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Thursday, October 13, 1983

83'yearold woman may lose home, SS

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HEMPSTEAD, Texas — An 83-year-old woman who is deaf and confined to a wheelchair may lose her home and Social Security income because of highway ex­pansion near Hemostead.

Jessie Oeslln lives in a house beside Texas Highway 6. which runs between Waco and Houston. The highway is scheduled to be widened from two lanes to four, and Mrs. Deslln's house Is In the way ol the expansion.

State highway officials offered to build a new bouse for Mrs. Des-lln near her present one. They also offered Mrs. Deslin the op­tion of moving her house 50 to 100 feet back from the highway.

Mrs. Deslin chose the second option and agreed to sell the highway department 1.25 acres of the 2? acres she owns near Hemp-stead. She was paid $9.718 tor the land.

What Mrs. Deslin didn't real­ize was that moving the house would require that It undergo ex­tensive improvements and re-pa i rs be^ojesjhejroujdjjejje^mit^ ted to move back In. The move would cost her $3,000 to $5.000 that she doesnt have.

She also found out that Soda! Security officials now plan to car-tail her $280-a-raonih Supplemen­tal Security Income payment be-cause of the money she received for her land.

Officials said the case Is com­plicated because Mrs. Deslin Is deaf, and they have bad diffi­culty communicating with her. She often bursts into tears when discussing the situation.

Mrs. Deslin said the official* •re "mean."

"I cant sleep at nfgbt because Pm so worried about what they're doing to me," Mrs. Deslin said. "I'm an old lady. Why are they being so mean to me? 1 just want to live out here in peace."

Michael Aodreozzl.a Bellvtlle. Texas, attorney representing Mrs. Deslin. said Social Security Administration rules forbid counting money received for re­locations as Income.

But Andreoni said officials at the Social Security office In Bren-ham. Texas, refuse to change their minds concerning Mrs. Des-' tin's case.

Andreozzi said be has do choice but to take the case to court.

They take her land, and they give her an amount of money that wont pay the cost of moving ber house," Andreoni said. "And, in the meantime, she loses her So­cial Security."

Highway department official Jim Pierce said be has tried to find a solution.

"She really dldnt have any choice but to sell us that land." Pierce said. "We were going to pet the property either war.

"I feel for the old lady, but there's only so much we can do. You cant communicate with ber, and there's just nobody to take charge and made a decision for her. Every time I go out there, she cries."

Pierce said be has unsuccess­fully battled the Social Security Administration in Mrs. Deslin's behalf.

this aspect of Social security. If Steve's benefits had been coming from a private charity or insurance com­pany, such agencies would have worked out a program with Steve that might have allowed him to earn money so that he could gradually get back on his feet without cutting off his disability benefits completely. Such arrangements simply cannot be worked out (by law) with the government. Under such laws a person either accepts being disabled and gets all the aid he is eligible for or he tries to work and loses all those benefits. These government programs actually encourage citizens to become totally dependent and accept the government stipend rather than seek ways to become even partially self-supporting.2

Foreign Freeloaders

Several years ago, while having lunch with two women of Italian extraction, the subject of taxes and Social Security came up. Anna, it turned out, was annoyed at the numbers of people she knew who apparently had come over from Italy just to qualify for Social Security. According to her, people came over from Italy and worked for five years or so and then went back to Italy and collected (by Italian standards) a sizeable retirement from America's Social Security program.

2 Today there are provisions that would allow those who are dis­abled to earn money over a nine month period without losing benefits. But between the red tape, the arbitrary manner these provisions are enforced and the penalties involved for those who might attempt to work, recipients are, once again, encouraged to collect benefits for disabilities rather than try to become fully (or even partially) self-supporting.

Remember, Social Security is substantially weighted in favor of those who qualify for minimum benefits. Such individuals receive a much larger pro­portional benefit than those who pay higher taxes over a longer period of time. I was surprised by this disclo­sure since I had never heard of it before, so I asked, "How many people do you know who are actually doing this?"

"I know of at least ten people who are here from Italy for just that reason," Anna replied.

"Oh, come on Anna, you can't possibly know that many people who are here for that reason only," I said. Although New Haven, Connecticut has a substantial percentage of people who are of Italian extraction, I was still a little shocked by that figure and assumed that Anna was exaggerating a bit.

Even her friend Maria, while aware of the situa­tion, agreed with me and turning to Anna said, "Come on Anna, you don't know that many."

Suddenly an animated discussion developed be­tween the two as Anna attempted to prove her point.

"Well," said Anna, "there's Vinnie's uncle Fred; and how about Nicky's aunt Carmelina?" They con­tinued talking, tallying up all those they knew who came from Italy to get on Social Security.

Finally, Maria turned to me and said, "Gee, Irwin, I guess we do know ten people who are here from Italy."

Needless to say, the revelation that these two women alone knew of at least ten people who had come here from Europe to rip-off the American taxpayer through the Social Security system shocked me.

While in Chicago I told that story to some people as we were eating dinner. One woman of Polish extraction said, "Well, they come over here from Poland for the same reason."

Apparently this is common and a well known fact in areas populated by large ethnic groups. Figure 48 is part of an IRS brochure, especially designed for people collecting Social Security benefits who live outside the United States. Note that the brochure comes printed in a variety of foreign languages. Obviously a number of these recipients didn't stay in America long enough to even learn our language! Note that the pamphlet in­structs these foreigners that they should notify the U.S. government if their economic situation changes (so their benefits could be reduced accordingly). Can you see how American taxpayers are being ripped off? Do you think that such foreign nationals, living in a for­eign country (receiving old age, disability or dependent benefits derived from working Americans), would be stupid enough to notify our government so that those benefits could be reduced1? Especially when our govern­ment would have no way of knowing if or when such benefits should be reduced?! How stupid can the Amer­ican public be?

The Unemployment Rip-Off

While this book focuses especially on the OASDI aspect of Social Security, another part of the Act was the creation of unemployment "insurance". Though I can sympathize with the good intentions of those who favored such an "insurance" scheme, I am also well aware of the validity of the adage "the road to hell is paved with good intentions". I can think of no better proof of that wise saying than unemployment "insurance".

First of all, unemployment "insurance" is not in-


When are you outside of the U.S. ? |

When we say you are outside of the U.S., we mean that you are NOT in one oi the 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, or American Samoa. Once you have been away from the U.S. for at least 30 days in a row, you are considered to be outside the country until you return and stay in the U.S. for at least 30 days in a row.

Want more information? |

If you want more information than this booklet gives or if you have any ques­tions about Social Security, ask at any U.S. Embassy or Consulate or write to us at the address shown under "How to report" on page 3 .


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1 Introduction

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Figure 48 (continued)

Things that must be reported page

5 Change of address

6 Work outside the U.S.

9 Disabled person can work again or disability improves

9 Marriage

10 Divorce or annulment 10 Adoption of a child

10 Child leaves the care of a wife, husband, widow, or widower

11 Child nearing 18 is a full-time student or is disabled

12 Death

13 Inability to manage funds

13 Imprisonment for conviction of a felony

14 Deportation

U.S. Department of Health and Human Service* Social Security Administration SSA Publication Na 05-10137 June 19B3 *U.S. C.P.P. 198J- 381-5517 «

surance by any stretch of the imagination. From a purely economic point of view, such a program must increase unemployment.3 Though it is not my purpose

* For an explanation, see The Biggest Con, pages 222-223.

here to examine the economic implications of this pro­gram, I would like, at least, to discuss how the program operates in the real world.

Several years ago I moved into an apartment com­plex in southern Florida. At the same time, another gentleman (who had operated his own real estate busi­ness in a northern city) moved in also. Since he was eligible for maximum unemployment compensation, he was determined not to begin work again until he had exhausted all his benefits — and he did just that. He relaxed by the pool and played tennis every day for a year, when he could easily have found employment had he had any incentive to do so. But why should he? He was getting a sizeable unemployment check so he could take a year-long vacation. He did go to the unemploy­ment office each week and said that he was looking for, but could not find, a job. That, of course, was sheer bunk.

If the government had not been paying him not to work he would have found a job in short order. Everyone knows of similar instances where those collecting un­employment "insurance" really do not seriously bother to look for work until their benefits have run out.

Auto Workers-Getting More Money While Unemployed

Many unemployed auto workers were actually re­ceiving more money when they were laid off than they earned while working! Because of the bargaining power of the UAW, its members had a contract which provided that the automobile companies had to supplement state unemployment benefits, resulting in the auto workers receiving unemployment checks equaling approx­imately 90% of their working salary. The Federal gov-

ernment, however, had also inaugurated a program whereby those who became unemployed because of foreign imports would have their state benefits sup­plemented by an additional 40% in Federal money. In many cases, the combination of all these programs pro­vided auto workers with more money while they were unemployed than they were getting while working!

Hire and Fire Yourself!

I once met an accountant who specialized in doing books for small taverns, bars and grills. He explained to me how many of these owners would put fictitious peo­ple on their payroll so that they, themselves, could collect unemployment benefits. After paying such a tax for six months or so, the owner would go down to the unemployment office and apply for benefits claiming he was the phantom worker who had been fired from the establishment. Should the agency check with the place of business, the owner, of course, would verify that the worker (himself) had, indeed, been fired. This scheme may have necessitated the creation of phony Social Security and identity cards, but the people involved in such schemes knew all these tricks. I discovered it was not all that difficult to fool bureaucrats with such shenanigans.

I also understand that many marginal production shops are run on the basis that those hired will work for five or six months and then be "fired" so they can collect unemployment benefits for six months to a year. There are lots of people who are apparently willing to work on this basis because they know they will be able to take a long, paid vacation after working for only a few months.

Unemployed Actors and Ballplayers

The whole country was alerted some months ago to the fact that Ronald Reagan's son would be collecting unemployment "insurance" between dancing engage­ments. This, again, is but another aspect of the unem­ployment "insurance" rip-off. In certain professions un­employment was always accepted as a matter of course. Actors were always "unemployed" between shows; en­tertainers and musicians were "unemployed" between engagements; baseball players generally did not work in the winter months; and hockey players were "laid off' in the spring and summer.

All such professions generally pay higher wages to compensate for these periods of "unemployment" be­tween jobs and/or seasons. The system has now, howev­er, introduced an entirely unnecessary and ludicrous element to occupations where "unemployment" had no real meaning and was inherent in the profession itself.

So who actually pays the cost of real estate brokers who take a year's vacation to swim and play tennis; or the small businessman who fires himself so he can collect; or entertainers who collect unemployment ben­efits between engagements; or individuals who work six months then get fired, taking a six month vacation every year? Who pays? The public pays in terms of higher prices for everything that they buy which inevit­ably leads to a lower standard of living. All Americans suffer a reduced standard of living because of the econo­mic abuses created by unemployment "insurance"; which, in turn, was created by politicians who con­tinually use the program to get votes from an unin­formed and gullible public.

Social Security Is In Trouble Because Americans Now Live Longer Than When The Program Was Established

While listening to the radio a few months ago, I heard a government official discussing the reasons he believed Social Security was in trouble. All the reasons he gave, of course, were sheer nonsense, but his major contention was that Americans were living far longer today than they were when the program was first estab­lished and, therefore, the program was in trouble.

What this bureaucrat didn't tell the public was that over the years Social Security has consistently employed no less than 25 actuaries. Why didn't these actuaries take into consideration the increasing life expectancy of Americans so that taxes and benefits could be adjusted accordingly? Can you imagine what would happen if John Hancock, Prudential, Metropoli­tan (or any other of America's insurance companies) sent out letters to those who purchased retirement poli­cies years ago, stating that because Americans were currently living longer they could not give them the benefits promised in their policies? Congress would immediately launch an investigation and, if such were true, the officials of the company would be indicted and imprisoned. Well, the same thing should be done to government employees who promised certain "insur­ance" benefits to the American public and now are apparently welching on those promises.

Social Security "Trustees" — Why Aren't They Liable?

Every year the trustees of Social Security (the Sec-

retaries of the Treasury, Labor and HEW) issue a Trus­tee Report. Over the last dozen or so years each of these reports recommended substantial increases in Social Security taxes. Congress, however, (for obvious politi­cal reasons) never adopted the increases recommended by the trustees. The point is, what purpose did these "trustees" serve? The existence of trustees created the illusion that somehow "trustees" were watching the store. Normally, trustees have a fiduciary responsibil­ity to protect the assets over which they have agreed to serve as trustees.

In the private sector, if there are trustees and it is discovered that the funds for which they have accepted responsibility are gone, the trustees are held personally liable. I don't see why Social Security trustees should be treated any differently since they agreed to be trustees in the first place. If they assume no personal liability, why were they called "trustees"? Were they called "trustees" merely to provide the public with a false sense of security?

In the past when trustees recommended substan­tial increases in Social Security taxes and Congress didn't go along with these recommendations, these trustees should have resigned. Such resignations would have alerted the American public that the pro­gram was in trouble. Instead, they made recommenda­tions that were ignored and did absolutely nothing. These "trustees", therefore, aided and abetted Congress in creating the illusion that Social Security was sound and had the capital to pay for the benefits the govern­ment was promising. As such, these trustees are culp­able and, in my view, individually liable for the fact that Social Security is now bankrupt and cannot pay the benefits promised. To the extent that such "trus-

tees" are provided with pensions by the Federal govern­ment, such pensions should be stripped from them since there is no question that there is a debt they owe the American public. They allowed themselves to be used to mislead the nation.

Government Officials Should Have Pensions Cut Before The Public Accepts Cuts In Social Security Benefits

In addition, the public should demand that elected officials (especially former members of Congress and members of the Presidential office) should have their generous government pensions cut before the public accepts any cuts in promised Social Security benefits. Why should the politicians who promoted the Social Security swindle be permitted to cut the public's pen­sions while receiving no cuts in their own pensions? I cannot see why past Presidents such as Nixon, Ford and Carter (who were minding the store when the Amer­ican public was being swindled and lied to about Social Security) should now receive pensions and other benefits in excess of $100,000 per year eachl

In the event that it is claimed that government employees pay for their own pensions (as opposed to contributing to Social Security), all government em­ployees should have their retirement pensions cut to the extent that the public must now accept cuts in Social Security benefits.


1. The payment of Social Security taxes compels many (those with shortened life expectancies and no dependents) to purchase "benefits" for which they have no need; denying them the right to buy, acquire and enjoy those things which are far more important to them.

2. While disability payments may appear to be hu­manitarian, they also promote dependency and dis­courage a return to some sort of productive work.

3. Social Security permits aliens to rip off the Amer­ican taxpayer.

4. Unemployment "insurance" (a facet of the Social Security Act) is not insurance at all and, since it encourages rampant abuse, substantially lowers the nation's standard of living.

5. Social Security's so-called "trustees" should be held liable for the funds they oversee just as private trustees are responsible for the funds they oversee.

6. Government officials and employees should have their pensions cut (at last!) to the same extent that Social Security recipients have theirs cut.



Dropping Out of Social Security Is In The National Interest

Social Security taxes paid by the employer and employee will be increased in 1984 to 13.7% of payroll (and to 14% in 1985) while Social Security taxes for the self-employed will jump from 9.35% to 11.3%. Thus self-employeds who earn $37,800 or more will find their Social Security taxes going up by $932.45 in 1984. A hard working, single entrepreneur (earning $37,800 from his own business) could find himself paying $4,271.401 in Social Security taxes in addition to a possible $8,000 in regular "income" taxes. His com­bined total Federal tax bill (forgetting about other Federal excise or state and city taxes) could be in excess

1 The combined tax for employees receiving this amount in wages will be $5,178.60. Remember, though, that the maximum pro­jected combined tax when Social Security started was $180.00!

of $12,000 leaving him with less than $25,000 to both live on and attempt to expand his business!2

Given this level of taxation, is there anyone in his right mind who would claim that such an individual (and millions of others like him) is "free"? If they could, how do they then define serfdom? Or slavery?

It is obvious that working Americans are held in feudal bondage by a Washington bureaucracy that takes more from them than the 25% that medieval Lords extracted from their own serfs. What amazes me is why (supposedly) free Americans passively turn over so much of their productivity to government!

Big Business Serves Big Government

Big business in America is not run for the benefit of the owners (the stockholders), but is run principally for the benefit of the Federal government3 and the corpo­rate employees (both blue collar and executive). The executives who run America's large corporations do not own these businesses and could resign or be fired tomor­row. They are, therefore, not going to stick their necks out (risking their positions) to implement a radi­cal program that doesn't promise to significantly in­crease their own paychecks. They refuse to "rock the boat". Besides, they get enough non-taxable benefits (such as generous expense accounts, pensions and numerous other "perks") to take the sting out of the taxes they do pay. In addition, large corporations do a lot of business with the Federal government and so the

1 The Federal government has practically guaranteed that the only way many small businesses can grow is if their owners perjure themselves on their tax returns in order to retain some of the money the government tries to extort from them.

8 All of America's major corporations have actually been national­ized. See The Biggest Con, pages 137-139.

executives of these companies may be reluctant to jeopardize this relationship (a relationship they feel is dependent upon their willingness to collect t?.xes) as illegal as it might be.

Small businessmen,4 on the other hand, won't be intimidated by such considerations. They are painfully aware of how taxes and never-ending red tape are undermining their businesses and, in turn, their ability to pass their businesses on to their children. It is the small businessman whose economic fortunes will in­stantly brighten by his refusal to go along with either paying or collecting Social Security taxes. For small businessmen, not paying or collecting these taxes may be the difference between staying in business or shut­ting down. By not withholding Social Security taxes from workers, employee wages will effectively be in­creased at no additional cost to the employer. In addi­tion, the employer's portion can also be used to either increase capital or to further increase employee wages. It is my belief, therefore, that the small businessman will be instrumental in implementing the measures recommended in this book.

Social Security Taxes Responsible For Business Shutdowns

Many large corporations would also benefit if they refused to go along with the Federal government's ille­gal taxing measures. The absentee ownership nature of corporate America (and its reliance on legal counsel5) simply prevents major American corporations from

4 And there are 12,000,000 small businessmen and women in America today.

' Which guarantees that they will get the wrong legal advice with respect to Federal taxation.

acting in the best (long-term) interest of their stockhol­ders. Perhaps stockholder suits should be instituted to stop America's large corporations from acting as gov­ernment tax collectors to the detriment of both the corporations and themselves.

For example, Frank Bormann (President of East­ern Airlines) announced that unless Eastern employees took a 15% pay cut, Eastern would be forced into bank­ruptcy. The public is generally unaware that salary levels in America are forced up to compensate for the Federal taxes that are taken out. In addition, Federal taxes, in an economic sense, can be viewed as a Federal tax on payroll. In other words, an employee's net wage can be viewed as his actual wage, and all Social Secur­ity and withholding taxes that he and his employer pay can be viewed as a single excise tax paid by employers on their overall net payroll. You can see that on this basis alone Social Security taxes, plus the cost of their collection, easily accounts for 15% of employee payroll in the United States.

Since this is precisely the amount that Eastern said it needed to save in order to forestall bankruptcy, it is obvious that if their workers did not agree to a pay cut Eastern would have been forced into bankruptcy be­cause of the cost of the Social Security taxes that the company believes it has to collect and remit to the Federal government. Because of such taxes Continen­tal Airlines did, indeed, go bankrupt. If it could have avoided this expense (equivalent to 15% of its payroll), would it have gone out of business?

The same can be said of Braniff and Woolco. Would these two companies have gone out of business (creat­ing economic and social insecurity for their employees)

if they hadn't been subjected to such unnecessary and artificial, government-created payroll expenses?6

Government Increases Payroll Costs 35%

But wait, additional employee withholding taxes account for approximately another 20% of payroll which means that American businesses pay the Feder­al government a tax equivalent to about 35% of their payroll (apart from all the other taxes they pay) simply for the privilege of staying in business! Isn't it obvious that these artificial and unnecessary costs are the forces that are driving American companies (like East­ern, Continental, Braniff and Woolco) into bankruptcy? If Continental, Braniff and Woolco did not have these costs to contend with, would they have gone out of business or would Eastern have contemplated bankruptcy?

Prior to 1942, American businesses did not have to contend with such outrageous, artificial costs. They merely concentrated on turning out competitive pro­ducts while generating and retaining the capital neces­sary to do it. Today, businessmen waste considerable time and energy merely trying to figure out ways to avoid paying taxes. A huge business in tax shelters has developed wherein a lot of human energy and time, as well as capital, is diverted into creating and searching for investments whose only merit is that they will generate tax deductions greater than the capital in­vested in them. Such wasteful investment activities were not a part of the American economic scene prior to 1942. No wonder America has lost its position as the

' Used mostly to fund illegal and asinine Federal projects.

world leader in the production of well-made, low-cost consumer goods.

Show me a businessman who might be contemplat­ing going out of business, who would still consider doing so, if he understood that he was not required to pay either Social Security or ordinary "income" taxes. Not only would such an individual not consider going out of business, he would undoubtedly make plans to expand!

The social(ist) planners who promised American workers that Social Security would deliver all kinds of free goodies forgot to tell them that these goodies would be purchased by adding artifical costs to the price of all American-made goods; or that these very costs would (literally) collapse American businesses and spread the very economic and social insecurity that the program (Social Security) promised to eliminate. This is why the system should (correctly) be called Social ^Security because that is what the program delivers.

What Will Happen To The Country If Social insecurity Is Eliminated?

First of all, true "social security" rests upon econo­mic security which involves a society's ability to effi­ciently turn out a profusion of goods and services;7 and it is obvious that Social mSecurity taxes substantially reduce America's ability to do just that! In the final

7 A good example of this is Japan. One hundred million people with practically no resources have created a standard of living compa­rable to ours and actually outproduce us in many areas. True, we spend a greater percentage of our GNP than Japan does on national defense, but this hardly accounts for the difference. It wasn't too long ago that Japanese products simply couldn't hold a candle to American-produced goods. The question that Amer­icans must ask is how can Japan do so much with so little while (in comparison) America now does so little with so much?!

analysis, it is not a question of whether Social wSecur-ity will end—the only question is how and when it will end. The recommendations of the 1983 President's Commission (to reduce Social insecurity benefits by subjecting a portion to taxation and postponing retire­ment benefits for younger workers) amounts to an attempt to keep Social wSecurity alive by extracting higher taxes while giving even fewer benefits to Amer­icans under 40. Unfortunately, these recommendations are only illusions used to postpone the day of reckoning. The Commission's projected Social insecurity receipts did not take into account the destructive economic im­pact that higher Social znSecurity taxes (and higher budget deficits) must inevitably deliver.

Irresponsible Politicians Will Allow Situation To Deteriorate

This nation is now too broke to send paychecks to 36 million people each month for not working and the U.S. Congress knows it. But that collection of overpaid, overpensioned influence-peddlars don't have the in­tegrity or the backbone to honestly admit this to the public. They, therefore, will let matters get progres­sively worse (as long as they can continue to get re-elected) until the roof caves in.

Congress knows that the 1983 deficit (as well as the projected deficits for the next several years) is in the neighborhood of $200 billion. Financing such deficits (at 10% interest) will add approximately $20 billion a year (in interest) to each succeeding year's budget. To put this sum in perspective, you need only consider that the total 1984 annual budgets for the Department of the Interior, the Department of Justice, the Department of State, the Department of the Treasury and the En­vironmental Protection Agency don't (collectively)

amount to $18 billion a year! Therefore, Congress' un­willingness to balance the current year's budget (by cutting out expenditures that the nation obviously can't afford), means that it is willing to add the equiva­lent of five new departments and agencies to each suc­ceeding year's budget! So, while the Federal govern­ment obviously cannot even afford this year's expendi­tures, Congress, nevertheless, intends to substan­tially increase next year's (and succeeding year's) expenditures!

How Congress Plans To "Deal" With The Problem

Where will it all end? Senator Proxmire already gave us the answer: the government will eventually pay off Social insecurity claims (and all other claims) with printing press money money that won't buy anythingl America's politicians are planning to dupli­cate here what happend in Germany in 1922. Such a situation will obviously create economic devastation comparable to an atomic attack and the destruction will not be wrought by Soviet missiles or foreign agents but, rather, by our own Congress! None of America's ene­mies ever succeeded in delivering the type of economic destruction that the U.S. Congress is planning for all of us if we don't stop them first.

Social insecurity beneficiaries must understand that they have a vital stake in a healthy American economy. If the program that they think they need succeeds in collapsing that economy, where will they be? It is those Americans who are the most dependent who stand to suffer the most from the devastation that the U.S. Congress promises to deliver. Whether they realize it or not, it is Social insecurity's present benefi­ciaries who most need to be saved from the dangers inherent in their own misguided hopes and beliefs.

Do Federal Politicians Really Care About The Public?

Many people have been conned into thinking that Social insecurity is a reflection of the Federal govern­ment's concern for the public. Such a belief is utter nonsense. Social insecurity was created for no other reason than to allow vote-seeking politicians to get elected by promising gullible voters "something for no­thing". As proof that Washington politicians do not give a hoot for the public, one need only consider the Federal government's agricultural policy. Its entire agricultu­ral program is designed to do nothing but create food shortages in order to artificially drive up food prices.8 If farmers ever organized (on their own) to do this they would end up in jail for violating the Sherman anti­trust laws. It is amusing to consider that in Russia the government had to decollectivize a segment of its agri­culture in order to increase food production, while in America the government, in essence, collectivizes agri­culture in order to reduce production.

If the Federal government was really concerned about the public, would it force higher food prices on us? In 1983 the Federal government actually spent $19.4 billion ($2 million every hour!) buying up such food products as milk, butter, cheese, peanuts and wheat just to keep them off the market! In addition, taxpayers are charged hundreds of thousands of dollars a day just to store the stuff. The American taxpayer is, therefore, delivered a two-fold blow by the government's agri­cultural policies: he is first taxed in order to subsidize the program and he is taxed again in the form of having

* And the program is not even helping the farmers because other government economic and fiscal policies are artificially increas­ing farm costs for labor, interest and energy which are responsi­ble for forcing farmers out of business.

to pay higher food prices because of the program! Is this the activity of a benevolent, considerate and rational government?

On November 7,1983 The New York Times carried a front page story subtitled "House to vote on Measure to Pay Farms Not to Produce". It reported on a pend­ing bill in the House of Representatives which, for the first time, "would pay dairy farmers to reduce production.. .".9 Incredibly, in the same issue (page 20), there was another story captioned "Hunger Comes to Family's Table at Month's End". The article dealt with poverty in West Virginia and stated:

"Like countless others who live in poverty across the country, the three children of Jerry and Betty Elkins know all too well what it is like to sit down to meager meals. 'We usually have bread and gravy the last few days of the month,' Mr. Elkins, who is 27 years old, said while waiting for a handout of Federal surplus food at Guyan Valley High School. 'This cheese and butter will really come in handy at our house.'

The Elkinses glanced at their children, ages 5, 6 and 7, as they talked about trying to stave off hunger in one of the most economically depressed areas of the country."

The article went on to quote Mrs. Elkins as stating:

"I couldn't tell you how many times we've made a meal on bread and water gravy, ... The kids don't complain, though, and I tell them, 'At least we're not starving.'"

' This bill passed the House of Representatives (by a vote of 325 to 91) on November 9,1983.

The article went on to report that:

"Nancy Amedei, the director of the Food Research Action Center in Washington, D. C. has heard many such accounts. She says the country is teeming with hungry children."

It also said that Paul Smith of the Children's Defense Fund agreed with Ms. Amedei that hunger had become endemic among poor children in the United States and quoted him as saying:

"We're not talking about acute, caloric starvation ... This is not Bangladesh. What we're talking about is a regular and chronic lack of proper nutrition."

The article further stated that:

"In McDowell County, where more than 30 percent of the work force is unemployed, school officials say hunger is a way of life for many children."

It also quoted Frances Whitten, the administrator of the county's school breakfast and lunch programs as stating:

"Very definitely, there are hungry children in this county."

Federal Government Creates "Poverty"

So, while the nation is "teeming with hungry chil­dren" our representatives in Washington devise methods to cut food production! What sort of idiotic nation have we become?!

If it were not for the Federal government's policy of creating food shortages in order to drive up food prices, food would be so plentiful (and cheap) that the concept

of poverty (associated with the inability to feed oneself) would be unkown in America. So if we do have poverty in our country it is because the morons in the U.S. Congress have created it!

By eliminating a number of government projects along with Social mSecurity (such as farm subsidies and minimum wage laws), we will eliminate both poverty and unemployment in one fell swoop and all Americans (including those currently on Social in-Security) will be a lot better off.

If, after eliminating such programs, any American still needed financial assistance, the additional prosperity that the elimination of these programs would create will allow local governments and private charities to help such individuals on a far better basis than they are how being "helped" by the Federal government.

In essence, those who cling to a belief in Social mSecurity (whether they know it or not) actually cling to a belief in socialism — the belief that centralized planning by bureaucrats can overcome economic need better than a free economy can. It should be pointed out that America developed into a powerful country with­out Social mSecurity and if such a program was un­necessary before 1942, it certainly is even less neces­sary today given all the advances in technology that have occurred since then.

Most Government Expenditures Are Either Illegal Or Unnecessary

Figure 49 shows how the Federal government's 1984 revenues and expenses are allocated. Notice that direct payments to individuals account for 42% while grants to states and local communites account for another 11%, or a combined total of 53% of the total


Federal budget! This shows us that 53% of Fed­eral expenditures are largely unnecessary and unconstitutional.

As you already know, the Constitution does not per­mit the Federal government to tax some Americans for the specific benefit of others. But because of the govern­ment's success in getting Social insecurity through the courts, it was able to expand such types of illegal ex­penditures. It is also nonsensical for the government to tax citizens and then send the money back to them in the form of state and local grants. Citizens have to lose in such transactions since substantial portions of their taxes will remain with the Federal government for merely arranging this needless "round trip". Prior to 1942 such expenditures were practically nonexistant in the Federal budget and only developed because the government was allowed to establish a Social ircSecur-ity tax in 1938 and, further, to establish withholding taxes in 1942 (originally created as a temporary World War II "Victory" tax).

By getting the government out of all those areas into which it has now blundered (such as Social in-Security, agriculture, education, labor relations, "hu­man resources", etc.), we will force them to concentrate on the only two areas where the Federal government is really needed—national defense and foreign policy. By forcing them to concentrate in these two areas not only should we get a better foreign policy and national de­fense, but we should get them at a substantially lower cost.10

10 With few exceptions, most everything else the Federal govern­ment does outside of these two areas should be left to either state or local governments, private enterprise, charitable organiza­tions — or should not be done at all!

Congress Will Not Act Responsibly — So You Must!

The Federal government is now so huge and un­wieldy that it is impossible for it to control its own costs.11 Government waste is rampant in one depart­ment after another. The continual increases in govern­ment expenditures have undermined and now threaten the nation's entire industrial plant. It must be recog­nized that America's military potential rests on its industrial base. Anything that undermines and weakens that base weakens America's military strength. Less taxation, therefore, is essential in order to improve America's industrial strength as well as its military power.

Federal politicians, however, now facing a $200 billion deficit, threaten to raise taxes even further in order to "reduce the deficit". There is no way (compati­ble with economic health) that taxes can be raised high­er then they already are. If anything, they must be lowered!! But the only way that this can be done is if the U.S. Congress drastically reduces Federal spending. But an irresponsible Congress (fearful of losing the money and political support of various and sundry pressure groups) will not significantly cut Federal expenditures.

A Ticking Time Bomb

Congress knows that a $200 billion deficit12 is a ticking time bomb, but the scoundrels in Congress will

11 The Federal government even now refers to better than 50% of its expenditures as "uncontrollable".

12 Reported deficits below $200 billion will probably be inaccurate since they will not include "off budget" items. These unreported expenditures would have revealed that the 1982 deficit was actually $127 billion (which includes $17 billion in off budget items) and not the $110 billion reported.

do nothing to defuse it. They will be perfectly willing to sell out the nation's long-term welfare to gain their own immediate political ends.

Another major item in the Federal budget is in­terest. The American public now pays substantial amounts in interest on all the money that the Federal government borrowed to waste! It is important to recog­nize (in order to grasp the full extent of the U.S. Con­gress' total irresponsibility) that Congress has allowed a situation to develop wherein the interest now being paid by U.S. taxpayers on the Federal debt is twice as great as the taxes required to run all the other depart­ments of government — with the exception of defense! Compare this to a family that spends twice as much on interest as it does on food. Would the manager of such a household be considered responsible? Well, these are the types of "managers" the public has been sending to Washington!

Though the government only needs about 35% of what it currently spends to cover its legitimate needs, even this is too high as I will explain. But, in any case, the government could easily collect this amount in ex­cise taxes alone from the healthy economy that would be created if we would only eliminate 60% of what the Federal government does.

Examples Of Government Waste

While national defense makes up 29% of the budget, there is no doubt that this includes a substan­tial amount of pure waste. For example, at a hearing before the Senate Government Affairs Committee on November 2,1983, evidence was presented that Gener­al Dynamics sought to charge the Air Force $9,609 for a

hexagonal wrench that could be purchased for $.12 and $7,417 for a 3" steel pin that the Committee discovered they could get free in a Washington electronics store! The fact that such an outrageous attempt was even made is an indication of what General Dynamics and other government suppliers are obviously getting away with. Presumably if General Dynamics only sought to charge the government $10, $25 or $50 for these items (still outrageous) they probably could have got away with it! Can you imagine what defense contractors and other government suppliers actually get away with?

There is no doubt in my mind that given proper supervision, defense spending could probably be cut by 20% without any impairment in national defense.

The reason that taxpayers are so overcharged for national defense and other government services is that the President has to devote so much time to so many different government projects that he cannot give the necessary time and attention to the two areas for which he is specifically needed—national defense and foreign policy. In other words, the Federal government now sticks its nose into so many areas it cannot effectively do the job for which it is specifically charged under the Constitution and which cannot be done by local govern­ments or private enterprise.

Let's Have Real "Social Security"

To those who are fearful as to what this nation would be like without Social mSecurity, they need only consider what this nation was like, for example, in 1939. America had two World Fairs in 1939, one in San Francisco and the other in New York City. The people I recall seeing at the New York City fair were well dressed. There were roads with cars moving briskly

along. America obviously made it to 1942 without So­cial insecurity and I believe we were a healthier and mightier nation then than we are today. There is really nothing wrong with America that plowing under half of Washington, D. C. wouldn't cure. If there is anything to be said for Social mSecurity it is that the program can at least serve as a horrible example of the damage that politicians and bureaucrats can inflict on an unsuspect­ing public. So, to the extent that this program teaches the American people never to have faith in the econo­mic promises and programs of the Federal government (nor allow it to do anything but run the Army, Navy and Air Force; maintain foreign embassies; and operate the courts and the F.B.I.), something good may yet come out of the forthcoming debacle.13 If we terminate Social insecurity and at least two other government programs14 at the same time, the nation will quickly recover. In 5 years we will have a GNP double what it is today without unemployment or inflation. The Amer­ican republic began with a tax rebellion and the nation is sorely in need of another one today!


1. America didn't need Social insecurity before 1942 and it needs it even less now!

13 As Tom Paine put it, "Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one."

14 Farm subsidies and minimum wage laws.

Appendix A

(Chapter 4 of The

Biggest Con)

Social Security: The World's Biggest Chain Letter

Leaving the government's currency flim-flam and fleecing by inflation, let's consider another multibil-lion-dollar fraud, Social Security.

Let me stress at the outset that there are no mone­tary reserves available to the Social Security System out of which future benefits can be paid. All past Social Security taxes collected by the government have been spent like regular taxes and never treated any dif­ferently. They were never deposited in any trust fund despite the many statements and assurances by the government that this was being done.

Government officials over the years have told the American public that Social Security is an "insurance program" employing sound principles of funding and financing. Nothing could be farther from the truth.

Let me offer some examples of how the government goes about "informing" the public about the structure and financial condition of the Social Security System, Figures 18,19, and 20 are from Social Security publica­tion No. SS1-50, and entitled "Your Medicare Hand­book." Please note that insurance is used six times on the cover of the booklet (Figure 18), and on page 3 (Figure 19), it appears eighteen times. The usage of the

Figure 18

SSI-50 February 1974


Figure 19

Like Medicare, your handbook has two parts. .

1   ...   9   10   11   12   13   14   15   16   17

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