 7 – Medicare with historical rates and 8% earnings assumption 8384
Illustration 8 – Medicare with current contribution rates using an 8% earnings 8586
Illustration 9 – Combined Soc Sec and Medicare using current rates at 8% 8788
Illustration 10 – Social Security benefit computation without indexing wages 91
Computations showing that payroll tax rates are not uniform 101
Table showing estimate of potential oil royalty revenue 122
155
ALPHABETICAL INDEX
Abortion – 28, 46, 128, 140 Mandate – 95, 99, 100, 101, 103, 109, 112
Abortion – 28, 46, 128, 141 McCain, J ohn – 46
Barack Obama – 44, 113, 114, 151 Oath of Office – 2, 4, 6, 7, 8, 9, 10, 13, 20, 21, 22, 25, 29,
Black, J ustice – 117 94, 127, 129, 130, 131, 143, 146
CALPERS – 61, 63, 150 October surprise – 46
Campaign for Liberty – 129, 131 Oil – 1, 2, 32, 34, 35, 47, 49, 50, 60, 64, 118, 119, 120,
Cancer 20, 144, 145 121, 122, 123, 124, 130, 142, 143, 145, 148, 152, 153
Cardozo, J ustice – 106, 112, 114 Oil Shale – 119, 122, 123, 153
Carmichael v. Southern Coal and Coke Co. - 104, 152 Palin, Sarah – 48
China – 12, 35, 43, 120, 121, 152 Patriot or patriots – 2, 4, 5, 13, 41, 126, 128, 129, 130,
Civil Officer 8, 22, 23, 24, 25, 43 131, 143
Clinton, President – 12, 14, 25, 124 payroll taxes – 57, 62, 92, 102, 103, 104, 105, 109,
Constitution – 1, 6, 7, 8, 9, 10, 12, 20, 21, 24, 26, 27, 111, 114, 115, 118, 154
28, 29, 30, 31, 32, 33, 35, 36, 37, 45, 49, 51, 96, 97, Poe, Richard – 130, 146
98, 101, 102, 103, 104, 105, 107, 108, 109, 111, 113, Porker – 12, 128
121, 124, 126, 129, 130, 133, 134, 135 Price, Leigh – 123
136, 140, 141, 147 protective claim – 102, 103
Cult or Cultist – 9, 33, 34, 36, 37, 42, 43, 44, 148 Radicals – 4, 5, 33, 36, 41, 43, 131, 146
Customs – 46, 50 Regulation or Regulations – 9,26, 27, 29, 30, 32, 102, 147
David Horowitz – 4, 130, 146 Reserves – 62, 107, 119, 122, 123, 124, 153
defined benefit plan – 48, 58, 61, 62, 65, 67, 103, Resolution – 27, 34, 119
117, 118, 144 Resources – 1, 2, 20, 29, 31, 33, 34, 35, 116, 119, 122, 124,
Eco-terrorists – 1, 31, 34, 35, 36, 124, 125 125, 147, 153
Exception – 8, 25, 26, 27, 30, 32, 105, 113, 147 Restrictions – 7, 31, 32, 50, 106, 113, 120
Excise – 50, 95, 96, 97, 98, 99, 101, 105, 106, 107, roll call – 12, 14, 18, 37, 126, 147
108, 109, 110, 112 Romney, Mitt – 89
Extremists – 1, 4, 33, 34, 119, 126, 130, 143 Social Security Trust Fund – 1, 34, 35, 48, 49, 59, 63, 65, 119,
Fair Tax – 45 120, 121, 122
Fleming v. Nestor – 115, 152 Soros, George – 4, 146
Gerrymander – 3, 4, 129, 146 Spending – 1, 2, 11, 12, 13, 14, 20, 48, 49, 68, 74, 75, 89, 126,
Globalist – 43, 44, 45, 46, 47 129, 130, 131, 139, 140
Harlan, J ustice – 115 Steward Machine Company – 104, 105, 106, 107, 110, 112, 151
Helvering v. Davis – 52, 104, 107, 112, 113, 116, 149, Tariffs – 46, 50, 51, 93, 95, 134
151 Tea Party – 4, 127
High Crime – 22, 23, 24, 27, 30, 31, 35 Thompson, Fred – 89
imported oil – 1, 2, 31, 119, 130, 142, 143, 145, 152 Uniform – 9, 101, 105, 106, 112, 113
Incumbent – 3, 4, 8, 126, 128, 129, 130, 131, 142, 143 Veto – 4, 9, 12, 14, 17, 20, 124, 126, 147
IRS – 45, 46, 50, 54, 66, 100, 101, 102, 103, 109, 111, Water Bill – 4, 12, 14, 18, 20, 126
113, 116, 144, 151 welfare plan – 54, 65, 118
Kansas City School System – 32, 147
156