Since when is a bad debt more sacrosanct than the Bill of Rights?

In an earlier email, M. Simon mentioned Thomas Jefferson's famous remark about a revolution every 20 years, and here is the exact quote:

"God forbid we should ever be twenty years without such a rebellion... We have had thirteen States independent for eleven years. There has been one rebellion. That comes to one rebellion in a century and a half, for each State. What country before ever existed a century and a half without a rebellion?" --Thomas Jefferson to William S. Smith, 1787. ME 6:372
I think the above is consistent with Jefferson's philosophical belief that the dead do not have power to bind the living, which is expounded on by Jefferson in a letter to James Madison a couple of years later:
The question, whether one generation of men has a right to bind another, seems never to have been started either on this or our side of the water. Yet it is a question of such consequences as not only to merit decision, but place also among the fundamental principles of every government. The course of reflection in which we are immersed here, on the elementary principles of society, has presented this question to my mind; and that no such obligation can be transmitted, I think very capable of proof. -- I set out on this ground, which I suppose to be self-evident, that the earth belongs in usufruct to the living: that the dead have neither powers nor rights over it. The portion occupied by any individual ceases to be his when himself ceases to be, and reverts to the society. If the society has formed no rules for the appropriation of its lands in severality, it will be taken by the first occupants, and these will generally be the wife and children of the decedent. If they have formed rules of appropriation, those rules may give it to the wife and children, or to some one of them, or to the legatee of the deceased. So they may give it to its creditor. But the child, the legatee or creditor, takes it, not by natural right, but by a law of the society of which he is a member, and to which he is subject. Then, no man can, by natural right, oblige the lands he occupied, or the persons who succeed him in that occupation, to the payment of debts contracted by him. For if he could, he might during his own life, eat up the usufruct of the lands for several generations to come; and then the lands would belong to the dead, and not to the living, which is the reverse of our principle.

[...]

...by the law of nature, one generation is to another as one independant nation to another.

Let's turn to a recent news report quoting a congressman on the impending default of the Social Security system:
TUSCALOOSA -- "Social Security could face default within two years," U.S. Rep. Spencer Bachus predicted here Tuesday. "The situation is much worse than people realize, especially because of the problems brought on by the recession, near depression.

"That's not been on the board -- people don't seem to know that," Bachus, the ranking member of the House Committee on Financial Services, said in a wide-ranging interview with the Tuscaloosa News Editorial Board. "What this recession has done to Social Security is pretty alarming.

"We've known for 15 years that we were going to have to make adjustment to Social Security, but we still through that was seven or eight years down the road," he said. "But if things don't improve very quickly, we're going to be dealing with that problem before we know it."

The solvency of Social Security, which provides pensions for people over 65, has not played a major role in the current debate over health care in Congress and Bachus, a Vestavia Hills Republican who represents part of Tuscaloosa County, said it will not likely be addressed in any health care bill the House eventually passes, although if a Social Security bail out is needed, it will invariably impact government health care programs.

In the debate over health care, Bachus said that he could support a bill that includes privately-administered health "co-ops," along with the elimination of fraud and waste in existing government programs like Medicaid and Medicare.

The creation of health care "co-ops," or non-profit health cooperatives run by members, is an idea that has gained momentum as Democrats and President Barack Obama seems to have moved away from the idea of a "government option," which would be a government-run alternative to private health care now offered by for-profit insurance companies.

"I can not vote for a bill that has the government intruding into the private sector, subsidizing health care and eventually putting the insurance companies out of business," he said.

As for the looming Social Security crisis, Bachus said options are just now beginning to be discussed.

"We could raise the retirement age, or in the worst case, cut back on some benefits," he said. "But that is something we are just now beginning to get a handle on."

As I've said before, Social Security is a law, and like any other law, it can be changed or repealed as the legislature deems fit.

However, the way some people talk, you'd think Social Security was a form of Holy Writ -- as if we are supposed to bow our heads in respect whenever it is mentioned. Politically, it's considered the "Third Rail" to question it, and unlike any other law, the benefits it confers are spoken of in the most solemn terms -- as "entitlements."

I'd like to pose a Third Rail question. How is it that the biggest Ponzi Scheme on earth, which was put over by the worst human rights violator in U.S. history, has come to be seen in many circles as more sacrosanct than the Bill of Rights? Is it because it represents America's first major founding step towards socialism, so that it is akin to Hallowed Ground -- a sort of Biblical Hill On Which We Must Take Our Stand?

Come on! It's no more holy than a bounced check, and if the money's not there, the money's not there.

We're all familiar with the observation that "the Constitution is not a suicide pact."

I realize that some constitutional die hards might disagree, or at least have qualms with that sentiment. But if we assume for the sake of argument that the Constitution is not a suicide pact, by what standard should Social Security be?

posted by Eric on 08.19.09 at 12:31 PM










Comments

...by the law of nature, one generation is to another as one independant nation to another.

You realize that could be used to say that he believed in a Living Constitution?

And I don't know if it would be wrong to say that. He might agree that it should be reinterpreted every now and then.

I'm really going to have to read more of his writings. He's one squirrely dude.

Veeshir   ·  August 19, 2009 1:53 PM

I think the Constitution takes that very issue into account by means of Article V:

***QUOTE***
The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as Part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress; Provided that no Amendment which may be made prior to the Year One thousand eight hundred and eight shall in any Manner affect the first and fourth Clauses in the Ninth Section of the first Article; and that no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.
***END QUOTE***

Eric Scheie   ·  August 19, 2009 2:41 PM

The point you miss is that the program was not sold as welfare but that the contributions were for your future benefits. Of course, they were lying but this is why the commitment is more serious than just another stupid welfare scheme.

ricksa   ·  August 19, 2009 3:39 PM
"This corporeal globe, and everything upon it, belong to its present corporeal inhabitants during their generation. They alone have a right to direct what is the concern of themselves alone, and to declare the law of that direction; and this declaration can only be made by their majority. That majority, then, has a right to depute representatives to a convention, and to make the constitution what they think will be the best for themselves." --Thomas Jefferson, 1816

Emphasis mine. He never suggested that violent overthrow was the reasonable first course of action. Revolution is always a last resort, when all other means are no longer available.

Regarding insurrections:

"In a country whose constitution is derived from the will of the people directly expressed by their free suffrages, where the principal executive functionaries and those of the legislature are renewed by them at short periods, where under the character of jurors they exercise in person the greatest portion of the judiciary powers, where the laws are consequently so formed and administered as to bear with equal weight and favor on all, restraining no man in the pursuits of honest industry and securing to every one the property which that acquires, it would not be supposed that any safeguards could be needed against insurrection or enterprise on the public peace or authority. The laws, however, aware that these should not be trusted to moral restraints only, have wisely provided punishments for these crimes when committed." --Thomas Jefferson, Sixth Annual Message, 1806
"We fear that [violations of the Constitution] may produce insurrection. Nothing could be so fatal. Anything like force [used against the violators] would check the progress of the public opinion and rally them round the government. This is not the kind of opposition the American people will permit. But keep away all show of force and they will bear down the evil propensities of the government by the constitutional means of election and petition." --Thomas Jefferson, 1799
"A spirit which should... countenance the advocates for a dissolution of the Union and for setting in hostile array one portion of our citizens against another... would prove indeed that it is high time for every friend to his country, in a firm and decided manner, to express his sentiments of the measures which government has adopted to avert the impending evils, unhesitatingly to pledge himself for the support of the laws, liberties and independence of his country; and... to resolve that for the preservation of the Union, the support and enforcement of the laws, and for the resistance and repulsion of every enemy, they will hold themselves in readiness and put at stake if necessary their lives and fortunes on the pledge of their sacred honor." --Thomas Jefferson: Reply to Connecticut Republicans, 1809

It really depends on what someone is revolting against. Against the decisions of the majority or law and order? Jefferson would have shot them himself.

"Our wish... is, that the public efforts may be directed honestly to the public good, that peace be cultivated, civil and religious liberty unassailed, law and order preserved, equality of rights maintained, and that state of property, equal or unequal, which results to every man from his own industry, or that of his fathers." --Thomas Jefferson: Second Inaugural, 1805

As long as the people continue to have the right to vote, rebellion is completely out of the question. Corrections to constitutional overreach and abuse is still maintained in the ballot box.

Regarding Social Security: It was a HUGE mistake and it isn't Holy Writ as some people imagine. It is a multi-generational ponzi scheme and the pyramid is about to flip. When it bankrupts the nation, then people will realize (without violent rebellion) that it needs to be revoked. Unfortunately, it will require bankruptcy before we have the courage to address it. It's like an alcoholic: They have to get to the gutter stage before they'll admit they have a problem... and some, not even then.

In just a little over a decade, 100% taxation would not satisfy the requirements of Social Security and Medicare.

Mrs. du Toit   ·  August 19, 2009 4:06 PM

My only disagreement with any of your points is that FDR was the worst human rights violator in U.S. history. I think that is debatable. Wilson was as bad, if not worse. His police state tactics during WWI were one reason the Influenza Pandemic was so bad in the United States.

Admittedly, this is a point on which reasonable people can disagree.

Mark L   ·  August 19, 2009 4:54 PM

Eric, I wasn't talking about the Consititution, I was talking about Jefferson.

He was a very odd guy. He seemed to hold a bunch of mutually exclusive views at one time and I could be convinced that statement could "prove" that he believed in a Living Consititution.

Of course, if you think he did believe in a "Living Constitution" you couldn't use that statement to call for actually making it a living document since, if you interepret it that way, it says don't listen to dead guys.

Veeshir   ·  August 19, 2009 5:00 PM

I think Jefferson would have considered the amendment process sufficient to change the Constitution as needed.

Here's what he said in 1801:

http://yamaguchy.netfirms.com/7897401/jefferson/1801.html

"The Constitution on which our union rests, shall be administered by me according to the safe and honest meaning contemplated by the plain understanding of the people of the United States, at the time of its adoption, -- a meaning to be found in the explanations of those who advocated (it)...These explanations are preserved in the publications of the time, and are too recent in the memories of most men to admit of question."

Eric Scheie   ·  August 19, 2009 6:12 PM
In just a little over a decade, 100% taxation would not satisfy the requirements of Social Security and Medicare.

Sorry, but this statement is just factually false, in at least two respects. First, because the actual number is closer to 26% in the short term. And second, because as the baby boomer "bulge" moves through the system, that number actually starts to decline in the out years.

Medicare is the bigger problem, and there are ways to address that beyond fear-mongering and 400% exaggeration factors. But it's hard to have a debate when someone misrepresents the basic facts right from the get-go.

BTW, there is also a value to society in (1) keeping old people off the streets and (2) honoring the commitment to people near or past retirement who have already paid into the system and have built Social Security, in some form, into their long-term retirement plan.

After all, if the Government hadn't taken that $100,000+ from me, I would have been able to invest it and live off the interest at a level close to that currently promised by Social Security. To advocating the repudiation of that debt now that I am near retirement seems churlish. No scratch that, it's downright reprehensible.

HT   ·  August 19, 2009 8:44 PM

The point you miss is that the program was not sold as welfare but that the contributions were for your future benefits.

What you pay into Social Security is not a contribution into a fund, but simply a tax, which goes into the general revenue.

The Supreme Court has held that such payments do not create any sort of an obligation on the part of the government:

http://www.cato.org/pub_display.php?pub_id=5776


***QUOTE***

"To engraft upon the Social Security system a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever changing conditions which it demands." The Court went on to say, "It is apparent that the non-contractual interest of an employee covered by the [Social Security] Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments."

***QUOTE***

I'm 55, and I'd love to get back the money I have had to give to the government, but it isn't going to happen.

I'd rather forgo a monthly check than see the entire country go the way of Argentina. If there's no food in the stores, of what use is the worthless money?

Eric Scheie   ·  August 19, 2009 9:36 PM

To be clear: I don't give a flying fandango whether the country is legally obligated to pay out Social Security benefits. It is morally obligated to do so. And the "horrible" prospect of increasing the payroll taxes to 26% from the current combined rate of 15% is one that I can contemplate with equanimity, and future generations will just have to tolerate, until they start having more babies again. Why should I make the sacrifice just to maintain their comfort, especially since the crisis is basically rooted in their collective selfish decision to not have enough children to keep the system solvent. They also benefit, by the way, by not having us living in their houses and ruining their lives, and by collecting the unspent balances from our estates when we die.

HT   ·  August 19, 2009 10:45 PM

Ms. du Toit,

We actually have a number of rebellions going on in America - some violent - some not so violent.

1. We have a Drug War - put on by a government that thinks it has the power over what people eat, drink, snort, smoke, and inject. This rebellion has been holding its own for 90+ years. It is not a very popular rebellion. OTOH it doesn't appear to be going away either.

2. We have a tax rebellion - i.e. black markets. The size of it? No one knows. The recession should give some idea.

There are probably others going on. When votes can oppress a minority or over strain a large minority there will be rebellion. It usually does not get to the point of mass violence unless the "authorities" decide to handle the problem that way.

M. Simon   ·  August 20, 2009 12:01 AM

What to do about social security?

Raising the retirement age can work. It might also be good to phase out mandatory retirement in industry (for those jobs where the advantages of youth are not paramount).

M. Simon   ·  August 20, 2009 12:05 AM

Jefferson asked that question, should the living be bound by the dead, to Madison. Jefferson, being the absent-minded philosopher, did not consider the danger of his proposition. Madison reminded him of the consequences of this principle in his reply. If the dead hold no claim against the living, then Jefferson's quote holds no necessary value to us. Nothing from the past holds any necessary value in the present, according to Jefferson's proposition. I will add that Jefferson is not my favorite founder. Many of his ideas are half-baked radicalisms or contradictory to his other ideas. Paine at least spells out his radical faith in reason and rejection of the past. Jefferson is merely amused by the thought.

Daniel   ·  August 20, 2009 12:41 AM

When you think about the SOB's we've elected...

"We are not about to send American boys 9 or 10 thousand miles away from home to do what Asian boys ought to be doing for themselves."
to quote that lying bastard Lyndon Johnson.

"Read my lips, no new taxes" - George Bush, The First.

And we could go on forever. The French model of revolution has its good points. We should try it here every few generations. Didn't Jefferson spend time in Paris?

Frank   ·  August 20, 2009 11:27 AM

HT,

Regarding your comment To be clear: I don't give a flying fandango whether the country is legally obligated to pay out Social Security benefits. It is morally obligated to do so...

Then the future recipients were also morally obligated to have more children so the fund could remain solvent (that's the fundamental of a pyramid scheme), morally obligated to maintain vigilance and guarantee that the government altered the charter of Social Security so FICA collections went into an interest-bearing account, rather than used as "float" to fool people into thinking their tax bills were lower, etc.

In other words, a generation cannot claim it is morally owed an obligation without also demonstrating that it handled its responsibilities in that regard. Moral claims are only valid when the people/parties live up to their end of the moral bargain. They didn't. The Boomers did nothing to guarantee that the money would be there when they wanted it. They spent it already. The bank account is empty.

Mrs. du Toit   ·  August 20, 2009 4:03 PM

HT,

Regarding your comment that "26%" is the portion of the Federal budget that will go towards Social Security, from the Heritage Foundation:

Net present value measures the amount of money that would have to be invested today in order to have enough money on hand to pay deficits in the future. In other words, Congress would have to invest $7.7 trillion today in order to have enough money to pay all of Social Security's promised benefits between 2016 and 2083. This money would be in addition to what Social Security receives during those years from its payroll taxes.

I don't know where you got the 26% figure, but I would guess that is the amount that would come from the general fund to pay out until 2016, but that doesn't include the current amount collected for FICA (another 15.8%). What is missing is the portion of taxes (not classified as Social Security) used for paying off the IOUs to Social Security. Those IOUs are $7.7 trillion today.

None of the above includes Medicare/Medicaid, which just makes it all the more ridiculous.

The Social Security Trust Fund contains nothing but IOUs. Those IOUs constitute a tax burden, in addition to the Social Security payments.

From CBO:

Although today the program takes in more revenue than it spends, that situation will not continue once large numbers of baby boomers begin claiming retirement benefits. In coming years, the Social Security system will face mounting financial pressures as its outlays start to grow much faster than its revenue. The Congressional Budget Office (CBO) projects that scheduled Social Security outlays (those implied by the current benefit formula) will rise from 4.3 percent of gross domestic product (GDP) in 2004 to 6.4 percent in 2050. Revenue, however, is scheduled to average less than 5.0 percent of GDP.

That last bit is important. Tax revenue is expected to be 5% of GDP, but the cost of Social Security is expected to be 6.4% of GDP, a shortfall of 1.4% of GDP.

More from CBO:

In 2009, the Social Security surplus--the amount by which the program's dedicated revenue in a year exceeds the benefits paid in that year--will start to diminish. In 2020, that surplus will disappear, and outlays for benefits will begin to surpass the system's annual revenue. To pay full benefits, the Social Security system will eventually have to rely on interest on the government bonds held in its trust funds--and ultimately, on the redemption of those bonds. In the absence of other changes, bonds can continue to be redeemed until the trust funds are exhausted, which will occur in 2052, CBO projects. But where will the Treasury find the money to pay for the bonds? Will policymakers cut back other spending in the budget? Will they raise taxes? Or will they borrow more?

The Bonds are simply IOUs the government owes itself. It doesn't manufacture the revenue to pay them out of thin air--it has to get it from tax revenue, either by increasing revenue, or cutting spending on other programs (or both). The Bond repayment will come from the taxpayer. It won't be in the Social Security line item (perpetuating the fiction), but regardless, it is an expense created by Social Security ALL of which is borne by the taxpayer.

Mrs. du Toit   ·  August 20, 2009 5:05 PM

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