This should surprise no one: The Social Security Trust Fund is expected to run dry by 2032, at which point benefits will be slashed or taxes increased. Since slashing benefits is political suicide, we can expect Congress to swing into action as the perennial champion of a politically powerful voting bloc.
Like government as such, Social Security is akin to the “Too Big To Fail” mantra that powerful banks have secured for themselves. For these systemic financial institutions Dodd-Frank will not, as promised, take taxpayers off the hook for saving them. The problem is the problem will never go away, absent radical action. Government will keep sending Social Security checks while changing who pays them, when they may be collected, how much they buy, or all three.
Social Security is a claim on a person’s income—any working person. Did this person agree to it? Today, it would strike most people as strange even to ask the question.
A wartime emergency that prompted the Current Tax Payment Act of 1943 has allowed government to loot paychecks before earners even see them. The act “compelled employers to withhold federal income taxes from workers’ paychecks and pay them directly to the government on the workers’ behalf.” Government thus imposed an uncompensated burden on employers. Though the wartime emergency ended, tax withholding didn’t. That, too, should surprise no one.
In 1913 any questions of taxation per se were cast aside in favor of taxation “fairness.” Who should pay for the federal government? The big earners, of course. On February 25, with the “certification by Secretary of State Philander C. Knox” the 16th Amendment was passed and the income tax was born.
“While the haves and the have-nots struggle over the division of existing wealth, it is the business of the State to improve itself at the expense of both; it picks up the marbles while the boys are fighting,” Frank Chodorov wrote in 1954. Surprising to those who had supported the income tax as a way of soaking the rich, it turned against the have-nots.
The income-tax rates kept climbing, and the exemptions kept declining; the mesh of the dragnet was made finer and finer so that more fish could be caught. At first it was the incomes of corporations, then of rich citizens, then of well-provided widows and opulent workers, and finally the wealth of housemaids and the tips of waitresses.
As astute readers know well, the president signed the Federal Reserve Act into law later that year, promising an end to the banking crises that had plagued the economy in the 19th century and especially in 1907. As the Fed inflated during the 1920s, and spurred bank runs leading to the criminalization of gold possession by 1933, the unhinged Fed printing press was born. Instead of market forces, the money supply would thereafter be determined by political forces. Possessors of printed currency received printed currency as redemption.
Fed chair Alan Greenspan, 2002:
In the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent overissuance of money. As recently as a decade ago, central bankers, having witnessed more than a half-century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess.
In other words, the Fed inflated. It is still inflating, and almost always will inflate, as a matter of policy. But the Fed, we are told, is an inflation fighter because inflation means higher prices, not the printing of money which puts upward pressure on prices.
Ironically, J. M. Keynes once saw through the central bank scam:
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
Inflation seldom destroys a healthy society by itself. It is mostly a symptom of a state already weakened by war, debt, and fiscal irresponsibility. Government energy at work.
How Did This Political Nightmare Come About?
Perhaps the trauma swirling around and above us has its roots in the Constitutional debates between the Federalists and Anti-Federalists. Federalists pushed for the Constitution to give the government more “energy.” This meant giving it more power and more money. More money meant the authority to inflict what statists call taxation, otherwise known as theft. And to tax not just the states under its jurisdiction, but individuals everywhere.
“The United States [under the Articles of Confederation] has an indefinite discretion to make requisitions for men and money; but they have no authority to raise either, by regulations extending to the individual citizens of America.” — Alexander Hamilton, “The Insufficiency of the Present Confederation to Preserve the Union,” December 1, 1787, Federalist 15, (emphasis added)
As both sides knew, but only one acknowledged, energetic governments grow.
“Can the annals of mankind exhibit one single example, where rulers overcharged with power, willingly let go the oppressed, though solicited and requested most earnestly?” — Patrick Henry, speech before before the Virginia Ratifying Convention, June 5, 1788
Where was Thomas Paine when his adopted country needed him? Overseas trying to get financing for an iron bridge he designed. To be fair, Paine had not been chosen for the Convention, and his bridge was a serious project intended to improve commerce. Jefferson and John Adams were also overseas, yet both continued to engage American constitutional questions. Still, Paine’s silence during ratification deprived America of its most powerful pamphleteer. In the piquant words of Benjamin Rush, “Paine destroys error by successive flashes of lightning.”
Americans today pray for a few crumbs of relief from the leviathan state its government has become. Our forefathers had insight most of us lack, and which nationalists like Hamilton tried to obfuscate. What political TV commercial urges us to reclaim the Declaration’s affirmation of an individual’s unalienable rights? And what politician would pledge his life, fortune, and sacred honor to fight for them?
Conclusion
An unalienable right is not possible under a government that claims a monopoly on the legal use of force. Governments of that type, found everywhere, had the energy and incentive to create the hell its media tries to hide. Potemkin villages are abundant.
A presidential candidate who pledged to liquidate government in an orderly fashion and return governance to free market institutions and incentives, as we mostly had during the Revolutionary period, is our only peaceful hope.
