Can the Government Ever Tell the Truth

Right From the Start

I’ve told this story before but it is worth repeating.  Last spring a census taker appeared at our door to conduct an “interim” census in order to boost federal welfare spending in our area.  It was one of those days when I was feeling bored and a bit puckish.  I invited her in but warned her that I “hate the government” and that the answer to some of her questions may well be that it was none of the government’s business.  When we got to the questions involving ethnicity and sexual identity, I reminded her that we are now in a time under President Barack Obama when both of these matters are to be determined by the individual rather than traditional reference.  I noted the white woman in Spokane who self-identified herself as African-American so that she could become head of the NAACP, and the white woman in Massachusetts who self-identified herself as Native-American in order to take advantage of a minority preference program at Harvard (she later went on to become a United States senator still claiming Native-American heritage), and the college professor in Colorado who self-identified himself as Native American despite being lily white.  Having noted these examples I told the census taker that she should record me as an Asian woman – I checked to make sure she had done as I requested.  When we got to the questions of income and wealth I dutifully responded that it was none of her or the government’s business.

Every now and then that statement that I “hate the government” rattles around in my head enough to suggest that I should explain myself.  It is not government that I hate; it is this government that I hate.  Government is an absolute necessity to provide order – particularly in an increasingly complex society such as ours.  And it isn’t just Mr. Obama’s government, although his administration may be the most intrusive and repressive government since President Franklin Delano Roosevelt elected to intern men, women and children solely because of their Japanese ancestry.  It is a government that is so distrustful of its people that it feels compelled to lie about the purpose, process and intent of its legislation in order to affect its adoption without significant protest or risk of losing office.  Most generally, it lies when it seeks to create new or expanded welfare programs or to increase the intrusion and control of government.  It is not a recent change; it has been happening and expanding for decades.
Let me give you two examples – one nearly ancient and one of recent vintage.
The Social Security Act was adopted August 14, 1935 at the behest of President Roosevelt.  It was sold as “social insurance” for the elderly – a regular monthly payment for those retiring at the age of sixty-five.  A form of forced retirement savings for future retirement.  It was to be funded by the contributions from its intended future beneficiaries and a matching amount from the employers.  In concept it was a good idea, in practice it has just been another method of financing government.
Of course, missing from the government’s sales pitch was that the average life expectancy in 1935 was only sixty-two years – meaning that well over half of the people paying into the Social Security program would never live long enough to receive retirement benefits.  Missing also from the sales pitch was that the program was so wrought with fraudulent representations as to purpose and performance that congressional members immediately exempted themselves and federal employees from its operation – including its taxes/contributions.  And finally missing from the sales pitch is that the program was neither actuarially sound nor sufficiently segregated to insure that money would be available at the time of need.  It was a Ponzi scheme that relied on the permanent expansion of the workforce at a rate such that there was sufficient new to pay for retiring workers.  There was no trust fund, no accumulating investment and most certainly no earnings on those investments.  Ultimately benefits were determined by government and bore little relationship to the amounts contributed.
The money generated by the Social Security taxes – now FICA – was used, at first, by the government to pay current benefits and the excess for any other government program they wished to fund – it was not segregated or invested such that it would earn.  The trust fund was left with a series of promises to pay whatever benefits that came due. That promise appears to be written in the wind given that under Mr. Obama the national debt has doubled from $10 Trillion to nearly $20 Trillion and neither figure includes the unfunded future liability of Social Security or the unfunded future liability for federal public employees which according to Forbes exceeds $127 Trillion.  Like all Ponzi schemes, Social Security is likely to collapse for the next generation.
It was a welfare program.  Worse yet the government so disguised it as a retirement investment that it wound up paying welfare to people who really did not need it.
Even for those, like me, who are eligible for and receive Social Security benefits, the program sucks.  In May of 2005 I wrote an article describing the horrible performance of Social Security as a retirement vehicle.  I noted:
“Using these pieces of information [employer and employee contributions made over my working life] I built a spreadsheet that calculated the Social Security taxes [employer and employee] paid each year (earnings subject to tax times tax rate for the applicable year). Then I calculated the amount I would have earned on those taxes if I had invested them instead of paying them into the Social Security System. I used three different rates of return in doing the calculations. First I used four percent and five percent, which are reasonable substitutes for Treasury bills. Then, as a proxy for investment in the stock market I used the growth in the Standard & Poor’s Index from the year in which the tax was paid until the close of 2004.”
The net results as reported in that column were as follows:
“Well, using the Treasury bills, my investment would have grown to between $323,967 (four percent) and $379,339 (five percent) at the end of 2004.   Had I invested that money in an S&P 500 mutual fund, the amount would have grown to $519,941. Not bad for a $183,650 investment spread over 45 years. But the real comparison is the monthly benefit that I could expect under the various options:
 Actual Social Security payment per statement  $1,415/mo
 Based upon 4% Treasury bills    $2,106/mo
 Based upon 5% Treasury bills    $2,667/mo
 Based upon S&P 500 performance    $4,549/mo
I recognize that monthly Social Security payments have increased over the past eleven years but so has the S&P index – in fact at a faster rate.  And it has grown to new record highs despite the Bush/Obama recession and the slowest economic recovery in modern history under Mr. Obama.  By any measure most taxpayers making the maximum contribution under FICA would have been better off investing in the stock market -–even through boom and bust.
A more recent example is the Affordable Care Act (Obamacare).  The entire act was delivered in secrecy – not a single member of Congress had read the bill before voting on it.  Not even the Speaker of the House, Nancy Pelosi (D-CA) or the Senate Majority Leader Harry Reid (D-NV) had read it.  It was rushed to the floor and voted without any significant debate.  It had to be because it was based entirely on a series of lies.  It would not stand the test of hearings and debate.  It did not allow you to keep your physician – in fact, many were required to seek medical care from a new physician.  It did not allow you to keep your insurance – in fact, it forced millions of people off existing insurance plans and eventually forced insurance carriers from the marketplace.  It did not reduce healthcare cost by $2500 per family – in fact, in many instances it has cause healthcare premiums to increase by double and triple the amounts they previously experienced.  It created huge additional deficits contrary to Mr. Obama’s assurances.  It was a lie, built upon a lie, and implemented through additional lying.
A March 2016 release from the Department of Health and Human Services stated that 20 million people had “gained health insurance coverage” under Obamacare.  In point of fact, according to a December 9, 2016 article in the Daily Signal, slightly over 80 percent of the gain in healthcare coverage is due to expansion of the welfare program known as Medicaid.  Of the remaining 20 percent, nearly half are young adults taking advantage of being able to be covered under their parents’ plan and the remainder is split between people forced off their previous plans by Obamacare and those actually new to the market.
In short, Obamacare was a welfare expansion program disguised as a plan to increase healthcare coverage for all.  Mr. Obama and the Congressional Democrats could have expanded Medicaid, provided for the extension of coverage for young adults and achieved virtually the same results.  They could have further provided for a supplemental, taxpayer funded “pool” to pick up excess costs incurred by insurers because of elimination of the pre-existing conditions provisions.  But that would not have served the purposes of Mr. Obama and Congressional Democrats who did not want to justify or defend the welfare expansion under Medicaid nor their attempt to capture the entirety of healthcare under federal control.
Now before those of you on the left who get your exercise primarily by jumping to conclusions, let me reiterate that this is not about welfare – it is about the willingness of politicians to mislead in order to avoid defending their true intent and the probable results.  Providing for those who cannot work – the elderly, the sick and the disabled – is a duty of any modern society.  That is the essence of welfare.  For those who cannot work government should provided care and assistance, and those who will not work should be left to the vicissitudes of their choice.
But in neither case should the government mislead its people as to the intent, purpose, cost and likely result of any program whether it regards welfare, warfare or any other element of government.  When government misleads, it gives rise to hatred and distrust from its citizens – citizens like me.  Unlike the belief of Col. Jessep in A Few Good Men we can handle the truth.
President-elect Donald Trump has the opportunity to change the trajectory of honesty in the Congress and the Administration.  We will be watching to see if he takes that opportunity.