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The PJ Tatler

by
Michael Rulle

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July 18, 2011 - 12:11 pm

The defunct National Lampoon Magazine’s best cover of all time (above) portrays Obama’s current strategy on Social Security and the debt ceiling. Obama’s words are a case of life imitating comic art as fiscal tragedy. I am becoming a stickler on language in our nation’s political Kabuki theater. Politicians do not seek to explain simply, but to obfuscate complexly. The more one analyzes their words, the more one is forced to conclude they appear to be running an immoral and corrupt enterprise. The Tea Party movement is in large part a revolt against not just certain policies, but the means by which they are promoted.

Last week, the oleaginous Scott Pelley of CBS asked President Obama whether he “can tell the folks at home that, no matter what happens, the Social Security checks are gonna (sic) go out on August 3rd?”. Obama said “there may not be enough money in the coffers to do it”. Pelley is a complete lackey. The correct question would be to ask the President how he would prioritize what he would cut in the event no agreement on the debt ceiling would be reached. But this would not have given Obama the chance to demagogue. When the State of Minnesota shut down the government, its citizens hardly noticed until they realized restaurants’ liquor licenses might not get renewed. That really got the ball rolling and a deal was struck. Clearly the last thing to be cut in the Land of 10,000 lakes was the right to drink beer while eating burgers and fries.

As I discussed in my last essay, the Federal Government obfuscates on Social Security. The obfuscation is that they call the amount taken from taxes dedicated to Social Security –and spent elsewhere — and call the amount taken a “Trust Fund”. Imagine if I were to sneak into your savings account without your permission, take it, and when you complain, I tell you that I have merely established a trust fund for you that “I promise” to repay. While liquor licenses are the last thing to cut in Minnesota, the last thing that should be cut in a debt limit impasse are interest on debt, the military and, finally, social security. The first two are obvious. The last should be too. Our citizens have paid into the system. According  to what the Government tells us, we have paid close to $5 trillion more into the system than has been paid out to recipients. In fact, we currently pay about the same annually into the system as is being paid out. Why should that be cut? It is self-funding. But even the politicians get confused. It is hard to keep track of all the lies one tells.

Obama has unwittingly admitted that Social Security is a scam. He no longer even pretends it is set aside and held for retirement. It’s just another fiscal bargaining chip. And if you don’t follow his lead he just may shoot that dog — or not pay seniors.

Michael Rulle has worked in the financial services industry for 30 years. He currently manages his own proprietary trading firm, MSR Investments LLC, which specializes in quantitative modeling of markets. He also writes commentary about Political Economy on his weblog, Law of the Bad Premise.
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