Tuli Can't Stop Talking

These are just my thoughts on contemporary issues and an attempt to open up a dialogue.

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Location: New York City

A citizen who cares deeply about the United States Constitution and the Rule of Law.

Sunday, May 01, 2005

An Impeachable Offense?

Seriously folks, Mr. Bush is running around the country saying that the Social Security Trust Fund is merely IOU’s. He is implying that the U.S. Government doesn’t have to honor that debt.

Well, the Social Security Trust Fund is made up of U.S. Treasury Obligations. Now, it is contrary to the U.S. Constitution to say that U.S. Government debts will not be honored.

That’s right, what Mr. Bush is doing is unconstitutional. Not that the Straussian NeoCons are particularly into the U.S. Constitution, which they refer to as a mere “parchment regime.” All you have to do is note, the Gonzales memo stating that the President is above both domestic and international law during the “time of war.” Then, of course, there are those pesky U.S. laws against torture and the Geneva Conventions, which this administration believes it is above, and the abuse scandals, with memos exposing the DOD’s intentions, which show they really mean to disregard the domestic and international laws.

So, I guess it is no surprise that this administration, in their desire to dismantle the New Deal, would make assertions that directly contradict the Fourteenth Amendment of the U.S. Constitution, and may in fact be illegal statements.

The Fourteenth Amendment, Section IV and V states:

Section. 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section. 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

In fact, in the Press Conference on April 28, 2005, just last Thursday, the President made his point again.

He said:

Now, it's very important for our fellow citizens to understand there is not a bank account here in Washington, D.C., where we take your payroll taxes and hold it for you and then give it back to you when you retire. Our system here is called pay-as-you-go. You pay into the system through your payroll taxes, and the government spends it. It spends the money on the current retirees, and with the money left over, it funds other government programs. And all that's left behind is file cabinets full of IOUs.

That’s right, just measly old IOU’s in a file cabinet. Now it is quite possible that he doesn’t know what a U. S. Treasury obligation is, but that seems unlikely as earlier in the press conference he said:

The money from a voluntary personal retirement account would supplement the check one receives from Social Security. In a reformed Social Security system, voluntary personal retirement accounts would offer workers a number of investment options that are simple and easy to understand. I know some Americans have reservations about investing in the stock market, so I propose that one investment option consist entirely of Treasury bonds, which are backed by the full faith and credit of the United States government.

So, the Social Security Trust Fund is merely IOU’s, but his privatized accounts which are invested in U.S. Treasury obligations would be backed by the full faith and credit of the United States government. HMMMM! That seems to completely contradict the filing cabinet senario.

This leads me to believe that just like the Weapons of Mass Destruction, which never existed, this administration will say anything in its “Bamboozlepalooza” to get what it wants. Truth be damned!

Well, this is one time that the lie just might be really against the law of the land. There is an obscure case decided in 1935 that deals with this problem. The case is Perry v. United States, 294 U.S. 330. This cases deals with the redemption of a bond and the desire of the government to redeem it on terms different from those when it was issued. The bond was issued under the Act of September 24, 1917, which “authorized the moneys to be borrowed, and the bonds to be issued, 'on the credit of the United States,' in order to meet expenditures needed 'for the national security and defense and other public purposes authorized by law.’ ” Sounds a lot like those bonds that are sitting in that file cabinet in W. Virginia, doesn’t it?

In this case the U.S. Supreme Court rejected the government’s position and decided that:

The binding quality of the obligations of the government was considered in the Sinking Fund Cases, 99 U.S. 700, 718 , 719 S.. The question before the Court in those cases was whether certain action was warranted by a reservation to the Congress of the right to amend the charter of a railroad company. While the particular action was sustained under this right of amendment, the Court took occasion to state emphatically the obligatory character of the contracts of the United States. The Court said: 'The United States are as much bound by their contracts as are individuals. If they repudiate their obligations, it is as much repudiation, with all the wrong and reproach that term implies, as it would be if the repudiator had been a State or a municipality or a citizen.' 2 [294 U.S. 330, 352] When the United States, with constitutional authority, makes contracts, it has rights and incurs responsibilities similar to those of individuals who are parties to such instruments. There is no difference, said the Court in United States v. Bank of the Metropolis, 15 Pet. 377, 392, except that the United States cannot be sued without its consent. See, also, The Floyd Acceptances, 7 Wall. 666, 675; Cooke v. United States, 91 U.S. 389 , 396. In Lynch v. United States, 292 U.S. 571, 580 , 54 S.Ct. 840, 844, with respect to an attempted abrogation by the Act of March 20, 1933, 17, 48 Stat. 8, 11 (38 USCA 717), of certain outstanding war risk insurance policies, which were contracts of the United States, the Court quoted with approval the statement in the Sinking Fund Cases, supra, and said: 'Punctilious fulfillment of contractual obligations is essential to the maintenance of the credit of public as well as private debtors. No doubt there was in March, 1933, great need of economy. In the administration of all government business economy had become urgent because of lessened revenues and the heavy obligations to be issued in the hope of relieving widespread distress. Congress was free to reduce gratuities deemed excessive. But Congress was without power to reduce expenditures by abrogating contractual obligations of the United States. To abrogate contracts, in the attempt to lessen government expenditure, would [294 U.S. 330, 353] be not the practice of economy, but an act of repudiation.'


The Fourteenth Amendment, in its fourth section, explicitly declares: 'The validity of the public debt of the United States, authorized by law , ... shall not be questioned.' While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation. We regard it as confirmatory of a fundamental principle which applies as well to the government bonds in question, and to others duly authorized by the Congress, as to those issued before the amendment was adopted. Nor can we perceive any reason for not considering the expression 'the validity of the public debt' as embracing whatever concerns the integrity of the public obligations.

That seems pretty clear to me. The policy reasons for this are evident as well. If the U.S. Government were to disavow its obligations to the Social Security Trust Fund, it would make it very difficult to convince the Japanese and Chinese to continue to fund our deficits. This could lead to an International Crisis of major proportions, to put it mildly!

Now, it seems highly unlikely that the U.S. Congress, controlled by the Republicans, would even consider acting on this unconstitutional behavior. Though the recent roll back of the Ethics Rules strikes me, the eternal optimist, that they are getting nervous.

So far the media has pretty much ignored this and Bush’s contradictions.

The question is whether the U.S. Citizenry which has been burned by the WMD lies, will learn its lesson, or will continue to be bamboozled? The recent polls seem to suggest the former.

We can only hope!

Addendum: For more on the Bamboozle check out this Billmon post.


Blogger BobsAdvice said...

An outstanding post! There may be many great reasons to reform the Social Security System, because it is probably the most important portion of the retirement of millions of American senior citizens....but to denigrate the Social Security Trust Fund as just 'a bunch of IOU's' is outrageous and now, to suggest seniors have a safe account of Treasury bills....well what can you say?

Thanks for the post for all of us!


6:31 AM  
Blogger Andros said...

Bush, in his recent press conference at the W.H., he said the Social Security's IOUs are a "bunch of papers locked in a file cabinet somewhere"....

Over the years, the government has taken in lot more money in SS contributions that it had to pay out to the retirees. So, they thought, if they destroy SS those IOUs may not have to be paid back!

They're shredding our meager social net... It's social Darwinism. Yes, they are for that, but not for science....

You might enjoy my recent post....
Note the author of the quote....

2:49 PM  

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