Tuesday, March 23, 2010

The Voice of Experience


History Lesson for Obama:  The1935 Congressional Debates on the Social Security Act


What would you do if you had just pissed off approximately 150 to 180 million people?  Some pretty serious damage control, that's what.  Hence, His Majesty, King Hussein Obama the First will deliver a speech in Iowa this Thursday to kick off the Democratic effort to avoid a crushing loss in this November's Congressional mid-term elections.


Who knows what tortured arguments His Majesty and his minions will try to employ in this seemingly impossible task but I think the Congressional debate from Sunday gives us some idea of how they will try to defend this disastrous reform.  More specifically, several Democrats dismissively brushed aside Republican objections to the healthcare monstrosity by noting that opponents of Social Security and Medicare had similarly made predications of doom and gloom and those predications had not come true.  With disgusting smirks on their faces, these sniveling weasels smugly pointed out that the United States did not descend into socialism or communism, as some opponents predicted, because of the enactment of these programs.  This Democratic argument may or may not be true but it's worth noting that this general argument was hardly the only one offered against the enactment of these programs.


I realize His Majesty's knowledge of American history is fairly limited but I don't hold this fault against him since I don't know a whole lot about the history of His Majesty's native land of Kenya either.  So before You try to brush off the Republican arguments by lumping them with the rhetoric of the past, I offer the following prescient objections to the enactment of the Social Security Act in 1935, which are as true today as they were nearly 75 years ago.  The complete record of the debate in the House and the Senate can be found at http://www.ssa.gov/history/law.html




On the floor of the Senate on June 17, 1935, Republican Daniel Hastings of Delaware hit the Democrats with one of my favorite tactics, the use of mathematics.  Using projected earnings and actuarial data developed by the committees charged with writing the Social Security Act, Senator Hastings offered a series of illustrations that proved that the initial enrollees in the plan who were older, generally over 50 years of age would receive more money in benefits from Social Security than the money they and their employer had contributed.  So where would the money come from to pay these enrollees?


Senator Hastings continued to offer illustrations and proved that younger workers and people who would start working after the enactment of Social Security would end up covering this deficit since they would receive less in benefits than they and their employer had contributed.  Then he took this argument, which he referred to as a discrimination against the young, to another level:


Mr. President, I call attention to the discrimination in this bill not so much for the purpose of emphasizing the argument which will be made by those who shall participate in this fund, who pay the taxes, and who are entitled ultimately to some return from it, but I call attention to it for the purpose of emphasizing that, after all, this is a democratic form of government and what we do here may be changed and will be changed upon the demand of people who have been discriminated against. 


Senator Hastings wondered what future Congressman would say when their constituents would come to them and point out that they had paid more into the fund than they would probably receive.  He did not see how the future Congress could deny these claims for relief:


We will have no defense at all, because he will not have gone into this plan voluntarily.  We will have forced him into this plan. We will have forced him to contribute to the Federal Treasury 3 percent of his salary and will have forced his employer to do likewise.


Bear in mind that Senator Hastings is not just talking about a particular individual but a whole class of citizens.  On the floor of the House on April 19, 1935, Republican James Wadsworth Jr. of New York pointed out the power these citizens might weld:


Pensions and annuities are never abandoned; nor are they ever reduced. The recipients ever clamor for more.  To gain their ends they organize politically. They may not constitute a majority of the electorate, but their power will be immense.


As predicted by Senator Hastings and welding the political power envisioned by Representative Wadsworth, senior citizens used exactly this argument in the early 1970's when they demanded cost of living increases.  They pointed out that they had paid more into the system than they would ever receive so the Congress should be able to enact these automatic raises.  (As a brief aside, when the dummies in the Congress set down the formula to provide these increases they screwed it up and retirees received double the increase in the cost of living.  This mistake pushed the financially unstable Social Security Trust Fund to the brink of insolvency.  It took the government three years to fix the formula.  And tell me again that you want these fools in charge of your healthcare!)




As many Republicans in the current debate on healthcare pointed out, Representative Wadsworth tried to point out that once we started down the road of providing these benefits, there would be no turning back.  Once again, here are his comments from April 19th:


It launches the Federal Government into an immense undertaking which in the aggregate will reach dimensions none of us can really visualize and which in the last analysis, you will admit, affects millions and millions of individuals. Remember, once we pay pensions and supervise annuities, we cannot withdraw from the undertaking no matter how demoralizing and subversive it may become. .


Could you imagine the chaos that would ensure if we suddenly stopped paying Social Security benefits today?  Tens of millions of people have planned for their retirements based in part on receiving these benefits.  How many of these people would be reduced to the poverty level?  And consider the people who are currently planning for their retirements, who are in their forties and fifties.  There simply isn't time for these people to increase their retirement savings such that they could replace the income they except to receive from Social Security.  No matter how much damage Social Security inflicts on our fiscal health, we're stuck with it.  It would take decades to unwind the program. 




Representative Wadsworth was the type of Republican modern day liberals would hate.  Born into a wealthy, distinguished family (his grandfather was a General in the Union Army who was killed in action during the Battle of the Wilderness), Wadsworth believed in limited government and individual rights.  While serving in the Senate in 1917 (That's not a misprint.  Wadsworth is one of handful of persons who served in the Senate first and then the House), these beliefs led him to oppose the Eighteenth Amendment and become a vocal opponent of Prohibition, which was not a popular stance in the Republican Party during the 1920's.  Perhaps these beliefs also motivated his arguments against the financing of Social Security on the floor of the House on April 19th.  Wadsworth's objection was to the investment of the Social Security Trust Fund in government bonds, which is still the practice of the Fund today.


Now, that may seem an effective and adequate way to finance the Government's financial activities in all the Years to come. I am trying to look to the future. Heretofore the Government has financed its undertakings primarily and fundamentally as the result of the confidence of the individual citizen in the soundness of the Government's under-taking, but from this point on we are apparently going to abandon that philosophy of public confidence and resort to a very different practice. The Government is to impose a pay-roll tax through one of its agencies, collect the money into the Treasury Department, then the Treasury Department with its left hand on the proceeds of these taxes is to turn around and buy bonds of the United States Government issued by the right hand of the Treasury Department.  Thus the Government of the United States, after this thing gets going, is no longer to be financed directly by its citizens, confident in the soundness of the Government, but it is to be financed instead by arrangements made within the bureaucracy-an undemocratic and dangerous proceeding.


Like most people, I've always had a problem with Social Security Trust Fund lending money to the general fund of the government because the only way this general fund can pay back the money to the Trust Fund is to either raise taxes or issue debt to the general public.  In short, my objection is that this method doesn't work because the money isn't invested.  It's just gone.  Wadsworth, however, raises a point that I have never considered.


Basically, he's saying that ordinarily, people are free to buy government bonds or not buy government bonds.  If enough people lacked confidence in the operations of the government, which is exactly what is slowly happening in our time, the government wouldn't be able to raise money through selling bonds.  If you adopt this line of reasoning, then all of the money used to finance the government, whether through taxes or the proceeds of bonds, has been provided to the government with the approval of the public, albeit with taxes indirectly having been approved by people through their representatives, who must periodically stand before the public for elections that could be influenced by the tax burden they impose on the public.


The money lent by the Social Security Trust Fund to the government, however, doesn't bear this stamp of approval.  The decision to lend the money rests not with the public but instead with unaccountable bureaucrats.  The Congress can spend this money without having to seek its approval, i.e. it doesn't have to raise taxes or sell bonds to the public.  Take a moment and look at the latest financial statements of the Social Security Administration.  http://www.ssa.gov/finance/2009/Financial%20Statements.pdf  On page 92 you'll see that as of September 30, 2009, the Social Security Administration had approximately 2.5 trillion dollars in investments.  Skip ahead to page 102 and you'll find out that these investments consist of bonds issued by the Treasury.  Since our government is already in debt, this means that the federal government, to use Wadsworth's language, has taken 2.5 trillion dollars with the left hand and given it to the right hand to spend as it pleases.  It's also worth noting that this 2.5 trillion dollars exceeds the equity of the fund, called the net position.  Just think of all the earmarks, the pork, and the pet projects our politicians financed over the years with this money without having to raise taxes or seek money in the bond markets at market rates of interest. 



I'm sure most of the proponents of Social Security dismissed Wadsworth arguments but I don't know how they could have dismissed this argument from Senator Hastings.  On June 17th, the Senator pointed out that the raiding of the Social Security Trust Fund could happen because... a similar raid had already happened!


It must be borne in mind that in order to create this fund there must be annual appropriations by Congress. It is contemplated that those annual appropriations shall be the amount of money collected from the employer and the employee: but does anyone doubt that when the Congress comes to these appropriations there would be manipulations so that the fund would not be accumulated but would he used for current expenses of the Government?


Mr. President, we have a fine example of that-very slight, indeed, because of the amount involved-in the case of the civil-service retirement fund. I wonder if Senators realize that, while there is supposed to be something like a billion dollars accumulated in that fund and that the actuaries say there ought to be about a billion dollars accumulated in it, there has been practically nothing accumulated in that fund? I blame no particular person for it; I know when the Government needs money for some purpose the question may readily be asked why should not the Government, when it needs money for other purposes. take out of its till and put in some other place a certain sum of money that is necessary for some retirement fund? There is nothing in the civil-service retirement fund except an I O U.




I agree with all the arguments being offered by conservatives that the new healthcare reform will lead us down the road to a European style socialist state but to be frank, I don't think these arguments are going to work.  Instead, we should focus our arguments, as these two men did years ago, on the specific weaknesses in the law, which are legion.  Under the original Social Security Act, the first payroll deductions were scheduled to start on January 1, 1937, which meant there was only about a year and a half before the passage of the bill and its operation.  We have approximately twice that amount of time to stop this law from taking effect.  We should take advantage of that.  The Democrats seem intent on selling this law to the public.  We should force them to explain it, warts and all.

Wednesday, March 17, 2010

The Voice of Experience


Deem and Fail


If King Hussein Obama the First's minions were half as clever at devising solutions to our nation's problems as they were at utilizing arcane legislature procedures, our nation would resemble the biblical land of Canaan, a land flowing with milk and honey.  The latest tactic to thwart the clear will of the American people is known as "Deem and Pass."  I'll try and explain what Deem and Pass is in a moment but if you don't feel like plowing through the minutia of this legislative process, here's a quote from Nancy Pelosi that sums up all you absolutely must know about this latest strategy.  http://www.washingtonpost.com/wp-dyn/content/article/2010/03/15/AR2010031503742.html?hpid=topnews

It's more insider and process-oriented than most people want to know.  But I like it because people don't have to vote on the Senate bill.

Just stop a moment and let that one sink in for a while.  Even for a complete idiot like Pelosi, this quote is a shocking admission.  Basically, Pelosi is saying that the best way to pass the Senate bill is to use a process that allows Congressmen not to vote on the Senate bill.  At face value, this quote doesn't even make sense.  The perceptive reader, i.e. the non-liberal reader, should be able to deduce that Deem and Pass is actually a way for Congressmen to cover their butts, to deny that they voted for the Senate bill when in fact they did. 


So how does that work?  To understand Deem and Pass, we must start in the House Rules Committee, currently chaired by Democratic Congresswomen Louise Slaughter of New York, the author of the Deem and Pass strategy.  You might remember Louise Slaughter from His Majesty's fake attempt to reach out to Republicans last month at the boring health care summit.  She's the buffoon who tried to convince us to pass healthcare reform because one of her constituents was using her dead sister's false teeth.  http://freedomeden.blogspot.com/2010/02/louise-slaughter-dead-sisters-teeth.html


Over the past year, we've all become familiar with the rules of the Senate such as allowing unlimited debate and the use of the filibuster.  Since the House contains over four times the number of members as the Senate, the use of these rules in the House wouldn't be practical.  To allow 435 windbags to speak forever would effectively grind the legislative process in the House to a halt.  So over the years the House has developed mechanisms to limit debate and guide the legislative process so the House can function.  Hence the creation of the Rules Committee.


Every bill that comes to the House floor is considered under a rule that determines such issues as how long the House will debate the bill and what amendments, if any, can be offered.  So for example, when the House considers a bill on education, the Rules Committee might allow two hours of debate.  The chairman and ranking member, the senior member the minority party, of the Education and Labor Committee would each be given an hour to speak on this bill.  In practice, these two Congressman grant blocks of time to members of their party to speak about various aspects of the bill and once the time expires, the House starts the procedure for taking a vote.  So far, this process makes sense.


In addition, the rule for this bill might limit the number of amendments that can be proposed on the House floor and the sections of the bill that can be amended.  This idea also makes sense because by the time the bill gets to the floor most amendments have already been considered in committee and/or it's highly unlikely that an amendment would be approved anyway unless a majority of the Congress has already been polled by the party leaders to see if they would vote for it.  It would be a waste of time to propose these amendments only to see them voted down. 


Deem and Pass is simply another process that's been developed over the years by the Rules Committee similar to the ones described above to make the legislative process in the House more efficient.  Usually Deem and Pass is used for making technical, non-controversial changes to a bill.  (Before I go any further, I culled this explanation from a number of websites since no one site had a comprehensive one.  Believe it or not, Mother Jones and msnbc actually had the best analysis with The Washington Post getting an honorable mention.)  The Rules Committee adopts a rule that contains the technical changes, i.e. changes the House feels are required, to the bill passed in the Senate.  This rule basically contains two provisions.  The first provision is fairly straightforward.  If the Senate approves the technical changes, there's no need to send the approved changes back to the House because the House has already passed them.  The second provision is the one that is causing all the controversy.  This provision states that the underlying legislation, i.e. the Senate bill, is considered as to be passed by the House even though the vote was technically on the combined package of the bill and its amendments.  In simple English, in most cases, the use of Deem and Pass is the House saying, "We agree this bill should be a law but we feel these minor changes should be made."


If I lost you on that explanation, try and hang in there as I flesh out the preceding analysis by describing how Deem and Pass would most likely be applied to the current Senate bill on healthcare destruction.


·         Step 1 – The House Rules Committee adopts the rule that contains the changes to the Senate bill along with the provision to consider the Senate bill as if passed by the House in a separate vote.


·         Step 2 - The House conducts a roll call vote on the Senate bill under this rule and passes the bill.


·         Step 3- The Senate bill, without the changes, has been effectively passed by both Houses of Congress.  This bill goes to His Majesty, King Hussein Obama the First, who affixes the royal seal and the bill is now a law.


·         Step 4 – The Senate considers the changes to the bill, which is now law, and attempts to enact those changes using the budget process known as "reconciliation."  If these lunatics ever get this far, I try to explain the reconciliation process in a separate post.  For now, the important point to known is that bills considered under reconciliation can't be filibustered so the Democrats would only need 51 votes.


·         Step 5 – The Senate enacts the House changes to their bill and these changes go to His Majesty for his royal seal.  Remember there's no need to send the changes back to the House because they've already approved these changes.


·         Step 6 – His Majesty affixes his royal seal to these changes and America starts down the road leading to a socialist utopia, with limited freedoms and reduced opportunity.


So why are the Democrats proposing to use such a convoluted process?  Well, if you think about it, there's a number of advantages to using Deem and Pass.


ü  If the Senate fails to pass the House changes, any Congressman who voted for the Senate bill under this rule can deny that he voted for only the Senate bill.  He'll cry and whine in front of his angry union supporters, telling them that he only voted for the Senate bill as amended by the House.  He'd tell them to go over to the Senate and ask them why they didn't approve the changes. 


ü  Since the Senate bill would become a law, it might be possible to use reconciliation and avoid the threat of a filibuster.


ü  As long as the Senate approved the changes exactly as approved by the House, there would be no need for another political ugly vote on healthcare in the House.  The stupid House members who vote for this bill could start on the impossible task of trying to explain their actions to their angry constituents without having to defend another wrong vote.  In essence, it would give them more time to patch up the damage.


I'll admit that this is a clever approach, worthy of a Bond villain, but I don't think it will work.  If you really think about it, the main lynchpin of this plan is that the American public consists of a bunch of idiots.


ü  If your Congressman tries to pull off the big lie, I voted for it but I didn't vote for it, people will see right through it.  John Kerry tried that one and we all know how that worked out.  People will ask this Congressman why they ran the risk of the Senate not approving their changes. 


ü  The whole reason the House wants these changes is that the Senate deleted them from the original bill passed by the House.  What makes them think the Senate will change their minds?  Granted, with reconciliation, fewer votes will be needed but I'm not so sure even fifty votes can be secured for many of these changes. 


ü  The only way to avoid another vote in the House is for the Senate to approve the House changes without amendment.  What are the odds of that happening? 


And on a more fundamental level, how do His Majesty and his deluded minions explain that the only way to pass healthcare reform was to execute the legislative equivalent of doing the limbo under a flaming bar while walking on a tightrope suspended over a shark tank?  I'm sure they'll try to pin the opposition to their reform on the special interests and partisan bickering but the majority of the American public, who have consistently expressed their opposition to His Majesty's plans, won't buy it.  Unfortunately for His Majesty, the serfs are still a little too smart to buy into this "change."  Maybe after four years as the head of our educational system, His Majesty will have indoctrinated enough serfs to take another stab at this one in twenty years.