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A Call for Action

A program to remove the radicals from Congress, 
fix Social Security, end our dependence on 
imported oil, and restore the Republic.
Lester Townsend

The dog pictured above requires periodic maintenance from his master. If he is not taken 
for a walk he will make a mess.

Congress requires periodic maintenance from the citizens of this country. Because of a 
lack of oversight, of Congress, by the voters. Congress has created a monumental mess. 
The Obama administration and the radicals who control Congress are making the 
situation much worse, and are causing the deficit to increase at an exponential rate. The 
people of this country must replace all Congress critters, who are not honoring their 
oath of office.

The pending collapse of Social Security does not have to happen. There is a way to fix 
Social Security and we can end our dependence on imported oil.

This book gives details on how these needed changes can be made.
A Call for Action
by
Lester Townsend
I wish to thank Joe Sanger CPA, Gloria Sanger and  Dr. Ronald 
Graeser DO, for their input into this book.

I have tried to present this information in a format which can be 
understood by people who do not have a background in actuarial 
and pension issues. To the extent this book fails in  that regard, 
and to the extent the report contains any errors, I am solely 
responsible.

This book is titled “A Call for Action”, because the people must 
act. 

Copyright © 2009 by Lester Townsend. All rights reserved.
Published by lulu.com
  
TABLE OF CONTENTS
INTRODUCTION
THE PROBLEMS!                                                              1

POLITICAL ACTION
IT'S A GERRYMANDERED COUNTRY                                                        3
IT'S AN OATH                                                                                                                  6

HOW PEOPLE VOTE DOES MATTER
A HISTORY OF FISCAL MISFEASANCE 11
IGNORE WHAT THEY SAY!, WATCH HOW THEY VOTE! 14
CHECKS AND BALANCES                                                                                21 
EXCEPTIONS AND REGULATIONS                                                             26 
       

STOPPING THE CULTISTS
THE GLOBAL WARMING CULT 33
CONSERVATIVE, NOT REGRESSIVE 42

SOCIAL SECURITY 
HOW TO FIX THE SOCIAL SECURITY SYSTEM                                  48 
BACKGROUND OF SOCIAL SECURITY                                                             52
WHAT IS A PENSION PLAN?                                                                          58
EVALUATION OF THE SOCIAL SECURITY FUNDING           
MODEL                                                                                                                                         65
EVALUATION OF MEDICARE FUNDING MODEL                                   81 
EVALUATION OF COMBINED FUNDING MODEL                              87 
PROPOSALS TO RAISE TAXES OR CUT BENEFITS                      89 
OTHER IMPENDING THREATS TO THE SOLVENCY 
OF SOCIAL SECURITY                                                                                                            93 

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CONSTITIONAL PROBLEMS WITH SOC. SEC.
THE PAYROLL TAX                                                                    95 
THE 1937 SUPREME COURT CASES                                                       104 
THE 1960 SUPREME COURT CASE                                                        115 

ENERGY
ENDING OUR DEPENDENCE ON IMPORTED OIL                          119

A CALL FOR ACTION   
ANSWER THE CALL                                                                126

ADDENDUMS
NOT YOURS TO GIVE                                                                                132
MY THIRD PARTY EXPERIENCE                                                               140
ABOUT THE AUTHOR                                                                                      144
END NOTES                                                                                146
INDEX OF TABLES AND ILLUSTRATIONS                                       155
ALPHABETICAL INDEX                                                                  156

  

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INTRODUCTION

THE PROBLEMS!

This country faces major problems. The purpose of this book is


to issue a call for the citizens of this country to take action, and
to show how some of the major problems can be solved by
adherence to the Constitution of the United States.

First, our country is on a course to national bankruptcy, and


Congress is currently engaged in a massive program of
spending which will impoverish our children and grandchildren,
because of the taxes that will be required to pay off the debt.

Second, the Social Security and Medicare Programs are going to


go broke1,2. This problem occurred because all branches of
government collaborated in setting up Social Security, as
welfare program, instead of setting up an old age pension
program. These actions occurred because of the desire, by
Congress, to spend money which should have been deposited
into an actual Social Security Trust Fund. It costs five times as
much to pay Social Security benefits in a welfare program, than
it would to fund a pension plan providing the same benefits.

A third problem is that this country is dependent on imported oil


for our energy needs. While much of this oil comes from
Canada, we also import oil from countries which are not our
friends. Countries such as Venezuela and Saudi Arabia ( 18 of
the 19 hi-jackers on 9-11 were Saudis ).

This problem has occurred because we have been blocked from


developing our own resources by environmental extremists. The
damage caused to our economy by this dependence on
imported oil is so severe, that the environmental extremists
should be considered eco-terrorists. All reasonable people are
environmentalists who want to protect our environment. The
extremists use this fact to make anyone, who opposes extreme
environmental positions, feel guilty and support actions which
actually harm this country. These extremists are eco-terrorists.

There are many other problems but this book will be primarily

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directed at providing ways to solve the problems listed above.

The first section will address political issues and suggest how
Americans can answer a call to take action, and fix our
problems. We must replace politicians, who place special
interest groups over the American people. We can end the
overspending by replacing the pork barrel politicians with
patriots who will honor their oath of office.

The last section of the book will cover the Social Security and
Medicare Programs and the use of our energy resources to end
our dependence on imported oil. We can fix the Social Security
and Medicare funding problems, without raising taxes or cutting
benefits, by using the oil and gas properties owned by the
Federal Government.

2
POLITICAL ACTION
IT'S A GERRYMANDERED COUNTRY

We reelect over 90 plus percent of our Congressmen every


election, because the Congressional Districts have been
gerrymandered to be safe for the incumbent in general
elections. People identify with one of the two major parties and
vote for that party.

The gerrymandered election districts are created by identifying


the voting patterns for various communities. These patterns are
then used to draw the boundaries for Congressional ( and other
) Districts, which favor one party by having a majority of voters
for that party. The term gerrymander1 is defined as; the dividing
of a state, county, etc. into election districts so as to give one
political party a majority in many districts, while concentrating
the voting strength of the other party in as few districts as
possible.

The voting records at the precinct level can be used to compare


the total votes cast with the votes for the candidates of a
particular political party. These precincts can then be clumped
together in voting districts designed to favor that party.

The overall vote of the country will show that 25 to 30 percent


of the voters identify themselves as Republicans while 30 to 35
percent regard themselves as Democrats. The Democrat party
has a higher percentage because the blacks in this country vote
as a monolithic block, with over 90 percent voting for the
Democrats. Hard core voters, in both of the major parties, can
be thought of as brain dead, straight ticket, party line voters.

Gerrymandered districts allow an incumbent to have a reliable


base of 40 percent or more of the vote in the general election.
The opposing major party will have corresponding decline in the
number of dependable voters. This makes it very difficult for the
non-incumbent major party to get a candidate elected, to
Congress, in a gerrymandered district.

In some districts this gerrymandering results in a dependable

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vote, in the general election, in excess of 50 percent.

The gerrymandering has resulted in this country having a one


party system in most Congressional Districts. This single party
is the incumbent party. The only election which counts in these
districts is the incumbent party primary.

The gerrymandering of Congressional Districts has been used


by George Soros and his radical left wing extremists to take
over control of the Democrat party. The strategy was used, to
get left wing extremists elected, in the primary elections.
Because they would then win in the general election.

David Horowitz lays out the details of what has happened to the
Democrat Party in The Shadow Party2. This book details how a
relatively small group of voters were able to elect extremists,
and take control of the Democrat Party. This strategy was
possible because of the low voter turnouts in partisan primaries.
A small number of activist voters can elect a candidate in a
primary election.

This same strategy can be used to elect individuals who will


pledge to honor their oath of office. All the big spenders who
voted to override the veto of the 2007 water bill ( discussed in
the chapter titled “Watch how they vote” ) should be challenged
in the incumbent party primary election, or the general election,
or both.

The fact that incumbents have created a system to insure their


own reelection, can and must be used to remove them from
office. If all of the patriots and tea party attendees will rally
behind a singe patriot candidate, in the incumbent party
primary, we can remove the radicals from office. These
extremists will be vulnerable to an active group of voters, who
turn out in support of a single patriot candidate.

Our Representatives and Senators are elected, by the voters,


and they can be removed by the voters. The Patriots need to
hoist the incumbents by their own petard. A petard is defined
by my Random House Webster's College Dictionary as “a bomb
formerly used in warfare to blow in a door or gate. To be hoist
by, or with, one's own petard, is to be caught by the very device
one had contrived to harm another.”

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We are now living in a country where radicals rule, and the
Patriots must rise up and remove the radicals. If this is not
done, this country will not long endure.

5
IT'S AN OATH

Congress

Every member of Congress takes an oath of office before


assuming their duties as a Senator or Representative. Taking
the oath is required by Article VI of the Constitution which
provides:

“The Senators and Representatives before mentioned, and the  
Members of the several State Legislatures, and all executive and  
judicial Officers, both of the United States and of the several States,  
shall be bound by Oath or Affirmation, to support this Constitution;  
but no religious Test shall ever be required as a Qualification to any  
Office or public Trust under the United States.”

The actual wording of the oath1 is as follows:

“I [name], do solemnly swear ( or affirm ) that I will support and


defend the Constitution of the United States against all
enemies, foreign and domestic; that I will bear true faith and
allegiance to the same; that I take this obligation freely, without
any mental reservation or purpose of evasion; and that I will
well and faithfully discharge the duties of the office on which I
am about to enter: So help me God.” 5 U.S.C.§3331

All who take this oath need to understand what taking the oath
entails.

This oath is a Constitutional requirement for service in the


Senate, or the House of Representatives. This oath takes
precedence over loyalty to any particular party or special
interest group, and must not be viewed as simply a procedural
requirement to hold office.

An Oath is a solemn promise2; which is defined as a pledge or


vow3. This vow should be viewed with the solemnity and
seriousness, which should be accorded to a person's marriage
vows.

This promise is made by the person assuming the office.

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The individual promises to support and defend the Constitution
of the United States against all enemies, foreign and domestic .

The definition of the word support 4 includes the following


definitions; “to bear the weight of; to hold in place; to provide
necessities; to provide with the means to endure.” The
definition of the word defend5 includes the following definition;
“to protect from danger”. The inclusion of the word domestic
requires our Congress Persons to protect the Constitution from
those individuals in this country ( including members of
Congress, the Judiciary and the Executive Branch ) who are
hostile to the restrictions in the Constitution.

The person taking the oath promises to bear true faith and
allegiance to the Constitution. The word allegiance imposes an
obligation of loyalty to the Constitution. This allegiance
supersedes loyalty to any political party, or special interest
group.

The statement that the person taking the oath takes the
obligation; “freely, without any mental reservation or purpose of
evasion”, requires the oath taker to make a solemn vow without
any unvoiced exceptions to the oath.

The promise that the individual will “well and faithfully


discharge the duties of the office” which he or she is entering
requires our members to abide by the provisions and
restrictions in the Constitution. All legislation which our
legislators approve should fully comply with the provisions of
the Constitution. Any proposed legislation which does not
comply with the Constitution should be rejected.

Any Congress person who votes for a bill he or she has not been
given time to read is violating the Oath of Office.

This oath also requires our Senators and Representative to


accept their Constitutional responsibility, to apply the checks
and balances in the Constitution when necessary.

The voters have an obligation to remove Senators and


Congressmen who do not honor the oath of office.

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Judges
The oath of office for Judges6 is different than the oath for
members of Congress and the Executive Branch.

A Judge or Justice takes the following oath: “I, XXX XXX, do


solemnly swear (or affirm) that I will administer justice without
respect to persons, and do equal right to the poor and to the
rich, and that I will faithfully and impartially discharge and
perform all the duties incumbent upon me as XXX under the
Constitution and laws of the United States. So help me God.”

A judge promises to administer justice without respect to


persons. This part of the oath requires our laws to be
administered without regard to race, gender, religion, ethnicity
or self perceived gender identity, unless a provision in the law
allows an exception or preference. The promise also requires
justice to be administered under the Constitution and laws of
the United States. This provision requires that any exceptions or
preferences in our laws must comply with the U.S. Constitution.

This oath does not include any provision allowing the laws of
other nations to be used. The U.S. Constitution is the
preeminent law of our country.

Traditionally judges have had the latitude to interpret the


Constitution in view of the facts in the case being considered by
the court. In recent decades, this latitude has been used to
include provisions which are not in the Constitution, or to ignore
provisions that are included in the Constitution.

The Constitution does provide checks and balances which can


be used to correct errors and abuses when made by the Courts.
These checks and balances are to be applied by Congress, and
are discussed in the chapter on Checks and Balances. Our
congressmen have an obligation to remove judges, and other
civil Officers, who do not honor the oath of office. Failure to act
is a violation of the oath taken by Congress.

President

The President must also recite an oath of office. The oath for
the President is the only oath for which the wording is

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specifically contained in the Constitution.

Article II, Section 1 of the U.S. Constitution Provides: “I do  


solemnly swear (or affirm) that I will faithfully execute the office of  
President of the United States, and will to the best of my ability,  
preserve, protect and defend the Constitution of the United States.” 

This oath is similar to that recited by Congress Persons in that


the President vows to preserve, protect and defend the
Constitution of the United States. This provision requires that
our President should protect the Constitution by vetoing any law
which violates the U.S. Constitution.

Military

The Oath of Office (for officers)7:

“I, (state your name), having been appointed a (rank) in the


United States (branch of service), do solemnly swear (or affirm)
that I will support and defend the Constitution of the United
States against all enemies, foreign and domestic; that I will bear
true faith and allegiance to the same; that I take this obligation
freely, without any mental reservation or purpose of evasion;
and that I will well and faithfully discharge the office upon which
I am about to enter. So help me God.”

The oath for officers is, first and foremost, an oath to support
and defend the U.S. Constitution. The oath is not a vow of fealty
to a specific individual, such as a President who is engaged in
developing a cult of personality.

The Oath of Enlistment (for enlistees)8:

“I, (state your name), do solemnly swear (or affirm) that I will
support and defend the Constitution of the United States
against all enemies, foreign and domestic; that I will bear true
faith and allegiance to the same; and that I will obey the orders
of the President of the United States and the orders of the
officers appointed over me, according to regulations and the
Uniform Code of Military Justice. So help me God.”

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The military oath is similar to the oath taken by Congress and
the oath for enlisted personal includes following orders from
superiors. It must be noted that the first item stated in this oath
is allegiance to the U.S. Constitution.

All veterans and former government employees need to


consider that your oath of office does not expire. Your oath
takes precedence over loyalty to any political party. You need to
vote against any politician who does not honor his or her oath
of office, to support and defend the Constitution. If you do not
vote to remove these individuals, you will be violating your oath
of office.

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HOW PEOPLE VOTE DOES MATTER
A HISTORY OF FISCAL MISFEASANCE

There is a level of financial misfeasance on the part of our


Congress which has grown to mind boggling size. The following
table of Historical Data1 from the Congressional Budget Office
shows the history of deficit spending for the last four decades.
T able F-1.
Revenues, Out lays, Surpluses, Def icit s, and Debt Held by t he Public, 1969 t o 2008
(Billions of dollars)

Def icit (-) or Sur plus Debt


On- Social Post al Held by
Revenues Out lays Budget Secur it y Ser vice T ot al t he Public a
1969 186.9 183.6 -0.5 3.7 n.a. 3.2 278.1
1970 192.8 195.6 -8.7 5.9 n.a. -2.8 283.2
1971 187.1 210.2 -26.1 3.0 n.a. -23.0 303.0
1972 207.3 230.7 -26.1 3.1 -0.4 -23.4 322.4
1973 230.8 245.7 -15.2 0.5 -0.2 -14.9 340.9
1974 263.2 269.4 -7.2 1.8 -0.8 -6.1 343.7
1975 279.1 332.3 -54.1 2.0 -1.1 -53.2 394.7
1976 298.1 371.8 -69.4 -3.2 -1.1 -73.7 477.4
1977 355.6 409.2 -49.9 -3.9 0.2 -53.7 549.1
1978 399.6 458.7 -55.4 -4.3 0.5 -59.2 607.1
1979 463.3 504.0 -39.6 -2.0 0.9 -40.7 640.3
1980 517.1 590.9 -73.1 -1.1 0.4 -73.8 711.9
1981 599.3 678.2 -73.9 -5.0 -0.1 -79.0 789.4
1982 617.8 745.7 -120.6 -7.9 0.6 -128.0 924.6
1983 600.6 808.4 -207.7 0.2 -0.3 -207.8 1,137.3
1984 666.5 851.9 -185.3 0.3 -0.4 -185.4 1,307.0
1985 734.1 946.4 -221.5 9.4 -0.1 -212.3 1,507.3
1986 769.2 990.4 -237.9 16.7 0.0 -221.2 1,740.6
1987 854.4 1,004.1 -168.4 19.6 -0.9 -149.7 1,889.8
1988 909.3 1,064.5 -192.3 38.8 -1.7 -155.2 2,051.6
1989 991.2 1,143.8 -205.4 52.4 0.3 -152.6 2,190.7
1990 1,032.1 1,253.1 -277.6 58.2 -1.6 -221.0 2,411.6
1991 1,055.1 1,324.3 -321.4 53.5 -1.3 -269.2 2,689.0
1992 1,091.3 1,381.6 -340.4 50.7 -0.7 -290.3 2,999.7
1993 1,154.5 1,409.5 -300.4 46.8 -1.4 -255.1 3,248.4
1994 1,258.7 1,461.9 -258.8 56.8 -1.1 -203.2 3,433.1
1995 1,351.9 1,515.9 -226.4 60.4 2.0 -164.0 3,604.4
1996 1,453.2 1,560.6 -174.0 66.4 0.2 -107.4 3,734.1
1997 1,579.4 1,601.3 -103.2 81.3 0.0 -21.9 3,772.3
1998 1,722.0 1,652.7 -29.9 99.4 -0.2 69.3 3,721.1
1999 1,827.6 1,702.0 1.9 124.7 -1.0 125.6 3,632.4
2000 2,025.5 1,789.2 86.4 151.8 -2.0 236.2 3,409.8
2001 1,991.4 1,863.2 -32.4 163.0 -2.3 128.2 3,319.6
2002 1,853.4 2,011.2 -317.4 159.0 0.7 -157.8 3,540.4
2003 1,782.5 2,160.1 -538.4 155.6 5.2 -377.6 3,913.4
2004 1,880.3 2,293.0 -568.0 151.1 4.1 -412.7 4,295.5
2005 2,153.9 2,472.2 -493.6 173.5 1.8 -318.3 4,592.2
2006 2,407.3 2,655.4 -434.5 185.2 1.1 -248.2 4,829.0
2007 2,568.2 2,728.9 -342.2 186.5 -5.1 -160.7 5,035.1
2008 2,524.3 2,982.9 -641.8 180.8 2.4 -458.5 5,802.7

Source: Congressional Budget Office.


Note: n.a. = not applicable (the Postal Service was not an independent agency until 1972);
* = between -$50 million and $50 million.
a. End of year.

revised: 4/14/09

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This table ( which shows debt held by the public, and
apparently does not show debt held by foreign governments
such as China ) shows a pattern of ever increasing budget
deficits over the last 40 years. The only on budget surplus
occurred in 1999 and 2000 which were the last years of the
Clinton administration. The total budget surplus in 1998 and
2001 occurred because the Social Security surplus is included in
government revenue.
We currently have a group of professional politicians in
Washington who think their job is to bring home the Bacon. The
deficits occur because they want to have money spent in their
home districts to show they are working for their constituents.
The taxpayers and voters are responsible for this sorry state of
affairs. Pork barrel projects are not paid for with free money
from Washington. They are paid for with tax dollars, or with
borrowed money, which will ultimately be our children's tax
dollars. All government borrowing puts the taxpayers on the
wrong side of the compound interest equation. The amount
needed to pay off this debt will be far in excess of the amount
borrowed because of interest added to the debt.
The earmarks and pork barrel projects usually benefit very few
people. When your Congress Critter boasts about how much
money is being spent in your Congressional District ( or state in
the case of a Senator ), ask yourself how much of this money
will benefit you? The answer is probably “none”. You need to
realize that Congress is spending your money to benefit others.
These others are probably individuals, or special interest
groups, who make campaign contributions to help the politician
get reelected.
Taxpayers and voters are ultimately responsible for our
government's current financial problems. As long as we reelect
Congress Critters who spend money on projects, which are not
limited to the legitimate functions of the Federal Government
set forth in the Constitution, this mess will continue. This book
is a call for action!
We need to remove all of the porkers in Congress. The Chapter
titled “Ignore what they say, watch how they vote!” contains a
copy of the roll call vote on the veto override of the pork laden
2007 Water Bill. By their vote on this bill, the porkers have
identified themselves. The list also details the individuals who
voted against the veto override. These individuals should be

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praised.
We need to educate ourselves about the issues, positions and
voting record of candidates. If we fail to educate ourselves, we
are part of the problem. If we do not vote we are part of the
problem. If we are eligible to vote and have not registered to
vote, we are both irresponsible and a part of the problem.
We as taxpayers, and voters, need to elect representatives who
will limit spending to the necessary functions of government.
We need to elect patriots who will honor the oath of office.

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IGNORE WHAT THEY SAY!
WATCH HOW THEY VOTE!

Spending by our Federal Government is the responsibility of


Congress, not the President or the Courts. The President
proposes but Congress disposes. The President can jawbone
Congress in a effort to control spending and can even veto
various spending bills. The final decision on spending resides in
Congress which can override a presidential veto.

The massive deficit spending by Congress is a bipartisan


problem. A look at the budget deficits shows a pattern of
irresponsible spending by Congress regardless of the party in
control. During the first six years of the George W. Bush
presidency, the Republicans controlled Congress. During this
period, the president did not veto a single spending bill.
President Clinton actually did a far better job of working with
Congress and controlling the deficit.

During the last two years of the George W. Bush administration,


when the Democrats controlled Congress, the deficit spending
was even worse than during the period during which the
Republicans were in charge. The 2007 Water Bill demonstrated
that out of control spending is a bi-partisan problem and
provides a litmus test to identify which congress persons are
responsible for our current problems.

The administration proposed programs with a cost of 4.9 billion


dollars. Congress larded the bill with pork barrel projects. The
House bill provided for 15 billion in projects and the Senate bill
provided for 14 billion in projects. The House and Senate bills
were the sent to a Conference Committee to resolve any
differences. The Conference Committee compromised by
keeping all of the pork barrel spending from both houses, and
voted out a bill with 23 billion in approved projects. President
Bush then vetoed the bill 1 because of the massive amount of
pork barrel projects. Congress then voted, by a wide margin, to
override the veto. The following is a list showing the roll call
vote2, in the House of Representatives, on the veto override.

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Roll Call Vote No. 1040 Tally – Vote to Override Veto of 2007 Water Bill

Yea : 361 Members

Don Young (R­AK) Kevin McCarthy (R­CA) Mario Diaz­Balart (R­FL)


Robert Aderholt (R­AL) Gerald McNerney (D­CA) Alcee Hastings (D­FL)
Jo Bonner (R­AL) Gary Miller (R­CA) Ric Keller (R­FL)
Robert Cramer (D­AL) George Miller (D­CA) Ron Klein (D­FL)
Artur Davis (D­AL) Grace Napolitano (D­CA) Connie Mack (R­FL)
Terry Everett (R­AL) Laura Richardson (D­CA) Timothy Mahoney (D­FL)
Michael Rogers (R­AL) Dana Rohrabacher (R­CA) Kendrick Meek (D­FL)
Marion Berry (D­AR) Lucille Roybal­Allard (D­CA) John Mica (R­FL)
John Boozman (R­AR) Linda Sanchez (D­CA) Ileana Ros­Lehtinen (R­FL)
Mike Ross (D­AR) Loretta Sanchez (D­CA) D Wasserman Schultz ( D­FL )
Vic Snyder (D­AR) Adam Schiff (D­CA) Dave Weldon (R­FL)
Gabrielle Giffords (D­AZ) Brad Sherman (D­CA) Robert Wexler (D­FL)
Raul Grijalva (D­AZ) Hilda Solis (D­CA) John Barrow (D­GA)
Harry Mitchell (D­AZ) Fortney Stark (D­CA) Sanford Bishop (D­GA)
Rick Renzi (R­AZ) Ellen Tauscher (D­CA) Hank Johnson (D­GA)
Joe Baca (D­CA) Mike Thompson (D­CA) John Lewis (D­GA)
Xavier Becerra (D­CA) Maxine Waters (D­CA) Jim Marshall (D­GA)
Howard Berman (D­CA) Diane Watson (D­CA) Tom Price (R­GA)
Mary Bono (R­CA) Henry Waxman (D­CA) David Scott (D­GA)
Ken Calvert (R­CA) Lynn Woolsey (D­CA) Neil Abercrombie (D­HI)
Lois Capps (D­CA) Diana DeGette (D­CO) Mazie Hirono (D­HI)
Dennis Cardoza (D­CA) Marilyn Musgrave (R­CO) Leonard Boswell (D­IA)
Jim Costa (D­CA) Ed Perlmutter (D­CO) Bruce Braley (D­IA)
Susan Davis (D­CA) John Salazar (D­CO) Steve King (R­IA)
John Doolittle (R­CA) Mark Udall (D­CO) Tom Latham (R­IA)
David Dreier (R­CA) Joe Courtney (D­CT) Dave Loebsack (D­IA)
Anna Eshoo (D­CA) Rosa DeLauro (D­CT) William Sali (R­ID)
Sam Farr (D­CA) John Larson (D­CT) Mike Simpson (R­ID)
Bob Filner (D­CA) Christopher Murphy (D­CT) Melissa Bean (D­IL)
Elton Gallegly (R­CA) Christopher Shays (R­CT) Judy Biggert (R­IL)
Jane Harman (D­CA) Michael Castle (R­DE) Jerry Costello (D­IL)
Wally Herger (R­CA) Gus Bilirakis (R­FL) Danny Davis (D­IL)
Michael Honda (D­CA) F. Allen Boyd (D­FL) Rahm Emanuel (D­IL)
Duncan Hunter (R­CA) Corrine Brown (D­FL) Luis Gutierrez (D­IL)
Tom Lantos (D­CA) Ginny Brown­Waite (R­FL) Phil Hare (D­IL)
Barbara Lee (D­CA) Vern Buchanan (R­FL) J. Dennis Hastert (R­IL)
Zoe Lofgren (D­CA) Kathy Castor (D­FL) Jesse Jackson (D­IL)
Dan Lungren (R­CA) Ander Crenshaw (R­FL) Timothy Johnson (R­IL)
Doris Matsui (D­CA) Lincoln Diaz­Balart (R­FL) Mark Kirk (R­IL)

15
Roll Call Vote No. 1040 Tally – Veto Override Vote ­ 2007 Water Bill ­  Yea Votes 

Ray LaHood (R­IL) Albert Wynn (D­MD) David Price (D­NC)


Dan Lipinski (D­IL) Thomas Allen (D­ME) Heath Shuler (D­NC)
Donald Manzullo (R­IL) Michael Michaud (D­ME) Melvin Watt (D­NC)
Peter Roskam (R­IL) Dave Camp (R­MI) Earl Pomeroy (D­ND)
Bobby Rush (D­IL) John Conyers (D­MI) Jeff Fortenberry (R­NE)
Janice Schakowsky (D­IL) John Dingell (D­MI) Adrian Smith (R­NE)
John Shimkus (R­IL) Vernon Ehlers (R­MI) Lee Terry (R­NE)
Jerry Weller (R­IL) Peter Hoekstra (R­MI) Paul Hodes (D­NH)
Joe Donnelly (D­IN) Dale Kildee (D­MI) Carol Shea­Porter (D­NH)
Brad Ellsworth (D­IN) Carolyn Kilpatrick (D­MI) Robert Andrews (D­NJ)
Baron Hill (D­IN) Joseph Knollenberg (R­MI) Rodney Frelinghuysen (R­NJ)
Mark Souder (R­IN) Sander Levin (D­MI) Rush Holt (D­NJ)
Peter Visclosky (D­IN) Thaddeus McCotter (R­MI) Frank LoBiondo (R­NJ)
Nancy Boyda (D­KS) Candice Miller (R­MI) Frank Pallone (D­NJ)
Dennis Moore (D­KS) Michael Rogers (R­MI) Steven Rothman (D­NJ)
Jerry Moran (R­KS) Bart Stupak (D­MI) Jim Saxton (R­NJ)
Todd Tiahrt (R­KS) Fred Upton (R­MI) Albio Sires (D­NJ)
Ron Lewis (R­KY) Tim Walberg (R­MI) Christopher Smith (R­NJ)
Harold Rogers (R­KY) Michele Bachmann (R­MN) Steve Pearce (R­NM)
Ed Whitfield (R­KY) Keith Ellison (D­MN) Tom Udall (D­NM)
Rodney Alexander (R­LA)  John Kline (R­MN) Heather Wilson (R­NM)
Richard Baker (R­LA) Betty McCollum (D­MN) Shelley Berkley (D­NV)
Charles Boustany (R­LA) Collin Peterson (D­MN) Dean Heller (R­NV)
William Jefferson (D­LA) Jim Ramstad (R­MN) Jon Porter (R­NV)
Bobby Jindal (R­LA) Tim Walz (D­MN) Gary Ackerman (D­NY)
Jim McCrery (R­LA) Todd Akin (R­MO) Michael Arcuri (D­NY)
Charlie Melancon (D­LA) Russ Carnahan (D­MO) Tim Bishop (D­NY)
Michael Capuano (D­MA) Wm. Lacy Clay (D­MO) Yvette Clarke (D­NY)
William Delahunt (D­MA) Emanuel Cleaver (D­MO) Joseph Crowley (D­NY)
Barney Frank (D­MA) Jo Ann Emerson (R­MO) Eliot Engel (D­NY)
Stephen Lynch (D­MA) Sam Graves (R­MO) Kirsten Gillibrand (D­NY)
Edward Markey (D­MA) Kenny Hulshof (R­MO) John Hall (D­NY)
James McGovern (D­MA) Ike Skelton (D­MO) Brian Higgins (D­NY)
Richard Neal (D­MA) Charles Pickering (R­MS) Maurice Hinchey (D­NY)
John Olver (D­MA) Gene Taylor (D­MS) Steve Israel (D­NY)
John Tierney (D­MA) Bennie Thompson (D­MS) Peter King (R­NY)
Niki Tsongas (D­MA) Roger Wicker (R­MS) Randy Kuhl (R­NY)
Roscoe Bartlett (R­MD) Dennis Rehberg (R­MT) Nita Lowey (D­NY)
Elijah Cummings (D­MD) Howard Coble (R­NC) Carolyn Maloney (D­NY)
Wayne Gilchrest (R­MD) Bob Etheridge (D­NC) Carolyn McCarthy (D­NY)
Steny Hoyer (D­MD) Robin Hayes (R­NC) John McHugh (R­NY)
C.A. Ruppersberger (D­MD) Walter Jones (R­NC) Gregory Meeks (D­NY)
John Sarbanes (D­MD) Mike McIntyre (D­NC) Jerrold Nadler (D­NY)
Chris Van Hollen (D­MD) Brad Miller (D­NC) Charles Rangel (D­NY)

16
Roll Call Vote No. 1040 Tally – Veto Override Vote ­ 2007 Water Bill ­  Yea Votes  

Thomas Reynolds (R­NY) Timothy Murphy (R­PA) Michael McCaul (R­TX)


Jose Serrano (D­NY) John Murtha (D­PA) Solomon Ortiz (D­TX)
L McIntosh Slaughter ( D­NY ) John Peterson (R­PA) Ted Poe (R­TX)
Edolphus Towns (D­NY) Allyson Schwartz (D­PA) Silvestre Reyes (D­TX)
Nydia Velazquez (D­NY) Joe Sestak (D­PA) Ciro Rodriguez (D­TX)
Anthony Weiner (D­NY) Bill Shuster (R­PA) Pete Sessions (R­TX)
Stephanie Jones (D­OH) Patrick Kennedy (D­RI) Lamar Smith (R­T X)
Marcy Kaptur (D­OH) James Langevin (D­RI) William Thornberry (R­TX)
Dennis Kucinich (D­OH) Henry Brown (R­SC) Rob Bishop (R­UT)
Steven LaTourette (R­OH) James Clyburn (D­SC) Chris Cannon (R­UT)
Ralph Regula (R­OH) John Spratt (D­SC) Jim Matheson (D­UT)
Tim Ryan (D­OH) S. Herseth Sandlin (D­SD) Rick Boucher (D­VA)
Jean Schmidt (R­OH) Stephen Cohen (D­TN) Thomas Davis (R­VA)
Zack Space (D­OH) Jim Cooper (D­TN) Thelma Drake (R­VA)
Betty Sutton (D­OH) David Davis (R­TN) Randy Forbes (R­VA)
Michael Turner (R­OH) Lincoln Davis (D­TN) James Moran (D­VA)
Charlie Wilson (D­OH) John Duncan (R­TN) Bobby Scott (D­VA)
Dan Boren (D­OK) Bart Gordon (D­TN) Peter Welch (D­VT)
Tom Cole (R­OK) John Tanner (D­TN) Brian Baird (D­WA)
Mary Fallin (R­OK) Zach Wamp (R­TN) Norman Dicks (D­WA)
Frank Lucas (R­OK) Joe Barton (R­TX) Doc Hastings (R­WA)
John Sullivan (R­OK) Michael Burgess (R­TX) Jay Inslee (D­WA)
Earl Blumenauer (D­OR) John Carter (R­TX) Rick Larsen (D­WA)
Peter DeFazio (D­OR) Mike Conaway (R­T X) Jim McDermott (D­WA)
Darlene Hooley (D­OR) Henry Cuellar (D­TX) Cathy McMorris Rodgers (R­WA)
Greg Walden (R­OR) John Culberson (R­TX) Dave Reichert (R­WA)
David Wu (D­OR) Lloyd Doggett (D­T X) Adam Smith (D­WA)
Jason Altmire (D­PA) Chet Edwards (D­TX) Tammy Baldwin (D­WI)
Christopher Carney (D­PA) Charles Gonzalez (D­TX) Steve Kagen (D­WI)
Charles Dent (R­PA) Kay Granger (R­TX) Ron Kind (D­WI)
Mike Doyle (D­PA) Al Green (D­T X) Gwen Moore (D­WI)
Philip English (R­PA) Gene Green (D­T X) David Obey (D­WI)
Chaka Fattah (D­PA) Ralph Hall (R­TX) Thomas Petri (R­WI)
Jim Gerlach (R­PA) Ruben Hinojosa (D­TX) Paul Ryan (R­WI)
Tim Holden (D­PA) Sheila Jackson Lee (D­TX) Shelley Moore Capito (R­WV)
Paul Kanjorski (D­PA) Eddie Bernice Johnson (D­TX) Alan Mollohan (D­WV)
Patrick Murphy (D­PA) Nicholas Lampson (D­TX) Nick Rahall (D­WV)
Almost all of those who voted to override this veto are still in
Congress. The list of those who voted against the veto override
or who did not vote is on the following page.

17
Nay : 54  Members   Roll Call Vote 1040 – Vote to Override Veto of 2007 Water Bill

Spencer Bachus (R­AL) Paul Broun (R­GA) Patrick Tiberi (R­OH)


Jeff Flake (R­AZ) Nathan Deal (R­GA) Joseph Pitts (R­PA)
Trent Franks (R­AZ) Phil Gingrey (R­GA) Todd Platts (R­PA)
John Shadegg (R­AZ) Jack Kingston (R­GA) J. Gresham Barrett (R­SC)
Brian Bilbray (R­CA) John Linder (R­GA) Bob Inglis (R­SC)
John Campbell (R­CA) Dan Burton (R­IN) Joe Wilson (R­SC)
Darrell Issa (R­CA) Mike Pence (R­IN) Marsha Blackburn (R­TN)
Jerry Lewis (R­CA) Geoff Davis (R­KY) Kevin Brady (R­TX)
Howard McKeon (R­CA) Roy Blunt (R­MO) Louie Gohmert (R­TX)
Devin Nunes (R­CA)  Virginia Foxx (R­NC) Jeb Hensarling (R­TX)
George Radanovich (R­CA) Patrick McHenry (R­NC) Kenny Marchant (R­TX)
Ed Royce (R­CA) Sue Myrick (R­NC) Randy Neugebauer (R­TX)
Doug Lamborn (R­CO) Scott Garrett (R­NJ) Ron Paul (R­TX)
Tom Feeney (R­FL) James Walsh (R­NY) Eric Cantor (R­VA)
Jeff Miller (R­FL) John Boehner (R­OH) Virgil Goode (R­VA)
Adam Putnam (R­FL) Steve Chabot (R­OH) Bob Goodlatte (R­VA)
Cliff Stearns (R­FL) David Hobson (R­OH) Frank Wolf (R­VA)
C.W. Bill Young (R­FL) Jim Jordan (R­OH) F James Sensenbrenner (R­WI)

Not Voting : 17 Members  Roll Call Vote 1040 – Vote to Override Veto of  2007 Water Bill

Ed Pastor (D­AZ) James Oberstar (D­MN) Robert Brady (D­PA)


Thomas Tancredo (R­CO) G.K. Butterfield (D­NC) Sam Johnson (R­TX)
Lynn Westmoreland (R­GA)  Michael Ferguson (R­NJ) Barbara Cubin (R­WY)
Steve Buyer (R­IN) Donald Payne (D­NJ)
Julia Carson (D­IN) Vito Fossella (R­NY) Speaker : 1 Member
Ben Chandler (D­KY) Michael McNulty (D­NY) Nancy Pelosi (D­CA)
John Yarmuth (D­KY) Deborah Pryce (R­OH)
The Senate also voted to override the veto of the water bill by
an overwhelming margin, showing that the appetite for pork
was the major desire of both houses in Congress. The following
table shows the roll call vote3 in the Senate.

18
SENATE VOTE ON VETO OVERRIDE OF 2007 WATER BILL

Roll Call Vote No. 406 Tally

Yea : 79 Members

Lisa Murkowski (R-AK) John Kerry (D-MA) James Inhofe (R-OK)


Ted Stevens (R-AK) Benjamin Cardin (D-MD) Gordon Smith (R-OR)
Richard Shelby (R-AL) Barbara Mikulski (D-MD) Ron Wyden (D-OR)
Blanche Lincoln (D-AR) Susan Collins (R-ME) Robert Casey (D-PA)
Mark Pryor (D-AR) Olympia Snowe (R-ME) Arlen Specter (R-PA)
Barbara Boxer (D-CA) Carl Levin (D-MI) Jack Reed (D-RI)
Dianne Feinstein (D-CA) Debbie Stabenow (D-MI) Sheldon Whitehouse (D-RI)
Ken Salazar (D-CO) Norm Coleman (R-MN) Lindsey Graham (R-SC)
Joseph Lieberman (I-CT) Amy Klobuchar (D-MN) Tim Johnson (D-SD)
Thomas Carper (D-DE) Christopher Bond (R-MO) John Thune (R-SD)
Mel Martinez (R-FL) Thad Cochran (R-MS) Lamar Alexander (R-TN)
Bill Nelson (D-FL) Trent Lott (R-MS) Bob Corker (R-TN)
Saxby Chambliss (R-GA) Max Baucus (D-MT) Kay Bailey Hutchison (R-TX)
Johnny Isakson (R-GA) Jon Tester (D-MT) Robert Bennett (R-UT)
Daniel Akaka (D-HI) Elizabeth Dole (R-NC) Orrin Hatch (R-UT)
Daniel Inouye (D-HI) Kent Conrad (D-ND) John Warner (R-VA)
Charles Grassley (R-IA) Byron Dorgan (D-ND) James Webb (D-VA)
Tom Harkin (D-IA) Chuck Hagel (R-NE) Patrick Leahy (D-VT)
Larry Craig (R-ID) Ben Nelson (D-NE) Bernard Sanders (I-VT)
Mike Crapo (R-ID) Frank Lautenberg (D-NJ) Maria Cantwell (D-WA)
Richard Durbin (D-IL) Robert Menendez (D-NJ) Patty Murray (D-WA)
Evan Bayh (D-IN) Jeff Bingaman (D-NM) Herbert Kohl (D-WI)
Richard Lugar (R-IN) Pete Domenici (R-NM) Robert Byrd (D-WV)
Pat Roberts (R-KS) Harry Reid (D-NV) John Rockefeller (D-WV)
Mary Landrieu (D-LA) Charles Schumer (D-NY) John Barrasso (R-WY)
David Vitter (R-LA) Sherrod Brown (D-OH)
Edward Kennedy (D-MA) George Voinovich (R-OH)

Nay : 14 Members

Jeff Sessions (R-AL) Claire McCaskill (D-MO) Tom Coburn (R-OK)


Jon Kyl (R-AZ) Richard Burr (R-NC) Jim DeMint (R-SC)
Wayne Allard (R-CO) Judd Gregg (R-NH) Russ Feingold (D-WI)
Sam Brownback (R-KS) John Suntan (R-NH) Michael Enzi (R-WY)
Mitch McConnell (R-KY) John Ensign (R-NV)

Not Voting : 7 Members

John McCain (R-AZ) Barack Obama (D-IL) John Cornyn (R-TX)


Christopher Dodd (D-CT) Jim Bunning (R-KY) Back to Vote Map.
Joseph Biden (D-DE) Hillary Clinton (D-NY)

19
In deciding how you will vote, you need to ignore what the
politicians say and watch how they vote. There is a group of
representatives in the Democrat Party who claim to be fiscally
conservative. None of these alleged Blue Dog democrats voted
against the veto override. To be fair, there were some who
simply did not vote. They apparently did not want to vote
against the party leadership. This 2007 Water Bill vote indicates
that most of these politicians will say what they think voters
want to hear, and in fact are not fiscally conservative. It is your
job as a voter to hold our politicians accountable, by ignoring
what they say and watching how they vote.

The right to vote includes a solemn responsibility to educate


yourself about the issues, and to consider what is best for all of
the people in the country. This is a truly great country, but our
resources are limited and need to be managed properly. The
greed of the special interest groups is unlimited and will destroy
our country, if our politicians continue to fund every program
which is presented with a tear jerking plea for money. The
increase in our national debt, and the required debt service
costs, will limit our ability ability to pay for the necessary
functions of government. Pork barrel spending must stop!

Many of the programs requesting funds from the government


are for good and noble purposes. This fact makes them hard to
resist. Any legislator who does not support the spending is
labeled as heartless. This is unfortunate but is not a reason to
vote for programs which are not authorized by the Constitution.

The oath of office requires our legislators to support and defend


the Constitution, even when doing so may make them appear to
be heartless. Government is like a cancer which, if left
unchecked, will grow until it kills it's host. As a cancer survivor, I
can say from personal experience that radical surgery is both
painful and debilitating. I can also say that that the reason I am
here today, is because I had the radical surgery.

This book is a call for the American people to act. We Americans


can remove Congress Critters, who ( by their votes )
demonstrate that they are more interested in benefiting a few
special interests with pork barrel projects, than in benefiting all
of their constituents by controlling spending.

20
CHECKS AND BALANCES!
Honoring the oath of office requires our representatives to apply
the checks and balances contained in the Constitution 1. This
includes more than just voting against bills which violate the
Constitution.

The Constitution provides checks and balances on the various


branches of government, including the courts. The checks on
the Courts are the responsibility of Congress, which also has the
power to provide checks on the Executive Branch. The best
known of these checks is the power of impeachment, which
allows the House of Representatives to act as a Grand Jury and
determine if there is sufficient reason to impeach an individual,
such as a President or a Judge.

The Senate then tries the individual and determines if he/she is


guilty and should be removed from office or subjected to some
lesser penalty.

The provisions in the U.S. Constitution 1 which govern the power


of impeachment include the following.

Article I., Section 2.

The House of Representatives shall chuse their Speaker and other  
Officers; and shall have the sole Power of Impeachment.

Article I., Section 3.

The Senate shall have the sole Power to try all Impeachments. When  
sitting for that Purpose, they shall be on Oath or Affirmation. When  
the President of the United States is tried, the Chief Justice shall  
preside: And no Person shall be convicted without the Concurrence of  
two thirds of the Members present.

Judgment in Cases of Impeachment shall not extend further than to  
removal from Office, and disqualification to hold and enjoy any
Office of honor, Trust or Profit under the United States: but the Party  
convicted shall nevertheless be liable and subject to Indictment, Trial,  

21
Judgment and Punishment, according to Law.

Article II., Section 4.

The President, Vice President and all civil Officers of the United  
States, shall be removed from Office on Impeachment for, and  
Conviction of, Treason, Bribery, or other high Crimes and  
Misdemeanors.

Article III., Section 1.

The judicial Power of the United States shall be vested in one supreme  
Court, and in such inferior Courts as the Congress may from time to  
time ordain and establish. The Judges, both of the supreme and  
inferior Courts, shall hold their Offices during good Behavior, and  
shall, at stated Times, receive for their Services a Compensation,  
which shall not be diminished during their Continuance in Office. 

Article III., Section 3.

Treason against the United States shall consist only in levying War  
against them, or in adhering to their Enemies, giving them Aid and  
Comfort. No Person shall be convicted of Treason unless on the  
Testimony of two Witnesses to the same overt Act, or on Confession in  
open Court.

The Congress shall have Power to declare the Punishment of Treason,  
but no Attainder of Treason shall work Corruption of Blood, or  
Forfeiture except during the Life of the Person attained.

Article VI.

The Senators and Representatives before mentioned, and the Members  
of the several State Legislatures, and all executive and
judicial Officers, both of the United States and of the several States,  
shall be bound by Oath or Affirmation, to support this Constitution;  
but no religious Test shall ever be required as a Qualification to any  
Office or public Trust under the United States.

22
These sections are extracted from the language in the U.S.
Constitution and are relevant because they apply to the power
of impeachment.

Article I, sections 2 and 3 provide that impeachment


proceedings must begin in the House of Representatives. The
act of impeachment requires only a simple majority vote by the
House. The Senate then has the power to try and convict ( or
acquit ) the individual who has been impeached. A conviction
by the Senate requires a vote of two thirds of the Members
present.

Article I, Section 3 also provides that the act of impeaching an


individual simply removes that individual from office. This limit
means that Congress has the power to fire members of the
Executive and Judicial Branch. This power should make
Congress the most powerful branch of the three branches of
government.

The power to impeach does not include the power to apply


penalties in addition to firing the individual in question. In fact
any impeachment which tried to do more than simply fire an
individual would violate the prohibition of “bills of attainder” in
Article I, Section 9 of the Constitution, and in Article III, Section
3.

Any additional action against an individual subjected to


impeachment would be in a Court of Law.

The provisions in Article II, Section 4 provide that; “The  


President, Vice President and all civil Officers of the United States,  
shall be removed from Office on Impeachment for, and Conviction of,  
Treason, Bribery, or other high Crimes and Misdemeanors.” 

Treason is defined in section Article III, Section 3 of the


Constitution.

The following definitions are from Blacks Law Dictionary 2.

Bribery:
“The offering, giving, receiving,or soliciting of any thing
of value to influence action as official or in discharge of

23
legal or public duty. The corrupt tendering or receiving
of a price for official action. The receiving or offering of
any undue reward by or to any person or a public officer
to influence his behavior in office. The taking or giving a
reward for public office.”3

High Crimes:
High; “This term, as used in various compound legal
phrases, is sometimes merely an assignation of dignity,
not importing a comparison; but more generally it means
exalted, either in rank or location, or occupying a position
of superiority, and in a few instances it implies superiority
in respect to importance, size, frequency or publicity of
use”4

The use of the adjective high to describe crimes, gives


the phrase “high Crimes” the same meaning as the
term felony.

Felony:
“A crime of a graver or more atrocious nature than those
designated as misdemeanors. Generally a crime
punishable by death or imprisonment in a penitentiary.
And at common law, an offense occasioning total
forfeiture of land or goods to which capital or other
punishment might be superadded according to degree
of guilt.”5

Misdemeanors:
“Offenses lower than felonies and generally those
punishable by fine or imprisonment otherwise than in a
penitentiary.” “An act committed or omitted in violation
of a public law either forbidding or commanding it.”6

Civil Officer:
“The word 'civil', as regards civil officers, is commonly
used to distinguish those officers who are in public
service but not of the military. Hence, any officer of
the United States who holds appointment under the
national government, whether his duties are executive

24
or judicial, in the highest or the lowest departments of
the government, with the exception of officers of the
army or navy, is a 'civil officer.' ”7

These definitions used in conjunction with the impeachment


provisions in the Constitution give Congress the power to fire
( impeach ) any individual appointed by the President.

Impeachment does not carry any forfeiture of pension benefits


or property other than the ability to be employed by the U.S.
Government. Any forfeiture of property can only occur after
court action. This provision in the Constitution gives Congress
the Constitutional authority to fire, for cause, any of the Czars
appointed by the President.

The requirement of a 2/3 vote in the Senate, to convict, is a


high threshold which will limit the use of the impeachment
provisions. This requirement creates a situation where we need
to elect Senators who will honor their oath of office.
This requirement was demonstrated by the difference between
the impeachment actions affecting President Nixon and
President Clinton. When President Nixon found out that the
Republicans in the Senate would vote for impeachment. He
resigned. This can be compared with the impeachment of
President Clinton, where the Democrats voted against
impeachment. These votes demonstrate a much higher level of
personal integrity on the part of the Republican Senators, than
with the Democrat Senators who put party loyalty over their
oath of office to support and defend the Constitution.

Article I, Section 3 of the Constitution requires all Senators,


sitting in judgment, at an impeachment proceeding, to be under
oath. Ignoring the facts and voting to acquit because of party
loyalty is a violation of the Senators Oath of Office.

25
EXCEPTIONS AND REGULATIONS
The previous chapter dealt with impeachment. Our Constitution
provides other checks which apply to the Judiciary. These
checks include the power to strip the Federal Courts of
appellate jurisdiction and to write regulations on appellate
Jurisdiction.

This power is provided by Article III., Section. 2., Clause 2 of the


U.S. Constitution.

Article III., Section 2.

“The judicial Power shall extend to all Cases, in Law and Equity,  
arising under this Constitution, the Laws of the United States, and  
Treaties made, or which shall be made, under their Authority;­­to all  
Cases affecting Ambassadors, other public Ministers and Consuls;­­to  
all Cases of admiralty and maritime Jurisdiction; to Controversies to  
which the United States shall be a Party; to Controversies between two  
or more States; between a State and Citizens of another State; between  
Citizens of different States; between Citizens of the same State  
claiming Lands under Grants of different States, and between a State,  
or the Citizens thereof, and foreign States, Citizens or Subjects.

In all Cases affecting Ambassadors, other public Ministers and  
Consuls, and those in which a State shall be Party, the supreme Court  
shall have original Jurisdiction. In all the other Cases before  
mentioned, the supreme Court shall have appellate Jurisdiction, both  
as to Law and Fact, with such Exceptions, and under such  
Regulations as the Congress shall make.”

I have quoted the entire section so as not to be accused of


taking anything out of context. The last sentence of this section
allows Congress to make exceptions regarding areas where the
courts have jurisdiction. The wording in this section provides
that exceptions where appellate jurisdiction is not allowed are
made by Congress. This means that any law stripping the
Federal Courts of jurisdiction does not require a Presidential
signature. In addition there is no requirement that anything,

26
other than a simple majority vote of both houses of Congress, is
required. Also there is no provision for any appeal of the
decision. This action by Congress would be final.

You may ask yourself what is to stop the courts from simply
striking down any such exception or regulation passed by
Congress. The answer is simple, if any Judge were to try to
strike down such a law, that Judge would be committing a High
Crime. Any action by a Judge against a resolution restricting
appellate jurisdiction would be an attempt to strike down a
provision which is specifically allowed by the Constitution. Such
an act would be the highest of high crimes because it would be
an assault on the Constitution itself.

This is different than other areas where Congress has the power
to pass laws. Other laws are passed under the general
legislative power in Article I of the U.S. Constitution, which
requires a Presidential signature, and which are subject to
Judicial Review.

The courts established their power to declare a law


unconstitutional shortly after the founding of this republic. We
are taught that the bellwether case, for this power of the courts,
was Marbury v. Madison1.

The ability of the courts to declare laws to be null and void


when they are unconstitutional is an example of a constitutional
check on the abuse of power by the Congress.

The Constitution gives Congress the same type of power to curb


abuses of power by the Court. Congress can limit the ability of
the Federal Courts to hear cases on any issue except cases
where the Supreme Court has original jurisdiction.

The power of impeachment is the enforcement tool which is


provided to insure Congress has the ability to actually apply,
the constitutionally provided limit on the power of the courts.

Congress would literally be forced to impeach any judge who


tried to undo any limitation imposed by Congress under Article
III, Section 2, Clause 2. The impeachment would be required
because the Judge would be assaulting the very institution of
the Congress, and the respective powers of the House of

27
Representatives, and the Senate as a separate branches of
government with their own specified powers.

This country is supposed to be a Constitutionally limited


Republic. This country is not supposed to be ruled by judges.

You may ask. Why do we need to limit the power of the courts?
The obvious answer can be demonstrated by the well known
case of Roe v. Wade. We have a case where an unconstitutional
decision by a District Court Judge is ultimately upheld by the
Supreme Court. This case then became the law of the land,
because lower courts are bound by Supreme Court Decisions.
This case was unconstitutional because it violated both the 5 th
and 14th Amendments to the constitution. The 5th and 14th
Amendments both provide that no person shall be deprived of
life, liberty or property without due process.

There is no due process when an abortion occurs. No one is


representing the interests of unborn Americans. Because
decisions of the Supreme Court become the law of the land, the
rights of the unborn are ignored.

When we continue to complain about abuses by the court,


without making our representatives in Washington exercise the
power they have to curb the excesses of the courts, we are no
different than the homemaker who continually complains about
the spider webs in her house, and continually cleans out the
spider webs day after day. What this homemaker needs to do is
kill the spider.

Demonstrating in front of abortion clinics, or appealing bad


court decisions and waiting in a forlorn hope that the case will
be overturned, is no different than the homemaker trying to
solve the cobweb problem by sweeping up the cobwebs every
day. Congress has always had the power to stop the judicial
abuse caused by activist judges. After decades of inaction by
members of Congress, we should realize that our current
representatives do not intend to do anything to protect us, from
abuse by activist judges.

We can pressure our representatives to impeach bad judges.


This also, is no different than simply sweeping up the cobwebs.
Impeachment would only get rid of one bad judge. There are

28
dozens of activist judges who need to be impeached.

What we need to do is replace our current batch of elected


representatives in Washington. We need to elect people who
will honor their oath of office, to support and defend the
Constitution. We need to elect people who will use the power in
Article III, Section 2, Clause 2 of the Constitution to curb abuses
by activist Judges. Solve the problem, Kill the spider. Replace
the Representatives who do not honor their oath of office. Elect
people who will support and defend the Constitution!

Article III, Section 1, provides that; The Judges, both of the


supreme and inferior Courts, shall hold their Offices during
good Behavior...

This provision imposes a much lower standard for the removal


of a judge, than for the removal of a President or Vice President
who has been elected by the people. A judge can be removed
when his actions demonstrate bad behavior. Judges do not
serve at the pleasure of the President and must be fired by
Congress.

When a Judge makes a decision which ignores provisions that


are included in the Constitution, or interprets the Constitution to
include provisions which are not included, the judge is
committing a misdemeanor ( bad behavior ) and can be
subjected to impeachment. Every Judge is required to take an
oath of office by Article VI of the Constitution. The violation of
this oath of office by the aforementioned acts could be
considered an impeachable offense, since the judge is not
providing justice under the Constitution and laws of the United
States.

The power of Congress to write Regulations, which tell the


Federal Courts how appellate jurisdiction is to be applied, is
another check on abuses by the Courts. Use of this power will
be necessary to solve the current problems created by eco-
terrorists who are stopping the development of our nation's
resources.

To understand how this power functions, it is necessary to


understand what a Regulation is.

29
A regulation is a set of rules, to provide individuals trying to
apply a law, and/or comply with a law, guidance regarding the
proper course of action required by the law. The regulation is
effectively a law and is binding.

If a regulation does not properly follow the underling law, it can


be overturned by the courts.

It should be noted that if any Judge were to deliberately violate


an exception to, or regulation of, appellate review authority
passed by Congress; that Judge would be committing an
impeachable act and in any impeachment proceeding, would be
tried by the body which passed the law. There is no appeal
possible after a Judge has been impeached by the House and
convicted by the Senate.

There are now many areas where it is necessary provide the


Courts with binding guidance on the proper application of the
U.S. Constitution as the preeminent law of our country.

The use of a regulation to tell the Federal Courts how to


interpret the full faith and credit provisions in the Constitution is
now necessary to protect the sanctity of marriage.

The wording in the section of the Constitution quoted above,


provides that Regulations, telling the Courts how to apply the
power of appellate review, are made by Congress. This means
that Congress can write a Regulation prohibiting the “Full Faith
and Credit” provision in the Constitution, from being used to
force any state to accept a contract, if the contract, or
provisions of the contract, would violate the laws of the state.

This prohibition is what the Defense of Marriage Act provides,


regarding marriage. The addition of a Regulation will put judges
on notice that they would face impeachment if they try to
overrule the Defense of Marriage Act.

You may ask yourself what is to stop the courts from simply
striking down any such Regulation passed by Congress. The
answer is the same as given for an exception stated previously.
If any Judge were to try to strike down such a Regulation, that
Judge would be committing a High Crime. Any action by a Judge
against such a Regulation, would be an attempt to strike down

30
guidance which is specifically allowed by the Constitution. Such
an act would be the highest of high crimes because it would be
an assault on the Constitution itself.

The power of impeachment is the enforcement tool which is


provided to insure congress has the ability to actually apply, the
constitutionally provided limits on the power of the courts.
Congress would literally be forced to impeach any judge who
tried to undo any limitation imposed by congress under Article
III., Section 2., Clause 2.

The impeachment would be required because the Judge would


be assaulting the very institution of the Congress, and the
respective powers of the House of Representatives and the
Senate as separate branches of government.

You may ask. Why do we need to limit the power of the courts?
The obvious answer is that the Federal Courts cannot be trusted
to properly interpret the U.S Constitution. There have been a
number of Federal Court decisions in recent years which violate
the U.S Constitution.

Activist Federal Judges are legislating from the bench, when


they do not want to accept the restrictions contained in the
Constitution. The Constitution gives Congress the power and
responsibility to curb the abuses by the courts. The voters need
to remove legislators who shirk their responsibility.

The use of the power to make exceptions, to appellate


authority, will be necessary to save the Social Security System
and end our country's dependence on imported oil. We must
prevent the eco-terrorists from using the power of the federal
courts, to stop the development of our own resources.

If this power is not used, eco-terrorists will continue to use the


Federal Courts to stop the development of our own resources.

When this power is first used, it will probably require that some
federal judges be fired. Our judges are used to having god like
power to determine what the Constitution means, and they will
not share this power willingly. Voters need to elect
representatives and senators who will act to stop the abuse of
the Constitution by the judiciary.

31
The exceptions and regulations discussed here would put the
federal judges on notice that they are subject to restrictions.
Such notice is needed in the normal course of business, to allow
the necessary latitude, for our federal judges to do their jobs.

There are occasions where a judge renders a decision which is


so egregious that the judge should simply be fired. An example
of this was the decision by a federal judge ordering an increase
in taxes to finance the Kansas City School System. This decision
has resulted in the taxpayers paying an additional 2 billion
dollars in taxes, since the decision, with no improvement in the
educational outcome for the school system 2.

Under our Constitution a judge does not have the authority to


order a tax increase. Article VI of the Constitution guarantees all
states a republican form of government. Violation of this
fundamental part of our Constitution should have resulted in the
impeachment of this judge.

32
 STOPING THE CULTISTS AND THEIR
PUPPET MASTERS

THE GLOBAL WARMING CULT

There are two groups of radicals who will destroy our country if
they are not stopped. When a person considers the final result
of the actions being pursued, it is apparent that our destruction
is intended. Both of the groups have used the big lie strategy
promulgated by Hitler's propaganda minister Joseph Goebbels.
The idea of the big lie is that, if you tell a lie often enough,
people will begin to believe it.

Cults develop when their puppet masters sound sincere and use
carefully tailored half truths, to get their followers to believe the
lie. These people can then be developed into a cult of true
believers who will spread the lie. The followers of cults usually
believe that their actions are for the good of the the country
and the world. Because they believe they are doing good, it is
essential that they be brainwashed, or not exposed to other
ideas, so that they will reject any inconvenient facts.

The mark or badge of a cult is the active suppression of any


dissenting point of view. False doctrine or dogma can not stand
exposure to the truth. Dissent must be squelched by any
means possible. This suppression may be in the form of
outlawing bibles in Saudi Arabia, which adheres to Islam, which
is probably the largest cult in the world. Another example is the
statement by Al Gore that the science is in, and no one can
question the science behind global warming. There are many
other cults in this country and the world, such as the cult of
political correctness. This book will focus on two, because the
followers of these two cults have succeeded in being elected to
high office, and are in the process of destroying our country.

The environmental extremists have succeeded in stopping us


from developing our own resources. A recent example of this
was a court decision ending an Alaska offshore drilling plan 1.
The fact that these actions have been going on for decades is
shown by the fact that the first new refinery in over 30 years is
now being planned to start construction in 2010 2. The extreme

33
environmentalists, who should be considered as eco-terrorists,
will probably wait until construction has started, before filing
suit. This wait would occur, because they want to inflict the
maximum amount of financial pain.

The cult of global warming, and it's variations, has given us the
environmental extremists. I have labeled these individuals as
eco-terrorists. Eco4 is a combining form for ecology and the
environment. A terrorist is a person who commits acts of
terrorism. Terrorism5 is “the use of violence and threats to
intimidate or coerce, especially for for political purposes”.

We need to stop our courts from being used as a weapon, to


prevent the development of our resources. Our Constitution
gives Congress the power and authority to prevent the use of
our courts as a weapon against the people.

The following is an example of the type of resolution needed.


The language could probably be improved, but this draft is
presented to show how uncomplicated the needed language
can be. This law would need to be passed along with language
setting up an actual Social Security Trust Fund.

_______________________________________________________________

JOINT RESOLUTION

LIMITING APPELLATE REVIEW BY THE FEDERAL COURTS

WHEREAS: It is necessary to promote the general welfare of this


country by having a Social Security Trust Fund with income
producing assets which can be used to fund the benefits being
paid to beneficiaries of the Social Security Trust Fund.

WHEREAS: Currently all payments of Social Security benefits are


made from accounts with the U.S. Department of Treasury,
which have to be paid from taxes or borrowing by the Treasury
Department.

WHEREAS: It is necessary to allow the allow the Social Security


Trust Fund to own properties which produce oil and natural gas,
as well as other income producing assets.

34
WHEREAS: In recent years, the courts have been used to block
the development of oil, mineral and other resources.

WHEREAS: Article 3, Section 2 of the Constitution of the United


States provides the Congress of the United States the ability,
power, and authority to limit the Appellate Jurisdiction of the
Federal Courts.

RESOLVED: The Federal Judiciary shall no longer have appellate


review authority on cases attempting to block the development
of oil, gas and other resources on property owned by the Social
Security Trust Fund.

RESOLVED: Any act to obstruct, evade, or circumvent the


provisions of this resolution by any civil Officer of the United
States, including Federal Judges, shall be a high crime and such
individual shall be subject to impeachment.

_______________________________________________________________

This type of legislation is only a start to the actions needed.


More information is provided in the chapters on political action.

The damage being done is real and getting worse. The eco-
terrorists who have been elected to positions of power in our
government have recently taken control of General Motors and
Chrysler. After this takeover they have terminated the
franchises of 789 Chrysler dealerships 6 and 1,100 GM
dealerships7 will be terminated by 2010. These dealers are not
part of the corporations, and there is no valid business reason
to eliminate a large portion of a company's sales outlets.

This action appears to have been taken because the extreme


environmentalists wanted to create a network of dealers for
small imported cars from China and India. These dealers have
millions of dollars invested in special purpose property and
must use these assets to make a living for themselves and their
employees.

This action will force the auto dealers into an action they would
not otherwise pursue.

This is an example of the use of force and coercion by terrorists

35
to achieve their political ends. The observer may think that the
goal is to promote a specific, if misguided, environmental
agenda. This may be true for the global warming cultists, but
the political goal3 of the puppet masters behind the cult is even
more sinister. The real political agenda of the eco-terrorists is
discussed in the chapter titled Conservative not Regressive.

The radicals in high office are systematically dismantling our


constitutional protections. The actions taken against the
dealerships were the subject of a Supreme Court request for a
stay to block the actions, of the administration. The Supreme
Court refused to hear the case and demonstrated once again
that we can't count on the courts to protect our rights.

The followers of the Global Warming Cult in congress have


passed a bill in the House of Representatives to address what
they view as the problem of greenhouse gases. This bill will cost
every American hundreds of dollars in increased electricity and
fuel bills each year. The bill will also fuel the coming inflation
scourge when businesses pass their costs along in the form of
higher prices. This bill is the latest example of the cultists
attempting to fix a nonexistent problem. Variations in the
earth's temperature are caused by fluctuations in the sun's
output. There have been climate changes throughout all of
recorded history, and the geologic record indicates changes
throughout all of the earth's history.

The effort to control and limit the level of carbon dioxide is even
more absurd. Carbon dioxide is essential for life on earth. Life
on this planet is carbon based. The plants and animals are
carbon based life forms. We breath in oxygen and exhale
carbon dioxide. Plants breath in carbon dioxide, and extract the
carbon through a process known as photosynthesis 8. The plants
then exhale oxygen. This carbon and oxygen life cycle is grade
school science.

The Global Warming Cultists use junk science, which is widely


disputed by scientists all around the world. If the models, used
to promote the global warming theory, had been accurate, we
would be having a steady increase in world temperatures. This
has not happened. You only have to look at the world around
you, to know we are not experiencing global warming. The
cultists refer to people who refuse to ignore the obvious, as

36
global warming deniers. This is further proof that global
warming is a religion, and worse yet, a cult.

The followers of this cult who are in the U.S. House of


Representatives have identified themselves by their votes on
HR 2454; The Clean Energy and Security Act. A copy of the roll
call vote on this bill follows.

37
FINAL VOT E RESULT S FOR ROLL CALL 477

HR 2454 RECORDED VOT E 26-JUNE-2009


BILL T ITLE - American Clean Energy and Security Act

Ayes 219

Abercrombie, Neil ( D HI-1 ) Cummings, Elijah ( D MD-7 ) Honda, Michael ( D CA-15 )


Ackerman, Gary ( D NY-5 ) Davis, Danny ( D IL-7 ) Hoyer, Steny ( D MD-5 )
Adler, John ( D NJ-3 ) Davis, Susan ( D CA-53 ) Inslee, Jay ( D WA-1 )
Andrews, Robert ( D NJ-1 ) DeGette, Diana ( D CO-1 ) Israel, Steve ( D NY-2 )
Baca, Joe( D CA-43 ) Delahunt, William ( D MA-10 ) Jackson, Jesse( D IL-2 )
Baird, Brian ( D WA-3 ) DeLauro, Rosa ( D CT-3 ) Jackson-Lee, Sheila ( D TX-18 )
Baldwin, T ammy ( D WI-2 ) Dicks, Norman ( D WA-6 ) Johnson, Eddie ( D T X-30 )
Bean, Melissa ( D IL-8 ) Dingell, John ( D MI-15 ) Johnson, Henry ( D GA-4 )
Becerra, Xavier ( D CA-31 0 Doggett, Lloyd ( D TX-25 ) Kagen, Steve ( D WI-8 )
Berkley, Shelley ( D NV-1 ) Doyle, Michael ( D PA-14 ) Kanjorski, Paul ( D PA-11 )
Berman, Howard ( D CA-28 ) Driehaus, Steve ( D OH-1 ) Kaptur, Marcy ( D OH-9 )
Bishop, Sanford ( D GA-2 ) Edwards, Donna ( D MD-4 ) Kennedy, Patrick ( D RI-1 )
Bishop, T imothy ( D NY-1 ) Ellison, Keith ( D MN-5 ) Kildee, Dale ( D MI-5 )
Blumenauer, Earl ( D OR-3 ) Engel, Eliot ( D NY-17 ) Kilpatrick, Carolyn ( D MI-13 )
Boccieri, John ( D OH-16 ) Eshoo, Anna ( D CA-14 ) Kilroy, Mary Jo ( D OH-15 )
Bono Mack, Mary ( R CA-45 ) Etheridge, Bob ( D NC-2 ) Kind, Ronald ( D WI-3 )
Boswell, Leonard ( D IA-3 ) Farr, Sam ( D CA-17 ) Kirk, Mark ( R IL-10 )
Boucher, Frederick ( D VA-9 ) Fattah, Chaka ( D PA-2 ) Klein, Ron ( D FL-22 )
Boyd, Allen ( D FL-2 ) Filner, Bob ( D CA-51 ) Kosmas, Suzanne ( D FL-24 )
Brady, Robert ( D PA-1 ) Frank, Barney ( D MA-4 ) Kratovil, Frank ( D MD-1 )
Braley, Bruce ( D IA-1 ) Fudge, Marcia ( D OH-11 ) Lance, Leonard ( R NJ-7 )
Brown, Corrine ( D FL-3 ) Giffords, Gabrielle ( D AZ-8 ) Langevin, James ( D RI-2 )
Butterfield, George( D NC-1 ) Gonzalez, Charles ( D T X-20 ) Larsen, Rick ( D WA-2 )
Capps, Lois ( D CA-23 ) Gordon, Barton ( D T N-6 ) Larson, John ( D CT -1 )
Capuano, Michael ( D MA-8 ) Grayson, Alan ( D FL-8 ) Lee, Barbara ( D CA-9 )
Cardoza, Dennis ( D CA-18 ) Green, Al ( D T X-9 ) Levin, Sander ( D MI-12 )
Carnahan, Russ ( D MO-3 ) Green, Raymond ( D T X-29 ) Lewis, John ( D GA-5 )
Carson, Andre ( D IN-7 ) Grijalva, Raul ( D AZ-7 ) Lipinski, Daniel ( D IL-3 )
Castle, Michael ( R DE-0 ) Gutierrez, Luis ( D IL-4 ) LoBiondo, Frank ( R NJ-2 )
Castor, Kathy ( D FL-11 ) Hall, John ( D NY-19 ) Loebsack, David ( D IA-2 )
Chandler, Ben ( D KY-6 ) Halvorson, Deborah( D IL-11 ) Lofgren, Zoe ( D CA-16 )
Clarke, Yvette ( D NY-11 ) Hare, Phil ( D IL-17 ) Lowey, Nita ( D NY-18 )
Clay, William ( D MO-1 ) Harman, Jane ( D CA-36 ) Lujan, Ben ( D NM-3 )
Cleaver, Emanuel ( D MO-5 ) Heinrich, Martin ( D NM-1 ) Lynch, Stephen ( D MA-9 )
Clyburn, James ( D SC-6 ) Higgins, Brian ( D NY-27 ) Maffei, Daniel ( D NY-25 )
Cohen, Steve ( D T N-9 ) Hill, Baron ( D IN-9 ) Maloney, Carolyn ( D NY-14 )
Connolly, Gerald ( D VA-11 ) Himes, James ( D CT-4 ) Markey, Betsy ( D CO-4 )
Conyers, John ( D MI-14 ) Hinchey, Maurice ( D NY-22 ) Markey, Edward ( D MA-7 )
Cooper, Jim ( D TN-5 ) Hinojosa, Ruben ( D T X-15 ) Matsui, Doris ( D CA-5 )
Courtney, Joe ( D CT-2 ) Hirono, Mazie ( D HI-2 ) McCarthy, Carolyn ( D NY-4 )
Crowley, Joseph ( D NY-7 ) Hodes, Paul ( D NH-2 ) McCollum, Betty ( D MN-4 )
Cuellar, Henry ( D T X-28 ) Holt, Rush ( D NJ-12 ) McDermott, James ( D WA-7 )

38
Ayes - Continued

McGovern, James ( D MA-3 ) Pingree, Chellie ( D ME-1 ) Smith, Adam ( D WA-9 )


McHugh, John ( R NY-23 ) Polis, Jared ( D CO-2 ) Smith, Christopher ( R NJ-4 )
McMahon, Michael ( D NY-13 ) Price, David ( D NC-4 ) Snyder, Victor ( D AR-2 )
McNerney, Jerry ( D CA-11 ) Quigley, Mike ( D IL-5 ) Space, Zachary ( D OH-18 )
Meek, Kendrick ( D FL-17 ) Rangel, Charles ( D NY-15 ) Speier, Jackie ( D CA-12 )
Meeks, Gregory ( D NY-6 ) Reichert, Dave ( R WA-8 ) Spratt, John ( D SC-5 )
Michaud, Michael ( D ME-2 ) Reyes, Silvestre ( D TX-16 ) Stupak, Bart ( D MI-1 )
Miller, George ( D CA-7 ) Richardson, Laura ( D CA-37 ) Sutton, Betty ( D OH-13 )
Miller, R. ( D NC-13 ) Rothman, Steven ( D NJ-9 ) T auscher, Ellen ( D CA-10 )
Moore, Dennis ( D KS-3 ) Roybal-Allard, L.( D CA-34 ) T eague, Harry ( D NM-2 )
Moore, Gwen ( D WI-4 ) Ruppersberger, C.A. ( D MD-2 ) T hompson, Bennie ( D MS-2 )
Moran, James ( D VA-8 ) Rush, Bobby ( D IL-1 ) T hompson, C. ( D CA-1 )
Murphy, Christopher ( D CT -5 ) Ryan, Timothy ( D OH-17 ) T ierney, John ( D MA-6 )
Murphy, Patrick ( D PA-8 ) Sanchez, Linda ( D CA-39 ) T itus, Dina ( D NV-3 )
Murphy, Scott ( D NY-20 ) Sanchez, Loretta ( D CA-47 ) T onko, Paul ( D NY-21 )
Murtha, John ( D PA-12 ) Sarbanes, John ( D MD-3 ) T owns, Edolphus ( D NY-10 )
Nadler, Jerrold ( D NY-8 ) Schakowsky, Janice ( D IL-9 ) T songas, Niki ( D MA-5 )
Napolitano, Grace ( D CA-38 ) Schauer, Mark ( D MI-7 ) Van Hollen, Christopher ( D MD-8 )
Neal, Richard ( D MA-2 ) Schiff, Adam ( D CA-29 ) Velazquez, Nydia ( D NY-12 )
Oberstar, James ( D MN-8 ) Schrader, Kurt ( D OR-5 ) Walz, Timothy ( D MN-1 )
Obey, David ( D WI-7 ) Schwartz, Allyson ( D PA-13 ) Wasserman Schultz, D ( D FL-20 )
Olver, John ( D MA-1 ) Scott, David ( D GA-13 ) Waters, Maxine ( D CA-35 )
Pallone, Frank ( D NJ-6 ) Scott, Robert ( D VA-3 ) Watson, Diane ( D CA-33 )
Pascrell, William ( D NJ-8 ) Serrano, Jose ( D NY-16 ) Watt, Melvin ( D NC-12 )
Pastor, Edward ( D AZ-4 ) Sestak, Joe ( D PA-7 ) Waxman, Henry ( D CA-30 )
Payne, Donald ( D NJ-10 ) Shea-Porter, Carol ( D NH-1 ) Weiner, Anthony ( D NY-9 )
Pelosi, Nancy ( D CA-8 ) Sherman, Brad ( D CA-27 ) Welch, Peter ( D VT-0 )
Perlmutter, Ed ( D CO-7 ) Shuler, Heath ( D NC-11 ) Wexler, Robert ( D FL-19 )
Perriello, T homas ( D VA-5 ) Sires, Albio ( D NJ-13 ) Woolsey, Lynn ( D CA-6 )
Peters, Gary ( D MI-9 ) Skelton, Ike ( D MO-4 ) Wu, David ( D OR-1 )
Peterson, Collin ( D MN-7 ) Slaughter, Louise ( D NY-28 ) Yarmuth, John ( D KY-3 )

Nays 212

Aderholt, Robert ( R AL-4 ) Bartlett, Roscoe ( R MD-6 ) Bonner, Jo ( R AL-1 )


Akin, W. ( R MO-2 ) Barton, Joe ( R TX-6 ) Boozman, John ( R AR-3 )
Alexander, Rodney ( R LA-5 ) Berry, Robert ( D AR-1 ) Boren, Dan ( D OK-2 )
Altmire, Jason ( D PA-4 ) Biggert, Judy ( R IL-13 ) Boustany, Charles ( R LA-7 )
Arcuri, Michael ( D NY-24 ) Bilbray, Brian ( R CA-50 ) Brady, Kevin ( R T X-8 )
Austria, Steve ( R OH-7 ) Bilirakis, Gus ( R FL-9 ) Bright, Bobby ( D AL-2 )
Bachmann, Michele ( R MN-6 ) Bishop, Rob ( R UT -1 ) Broun, Paul ( R GA-10 )
Bachus, Spencer ( R AL-6 ) Blackburn, Marsha ( R TN-7 ) Brown, Henry ( R SC-1 )
Barrett, James ( R SC-3 ) Blunt, Roy ( R MO-7 ) Brown-Waite, Virginia ( R FL-5 )
Barrow, John ( D GA-12 ) Boehner, John ( R OH-8 ) Buchanan, Vern ( R FL-13 )

39
Nays - Continued

Burgess, Michael ( R TX-26 ) Gohmert, Louis ( R TX-1 ) McCotter, Thaddeus ( R MI-11 )


Burton, Dan ( R IN-5 ) Goodlatte, Robert ( R VA-6 ) Mchenry, Patrick ( R NC-10 )
Buyer, Stephen ( R IN-4 ) Granger, Kay ( R TX-12 ) McIntyre, Mike ( D NC-7 )
Calvert, Ken ( R CA-44 ) Graves, Samuel ( R MO-6 ) McKeon, Howard ( R CA-25 )
Camp, David ( R MI-4 ) Griffith, Parker ( D AL-5 ) McMorris Rodgers, Cathy ( R WA-5 )
Campbell, John ( R CA-48 ) Guthrie, Brett ( R KY-2 ) Melancon, Charles ( D LA-3 )
Cantor, Eric ( R VA-7 ) Hall, Ralph ( R TX-4 ) Mica, John ( R FL-7 )
Cao, Anh ( R LA-2 ) Harper, Gregg ( R MS-3 ) Miller, Candice ( R MI-10 )
Capito, Shelley ( R WV-2 ) Hastings, Doc ( R WA-4 ) Miller, Gary ( R CA-42 )
Carney, Christopher ( D PA-10 ) Heller, Dean ( R NV-2 ) Miller, Jeff ( R FL-1 )
Carter, John ( R TX-31 ) Hensarling, Jeb ( R TX-5 ) Minnick, Walter ( D ID-1 )
Cassidy, Bill ( R LA-6 ) Herger, Walter ( R CA-2 ) Mitchell, Harry ( D AZ-5 )
Chaffetz, Jason ( R UT-3 ) Herseth Sandlin, S. ( D SD-0 ) Mollohan, Alan ( D WV-1 )
Childers, Travis ( D MS-1 ) Hoekstra, Peter ( R MI-2 ) Moran, Jerry ( R KS-1 )
Coble, Howard ( R NC-6 ) Holden, Tim ( D PA-17 ) Murphy, Tim ( R PA-18 )
Coffman, Mike( R CO-6 ) Hunter, Duncan ( R CA-52 ) Myrick, Sue ( R NC-9 )
Cole, Tom ( R OK-4 ) Inglis, Bob ( R SC-4 ) Neugebauer, Randy ( R TX-19 )
Conaway, K. ( R TX-11 ) Issa, Darrell ( R CA-49 ) Nunes, Devin ( R CA-21 )
Costa, Jim ( D CA-20 ) Jenkins, Lynn ( R KS-2 ) Nye, Glenn ( D VA-2 )
Costello, Jerry ( D IL-12 ) Johnson, Samuel ( R TX-3 ) Olson, Pete ( R TX-22 )
Crenshaw, Ander ( R FL-4 ) Johnson, Timothy ( R IL-15 ) Ortiz, Solomon ( D TX-27 )
Culberson, John ( R TX-7 ) Jones, Walter ( R NC-3 ) Paul, Ronald ( R TX-14 )
Dahlkemper, Kathleen ( D PA-3 ) Jordan, Jim ( R OH-4 ) Paulsen, Erik ( R MN-3 )
Davis, Artur ( D AL-7 ) King, Peter ( R NY-3 ) Pence, Mike ( R IN-6 )
Davis, Geoff ( R KY-4 ) King, Steve ( R IA-5 ) Petri, Thomas ( R WI-6 )
Davis, Lincoln ( D TN-4 ) Kingston, Jack ( R GA-1 ) Pitts, Joseph ( R PA-16 )
Deal, Nathan ( R GA-9 ) Kirkpatrick, Ann ( D AZ-1 ) Platts, Todd ( R PA-19 )
DeFazio, Peter ( D OR-4 ) Kissell, Larry ( D NC-8 ) Poe, Ted ( R TX-2 )
Dent, Charles ( R PA-15 ) Kline, John ( R MN-2 ) Pomeroy, Earl ( D ND-0 )
Diaz-Balart, Lincoln ( R FL-21 ) Kucinich, Dennis ( D OH-10 ) Posey, Bill ( R FL-15 )
Diaz-Balart, Mario ( R FL-25 ) Lamborn, Doug ( R CO-5 ) Price, Tom ( R GA-6 )
Donnelly, Joe ( D IN-2 ) Latham, Thomas ( R IA-4 ) Putnam, Adam ( R FL-12 )
Dreier, David ( R CA-26 ) LaTourette, Steven ( R OH-14 ) Radanovich, George ( R CA-19 )
Duncan, John ( R TN-2 ) Latta, Robert ( R OH-5 ) Rahall, Nick ( D WV-3 )
Edwards, Thomas ( D TX-17 ) Lee, Christopher ( R NY-26 ) Rehberg, Dennis ( R MT-0 )
Ehlers, Vernon ( R MI-3 ) Lewis, Jerry ( R CA-41 ) Rodriguez, Ciro ( D TX-23 )
Ellsworth, Brad ( D IN-8 ) Linder, John ( R GA-7 ) Roe, Phil ( R TN-1 )
Emerson, Jo Ann( R MO-8 ) Lucas, Frank ( R OK-3 ) Rogers, Harold ( R KY-5 )
Fallin, Mary ( R OK-5 ) Luetkemeyer, Blaine ( R MO-9 ) Rogers, Michael ( R AL-3 )
Fleming, John ( R LA-4 ) Lummis, Cynthia ( R WY-0 ) Rogers, Michael ( R MI-8 )
Forbes, James ( R VA-4 ) Lungren, Daniel ( R CA-3 ) Rohrabacher, Dana ( R CA-46 )
Fortenberry, Jeffrey ( R NE-1 ) Mack, Connie ( R FL-14 ) Rooney, Thomas ( R FL-16 )
Foster, Bill ( D IL-14 ) Manzullo, Donald ( R IL-16 ) Roskam, Peter ( R IL-6 )
Foxx, Virginia ( R NC-5 ) Marchant, Kenny ( R TX-24 ) Ros-Lehtinen, Ileana ( R FL-18 )
Franks, Trent ( R AZ-2 ) Marshall, James ( D GA-8 ) Ross, Mike ( D AR-4 )
Frelinghuysen, Rodney ( R NJ-11 ) Massa, Eric ( D NY-29 ) Royce, Edward ( R CA-40 )
Gallegly, Elton ( R CA-24 ) Matheson, Jim ( D UT-2 ) Ryan, Paul ( R WI-1 )
Garrett, Scott ( R NJ-5 ) McCarthy, Kevin ( R CA-22 ) Salazar, John ( D CO-3 )
Gerlach, Jim ( R PA-6 ) McCaul, Michael ( R TX-10 ) Scalise, Steve ( R LA-1 )
Gingrey, John ( R GA-11 ) McClintock, Tom ( R CA-4 ) Schmidt, Jean ( R OH-2 )

40
Nays - Continued

Schock, Aaron ( R IL-18 ) Stearns, Clifford ( R FL-6 ) Walden, Greg ( R OR-2 )


Sensenbrenner, F. ( R WI-5 ) Tanner, John ( D TN-8 ) Wamp, Zach ( R TN-3 )
Sessions, Peter ( R TX-32 ) Taylor, Gene ( D MS-4 ) Westmoreland, Lynn ( R GA-3 )
Shadegg, John ( R AZ-3 ) Terry, Lee ( R NE-2 ) Whitfield, Edward ( R KY-1 )
Shimkus, John ( R IL-19 ) Thompson, Glenn ( R PA-5 ) Wilson, Addison ( RSC-2 )
Shuster, William ( R PA-9 ) Thornberry, William ( R TX-13 ) Wilson, Charles ( D OH-6 )
Simpson, Michael ( R ID-2 ) Tiahrt, Todd ( R KS-4 ) Wittman, Rob ( R VA-1 )
Smith, Adrian ( R NE-3 ) Tiberi, Patrick ( R OH-12 ) Wolf, Frank ( R VA-10 )
Smith, Lamar ( R TX-21 ) Turner, Michael ( R OH-3 ) Young, C. W. ( R FL-10 )
Souder, Mark ( R IN-3 ) Upton, Frederick ( R MI-6 ) Young, Donald ( R AK-0 )
Stark, Fortney ( D CA-13 ) Visclosky, Peter ( D IN-1 )

NOT VOTING

Flake, Jeff ( R AZ-6 ) Hastings, Alcee ( D FL-23 ) Sullivan, John ( R OK-1 )

The ideas in this book need to be used to remove these radicals


from power. The administration and its supporters will subject
other hardworking citizens to the same type of terrorist attack
that was directed against the auto dealers, if the radicals are
left in power.

Any patriot, who was one of the auto dealers stripped of his
franchise in a Congressional District represented by one of the
people who voted for this bill, should consider answering the
call made by this book. You will already have name recognition
in your community, and you have a personal reason to act.

41
CONSERVATIVE, NOT REGRESSIVE
A previous chapter discussed the global warming cultists.
Another cult, trying to destroy the U.S.. is the group of people
who worship at the altar of free trade. Many of the followers of
this cult claim to be conservative. These individuals are
promoting policies and actions which are destroying our
manufacturing base and our middle class. Such policies and
actions are not conservative. A conservative 1 is one who is
disposed to preserve existing conditions, institutions, etc., or to
restore traditional ones, and to limit change.

If anyone questions the result of the actions taken by the free


traders, that person is denigrated and vilified with the label of
“protectionist”. The implication is that being a “protectionist” is
a bad thing. Protection2 is defined as the act of protecting or the
state of being protected. Protectionism 3 is the practice of
protecting domestic industries from foreign competition by
imposing duties or quotas.

Protecting our industry and workers is the conservative position.


Trying to make protectionism a bad word is an example of
Orwellian double speak, where up is down, and good is bad. The
fact that the promoters of free trade are trying to suppress all
opposing views, is evidence that we are dealing with a cult.

Free trade, as it is practiced by multi-national corporations, is


the practice of shipping manufacturing plants, and jobs, from
the United States to third world countries. Goods can then be
manufactured in sweat shops at very low ( slave labor ) wages,
and shipped back to be sold at a very high profit margin.

This trade is not free for the United States, and the job losses
we have suffered over the last several decades is the cause of
our current financial distress. The loss of a good paying
manufacturing job, with benefits, forces most workers
into service jobs, at low pay with no benefits. Most of these
people must then refinance their homes, to get a lower
payment, so they can survive. This migration of workers, down
the income ladder, is the source of most of the sub-prime
mortgage market. When we then have a large increase in food

42
and fuel prices, these individuals must choose between eating
and paying the mortgage. The spike in food and fuel prices,
during the summer of 2008, tipped us over the edge and
precipitated the current nationwide financial distress.

Pundits on talk radio claim the sub-prime mortgage problem is


caused by people being given mortgages they never should
have received. There was some fraud, but the root cause was
the pressure being put on the middle class, by the outsourcing
of our jobs. The outsourcing is not being covered by the major
news media. When millions of people are forced into low paying
jobs, they can't afford to consume the products being produced,
and our economy collapses.

Protecting our middle class and way of life is conservative.


Supporting free trade policies which will cause the destruction
of our middle class is regressive. We are on a path which will
lead us back to a time before we had a large middle class.

We must not return to the days of the Robber Barons, where a


few super rich individuals controlled most of the wealth and
property. We can stop this trend by eliminating the income tax
and letting our small business owners and professionals keep
their own money.

There are cultists and radicals, in both major political parties,


who are promoting destructive positions and programs.

The cultists in both parties can be voted out of office. The


globalist puppet-masters, who want to create a one world
government, are using their puppets in the global warming cult
and those who worship at the altar of free trade to further a
globalist agenda. The global warming nuts have created a pool
of auto dealers who are being forced into a position where they
will have to sell cars imported from China and India. The goal is
to force the sale of smaller cars which get higher mileage rates,
reduce carbon emissions, and cause the economies of China
and India to grow.

The free traders are shipping our plants, and jobs, to countries
like China and India, to promote the growth of other countries'
economies. Wanting other countries to have growing economies
and to prosper is a noble purpose. The problem is that the

43
globalists are promoting the growth of other countries at the
expense of America's workers and middle class.

The members of the global warming cult, and the free trade cult
are working together to destroy America. They will deny this
contention, but the final result of their actions will be the
destruction of our economy and of our way of life.

The actions taken are allegedly for our good, while having an
underlying purpose of destroying our country and our
Constitution. The ultimate goal is to have a one world
government where nations will not be able to make war against
each other. This may sound like a good idea, but is not. It will be
necessary to destroy our Constitution, before the U.S. can be
part of a one world government. When our Constitution is
destroyed, there will be no freedoms or personal liberties.

The drive to have a one world government has been underway


for over a hundred years with the League of Nations set up after
World War I, being a major manifestation of the effort. After
World War II, the United Nations was set up and continues
today. The United Nations model for government is totally
unable to provide protection for individual rights and liberties.
The institution is corrupt to the core.

The globalists who are working toward the destruction of our


Constitution will be much harder to deal with, than the cultists.
They include very wealthy individuals who are financing and
directing the push to a one world government. These wealthy
individuals do not lower themselves to the point where they get
involved in the political fray. They stay in the background and
use money as a tool, and a weapon. The only way we can deal
with them is to identify their puppets, and remove them from
office. These puppet masters currently control the leaders in
both major parties. If you doubt that the globalists own both
parties, consider that the free trade agreements have been
passed with votes from both parties. President Obama was
making noise about renegotiating the North American Free
Trade Agreement ( NAFTA ) when he was campaigning. This
ended as soon as he was elected. He follows the commands of
the globalist puppet masters.

The influence the political donor class has, on our politicians

44
and political parties, is shown by the efforts of the Republican
Party to promote the so called Fair Tax. This tax was very slickly
promoted with a lot of half truths and disinformation. After a
career in the IRS where I worked in every noncriminal
enforcement position, I have some knowledge of how taxes
work.

The Fair Tax is a national sales tax, on goods and services, and
is being promoted as a way to get rid of the Income Tax and the
IRS. It will do neither. A sales tax on both goods and services
will be a flat tax on the gross income ( not net income ), of
every business owner and professional person. This type of tax
would shift the collection, and paying, of the entire tax burden
onto the backs of our business owners and professionals.

Small business owners in this country operate in a brutally


competitive environment and would be devastated by a large
flat tax on their gross receipts.

Small business owners and professionals are core constituents


of the Republican Party. The idea of sticking these individuals
with our entire tax burden shows the level of arrogance by the
globalist puppet masters, and their contempt for the
intelligence of the voters. Business owners are not nearly as
stupid as the globalists want to believe, which is why the tax
proposal did not fly. This effort, to stick the shaft to a core
constituency, is part of the reason the Republican party is in
such disarray.

Another effect of the Fair Tax would be the elimination of almost


all tax which might be paid by the super rich. The amount of
goods and services purchased by the rich is a minute portion of
their income and wealth. This fact may be the origin of the
name given to the tax proposal. This is shown by the following
question and answer.

Question: What is a fair tax?

Answer: A fair tax is a tax that is paid by someone else.

For the super rich the Fair Tax is a fair tax.


A much better way to finance the operation of our government

45
would be through the use of a revenue tariff on all imports of
goods and services. This would shift the tax burden onto the
backs of the globalist multi-national corporations, who are
shipping our manufacturing plants, and jobs, to third world
countries. This action would also level the playing field in
international trade, and stop the outsourcing of our jobs.

We need open and fair trade, not free trade as currently


practiced.

Most nations around the world use a value added tax on their
manufactured goods. This tax is a hidden sales tax, which is
calculated on the value added to the product at each step of
the manufacturing and distribution process. This tax is then
rebated to the business which exports the product. The effect of
this action is to provide a government subsidy for exports.

The income tax system in the United States does not provide a
subsidy for exports, and as a result our companies are at a
competitive disadvantage in international trade. Free trade does
not exist in international commerce.

The repeal of the 16th Amendment to get rid of the income tax
and the use of a revenue tariff is a much better approach to
meaningful tax reform. Tariffs are collected by the Customs
Department, not the IRS. This action, combined with the
restructuring of Social Security described in this book, would
allow for the complete and permanent elimination of the IRS.

I previously stated that the globalist puppet masters control


both political parties. This is my personal opinion and finding
evidence to support this observation is difficult. My opinion is
based on a lifetime observing politics in this country.

The globalists do not care about the social issues such as


abortion. They are willing to let the political parties fight over
the social issues so the people think that we have a two party
system.

They do care about maintaining control of the leaders, in both


political parties. This was demonstrated by the October surprise
after the Republican convention in 2008. John McCain chose

46
Sarah Palin as his choice for Vice President. The globalists
looked at her, and decided they would not be able to control
her. They did not want to consider the possibility of having a
person, who had not signed on to the globalist agenda, in the
Oval Office.

The end result, of Sarah Palin's rejection by the globalists, was


the announcement by Treasury Secretary Hank Paulson; that
the economy was on the verge of collapse. This type of
announcement creates a self-fulling prophecy. After this
announcement, the economy collapsed and the Democrat party
won big in the election.

In my opinion, the globalists were willing to flush the entire U.S.


( and world ) economy down the toilet if that's what was needed
to keep politicians they controlled in power. Taking action on the
toxic mortgage problem, caused by the outsourcing of jobs,
could have been deferred until after the election.

47
 SOCIAL SECURITY

HOW TO FIX THE SOCIAL SECURITY SYSTEM

The first step to saving the Social Security System is to stop


Congress from spending the money. The way to do this is to
declare the system to be, what it should be, a defined benefit
pension plan.

When we declare the system to be a pension plan, the assets


must be prudently invested in a pension trust, for the exclusive
benefit of current and future beneficiaries. This will take the
Social Security Revenues and Expenses completely out of the
Federal Budget.

The actions needed will result in the creation of an actual Social


Security Trust Fund, which will then invest the Social Security
Funds in a broadly diversified investment portfolio. If this trust
fund is not established, nothing will prevent a national
bankruptcy.

When we move control of the money away from Congress, a


number of changes will have to be made to the current system.
These changes need to include the following:

1. Contributions to the system need to be collected by the


states, and paid directly to the Social Security Pension
Fund. The states already have the computer systems in
place to collect these funds because they collect and
account for unemployment benefits. They also have the
Constitutional authority to require payment into the
system ( which the Federal Government does not have ).

2. The Social Security System must be converted to a


corporate type of entity, in the same way the Post Office
was changed, in 1971, to a corporate type of entity with
a Board of Governors and an executive management 1.
This change removed the Post Office from the control of
Congress. This corporation would have the responsibility
to invest the trust funds and pay out benefits. The

48
corporation would be funded by charging a fee to the
trust fund in the same way Insurance Companies and
Mutual Fund Companies charge an expense against
assets under management.

3. After the Social Security system is changed so that


Congress can no longer spend the money. Congress must
direct that a portion of the government owned properties
held by our government ( such as closed military bases )
be transferred into an actual trust fund, and then sold by
the trust fund. Other government assets such as oil
drilling rights in ANWR ( the Arctic National Wildlife
Refuge ), both continental shelves and the inter mountain
west should also be transferred into the trust fund so that
the oil revenue can be used, to fund a Social Security
Trust Fund and pay current benefits. The transfer of these
assets into an actual pension trust is needed to remove
the Social Security liability from the Federal Books and
make up for the money which Congress has been
spending instead of investing.

Once there are actual assets being invested at a reasonable


rate of return, we will see the power of compound interest
working to generate earnings which can then be used to pay for
future benefits. A reasonable rate of return on the invested
assets will go a long way to solve the funding problems of the
system.

We must make these changes soon, or we will be faced with


major cuts in benefits or a massive tax increase ( or both ).

This book was prepared because the Social Security System can
be fixed without raising taxes or cutting benefits. The chapters
containing evaluations of the Social Security and Medicare
systems contain an explanation of the benefit computation and
illustrations showing the asset accumulation and benefit
payments for a hypothetical average participant. For those who
don't want to go over the details, the proposal to fix Social
Security can be summarized by saying we must stop Congress
from spending the contributions to the system, by setting up an
actual pension type of trust fund, and then we must fund the
trust fund.

49
The needed funding of an actual pension style trust can be
accomplished without raising taxes or cutting benefits, which is
the proposal being made by our elected representatives, who
want to be able to continue to spend the Social Security
Surplus.
The only reason there is a pending problem with Social Security
is that Congress has spent all of the money 2. This problem
occurred because Congress did not set up an actual trust fund
to invest the contributions ( payroll and self employment taxes )
made by participants and employers. This has resulted in what
has been described as an unsustainable socialist Ponzi scheme.
The current structure was allowed by a Supreme Court which
was responding to severe financial distress during the
depression of the 1930s. In allowing the current system to
stand, the court ignored provisions in the U.S. Constitution and
is partly responsible ( along with Congress ) for the current
financial problems afflicting this country. Because the Supreme
Court ignored explicit restrictions in the Constitution, we can
add unconstitutional to our description of the current system.
For more details on the Supreme Court decisions, review the
chapters on the decisions.
These problems with the Social Security System can be fixed, so
that the system will be self sustaining, and no longer in
violation of the Constitution. We need to set up a pension style
trust fund, which holds actual income producing assets which
can be used to pay for Social Security benefits. By using the
rights to oil and gas properties now owned by the federal
government, we can also end our dependence on oil imported
from the middle east. The potential leasing and royalty revenue
from our oil properties will provide a stream of revenue which
will increase with inflation, and can be used to pay for Social
Security benefits.
These changes will eliminate almost half of the Federal Budget
and pave the way for the complete, total, and permanent
elimination of the IRS. We can then repeal the 16 th Amendment
and replace the Income Tax with a Revenue Tariff, which was
the primary source of tax revenue for the first 140 years of our
country's history.
Tariffs are collected by the Customs Department and not the
IRS, which collects Income, Payroll and Excise Taxes. Using a
Revenue Tariff, as the primary source of our country's tax

50
revenue, will level the international playing field and stop the
outsourcing of our jobs to third world sweat shops.
This change to the tax structure will get the government out of
the lives of most citizens because the income tax is used to
micromanage our lives.

51
HISTORICAL BACKGROUND OF SOCIAL SECURITY

For most of human history, people lived and worked on farms


in extended families and this was the foundation of their
economic security. However, this changed as the developed
world underwent the Industrial Revolution. The extended family
and the family farm as sources of economic security became
less common as more and more people became wage earners,
working for others. Along with the shift from an agricultural to
an industrial economy, Americans moved from farms and small
rural communities to larger cities. In 1890, only 28 percent of
the U.S. Population lived in cities, by 1930 this percentage had
exactly doubled, to 56 percent. 1

In the United States, the Great Depression of the 1930s caused


severe hardship for a significant portion of our population. It
was against this backdrop that the Social Security Act emerged.
Congress enacted the Social Security Act which was signed into
law on August 14, 1935. 2

The situation at the time the enactment of the Social Security


Act of 1935 was described by the following excerpt from the
1937 Helvering v. Davis Supreme Court decision3.

“Congress did not improvise a judgment when it found that the


award of old age benefits would be conducive to the general
welfare. The President's Committee on Economic Security made an
investigation and report, aided by a research staff of Government
officers and employees, and by an Advisory Council and seven
other advisory groups. Extensive hearings followed before the
House Committee on Ways and Means, and the Senate Committee on
Finance. A great mass of evidence was brought together supporting
the policy which finds expression in the act. Among the relevant
facts are these: the number of persons in the United States 65
years of age or over is increasing proportionately as well as
absolutely. What is even more important, the number of such
persons unable to take care of themselves is growing at a
threatening pace. More and more, our population is becoming urban
and industrial, instead of rural and agricultural. The evidence
is impressive that, among industrial workers, the younger men and
women are preferred over the older. In times of retrenchment, the
older are commonly the first to go, and even if retained, their
wages are likely to be lowered. The plight of men and women at so
low an age as 40 is hard, almost hopeless, when they are driven
to seek for reemployment. Statistics are in the brief. A few
illustrations will be chosen from many there collected. In 1930,

52
out of 224 American factories investigated, 71, or almost one
third, had fixed maximum hiring age limits; in 4 plants, the
limit was under 40; in 41, it was under 46. In the other 153
plants, there were no fixed limits, but in practice few were
hired if they were over 50 years of age. With the loss of savings
inevitable in periods of idleness, the fate of workers over 65,
when thrown out of work, is little less than desperate. A recent
study of the Social Security Board informs us that

“one-fifth of the aged in the United States were


receiving old-age assistance, emergency relief,
institutional care, employment under the works program,
or some other form of aid from public or private funds;
two-fifths to one-half were dependent on friends and
relatives, one-eighth had some income from earnings, and
possibly one-sixth had some savings or property.
Approximately three out of four persons 65 or over were
probably dependent wholly or partially on others for
support.””

This information informs us that 3 out of 4 persons aged 65 or


over were dependent on others for support before the Social
Security System was adopted.
Sources of the Older Population's Income by Income Source

Lowest 2 nd 3rd 4t h Highest


Quintile Quintile Quintile Quintile Quintile

OASDI 88.70% 88.70% 75.30% 46.30% 17.20%

Pension and 2.60% 3.50% 10.60% 25.80% 21.00%


Annuities

Assets 4.40% 4.50% 7.20% 10.30% 21.80%

Earnings 1.80% 2.40% 5.70% 15.10% 38.10%

Other 2.60% 1.00% 1.30% 2.40% 1.80%

Totals may not add to 100 percent due to rounding.


Source of data is the EBRI 2008 Data Book, Chapter 7, T able 7.5
http://www.ebri.org/publications/books/index.cfm?fa=databook

Current information from the Employee Benefit Research


Institute ( EBRI )4 indicates that the situation today would be
similar if Social Security was eliminated. The following table lists
the income of older citizens by source and is divided into
quintiles by the level of income for 2007.
This chart shows that the 40% of senior citizens with the lowest
levels of income receive almost all of their income from Social
Security. The third quintile receives 3/4 of their income from

53
Social Security and the 4th quintile receives 2/3 of their income
from Social Security and pension programs. Only the highest
quintile receives most of it's income from assets and earnings
on those assets.
My personal experience, during the 15 years of my career in the
IRS spent working with pension plans and the 10 years in
private industry as a third party pension administrator, indicate
that individuals in the bottom half of the income spectrum do
not save for retirement. As an individual in the top half of the
income ladder has an increase in his/her level of income, he/she
will also have in increase in the contributions to a retirement
savings program. The reason for the lack of retirement saving at
the lower levels of income is simple. The poor can not afford to
save for retirement. Without the Social Security System, these
individuals would end up on welfare or as a burden to their
families.
Our retirees need the dignity that comes from receiving an old
age pension that they paid for with their own contributions.
Another major consideration is that we need to have the power
of compound interest working to cover the cost of these
benefits. A pay as you go welfare plan costs 5 times as much as
a properly funded pension plan.
The 1935 Social Security Act provided unemployment
insurance5 and old age and survivors benefits6. Disability
benefits7 were added in 1957 and medical benefits ( Medicare )8
was added in 1965. There have been other enhancements over
the life of the program, such as the indexing 9 of benefits for
inflation in 1975. Prescription drug coverage 10 was added to
Medicare starting in in 2006.
Both the rate of taxation to fund the program and the amount
of income subject to the payroll tax for retirement and disability
benefits have been steadily increased. There has never been a
cap on the amount of income subject to the Medicare Tax. The
following tables from the 2009 OASDI Annual Report, officially
Titled “The 2009 Annual Report of the Board of Trustees of the
Federal Old-Age and Survivors Insurance and Federal Disability
Insurance Trust Funds”, show how much the tax and the income
subject to taxation has been increased.

The following table11 shows the contribution rates for the OASDI
and Medicare programs combined.

54
  Table VI.F1.—Contribution Rates for the OASDI and HI Programs[In percent] 
Employees and employers, each  Self employed 
Calendar years  OASDI  HI  Combined     OASDI  HI  Combined 
1966 3.85 0.35 4.2    5.8 0.35 6.15
1967 3.9 0.5 4.4    5.9 0.5 6.4
1968 3.8 0.6 4.4    5.8 0.6 6.4
1969­70  4.2 0.6 4.8    6.3 0.6 6.9
1971­72  4.6 0.6 5.2    6.9 0.6 7.5
                       
1973 4.85 1 5.85    7 1 8
1974­77  4.95 0.9 5.85    7 0.9 7.9
1978 5.05 1 6.05    7.1 1 8.1
1979­80  5.08 1.05 6.13    7.05 1.05 8.1
1981 5.35 1.3 6.65    8 1.3 9.3
                       
1982­83  5.4 1.3 6.7    8.05 1.3 9.35
19841  5.7 1.3 7    11.4 2.6 14
1985 5.7 1.35 7.05    11.4 2.7 14.1
1986­87  5.7 1.45 7.15    11.4 2.9 14.3
1988­89  6.06 1.45 7.51    12.12 2.9 15.02
1990 and later  6.2 1.45 7.65    12.4 2.9 15.3

The following table shows that the amount of income subject to


the payroll tax has also increased 12.

55
T able VI.A1.—Cont ribut ion and Benefit Base and Cont ribut ion Rat es
Calendar Contribution Contribution rates (percent)
Years and benefit Employees and employers, each Self-employed
base OASDI OASI DI OASDI OASI DI
1937-49 $3,000.00 1 1— — — —
1950 $3,000.00 1.5 1.5 — — — —
1951-53 $3,600.00 1.5 1.5 — 2.25 2.25 —
1954 $3,600.00 2 2— 3 3—
1955-56 $4,200.00 2 2— 3 3—
1957-58 $4,200.00 2.25 2 0.25 3.38 3 0.38
1959 $4,800.00 2.5 2.25 0.25 3.75 3.38 0.38
1960-61 $4,800.00 3 2.75 0.25 4.5 4.13 0.38
1962 $4,800.00 3.13 2.88 0.25 4.7 4.33 0.38
1963-65 $4,800.00 3.63 3.38 0.25 5.4 5.03 0.38
1966 $6,600.00 3.85 3.5 0.35 5.8 5.28 0.53
1967 $6,600.00 3.9 3.55 0.35 5.9 5.38 0.53
1968 $7,800.00 3.8 3.33 0.48 5.8 5.09 0.71
1969 $7,800.00 4.2 3.73 0.48 6.3 5.59 0.71
1970 $7,800.00 4.2 3.65 0.55 6.3 5.48 0.83
1971 $7,800.00 4.6 4.05 0.55 6.9 6.08 0.83
1972 $9,000.00 4.6 4.05 0.55 6.9 6.08 0.83
1973 $10,800.00 4.85 4.3 0.55 7 6.21 0.8
1974 $13,200.00 4.95 4.38 0.58 7 6.19 0.82
1975 $14,100.00 4.95 4.38 0.58 7 6.19 0.82
1976 $15,300.00 4.95 4.38 0.58 7 6.19 0.82
1977 $16,500.00 4.95 4.38 0.58 7 6.19 0.82
1978 $17,700.00 5.05 4.28 0.78 7.1 6.01 1.09
1979 $22,900.00 5.08 4.33 0.75 7.05 6.01 1.04
1980 $25,900.00 5.08 4.52 0.56 7.05 6.27 0.78
1981 $29,700.00 5.35 4.7 0.65 8 7.03 0.98
1982 $32,400.00 5.4 4.58 0.83 8.05 6.81 1.24
1983 $35,700.00 5.4 4.78 0.63 8.05 7.11 0.94
1984 $37,800.00 5.7 5.2 0.5 11.4 10.4 1
1985 $39,600.00 5.7 5.2 0.5 11.4 10.4 1
1986 $42,000.00 5.7 5.2 0.5 11.4 10.4 1
1987 $43,800.00 5.7 5.2 0.5 11.4 10.4 1
1988 $45,000.00 6.06 5.53 0.53 12.12 11.06 1.06
1989 $48,000.00 6.06 5.53 0.53 12.12 11.06 1.06
1990 $51,300.00 6.2 5.6 0.6 12.4 11.2 1.2
1991 $53,400.00 6.2 5.6 0.6 12.4 11.2 1.2
1992 $55,500.00 6.2 5.6 0.6 12.4 11.2 1.2
1993 $57,600.00 6.2 5.6 0.6 12.4 11.2 1.2
1994 $60,600.00 6.2 5.26 0.94 12.4 10.52 1.88
1995 $61,200.00 6.2 5.26 0.94 12.4 10.52 1.88
1996 $62,700.00 6.2 5.26 0.94 12.4 10.52 1.88
1997 $65,400.00 6.2 5.35 0.85 12.4 10.7 1.7
1998 $68,400.00 6.2 5.35 0.85 12.4 10.7 1.7
1999 $72,600.00 6.2 5.35 0.85 12.4 10.7 1.7
2000 $76,200.00 6.2 5.3 0.9 12.4 10.6 1.8
2001 $80,400.00 6.2 5.3 0.9 12.4 10.6 1.8
2002 $84,900.00 6.2 5.3 0.9 12.4 10.6 1.8
2003 $87,000.00 6.2 5.3 0.9 12.4 10.6 1.8
2004 $87,900.00 6.2 5.3 0.9 12.4 10.6 1.8
2005 $90,000.00 6.2 5.3 0.9 12.4 10.6 1.8
2006 $94,200.00 6.2 5.3 0.9 12.4 10.6 1.8
2007 $97,500.00 6.2 5.3 0.9 12.4 10.6 1.8
2008 $102,000.00 6.2 5.3 0.9 12.4 10.6 1.8
2009 $106,800.00 6.2 5.3 0.9 12.4 10.6 1.8

56
This shows both the need for a retirement program and the
steady increase in both the benefits and the cost of the
program.

The Medicare tax has been increased several times and has no
earnings cap on salary, to limit the amount being paid for
Medicare. The problem is that payroll taxes have already been
increased to a level which is intolerable for the self employed
who pay both halves of the tax, and very painful for employees.
There is a limit to the amount of payroll taxes the public can
tolerate.
The ability of Congress to impose these intolerably high taxes is
explained, by analogy, with the instructions for cooking a live
frog. If you toss the frog into a pot of hot water, the frog will
jump out. If you put the frog into a pot of unheated water, and
slowly increase the heat, the frog will not notice what is
happening and you will soon have a cooked frog.

The evaluations of the funding models for the Social Security


and Medicare Systems, in the following chapters, indicate that
the system would be self sustaining at the current contribution
( tax ) levels if the contributions had been invested under the
rules applicable to a corporate pension plan.

57
WHAT IS A PENSION PLAN?

A pension plan is a program setup to provide retirement income


for individuals who have met the requirements to receive the
benefits provided by the plan.
There are two basic types of pension programs, defined
contribution plans and defined benefit plans.
In a defined contribution plan, the benefit is determined by the
amounts contributed to the plan, and the earnings on the
contributions to the plan. The actual benefit is determined by
the account balance. Another name for defined contribution
plans is to call them individual account plans. The most
common form of individual account plan is the 401(k) plan
( named after section 401(k) of the Internal Revenue Code ). In
this type of plan the contributions are made by the individual
employee. In some plans there is an employer match which
provides some level of contributions by the employer.
In a defined benefit plan, the benefit is determined by a formula
in the plan document. In the private sector most defined benefit
plans are funded by the employer. Some plans are funded with
contributions from both the employer and employees. The
amount of contributions needed to fund the program are
determined by actuaries who either calculate a required
contribution, or devise a contribution formula which will provide
the level of contributions needed to fund the plan. Small
changes in the actuarial assumptions used to calculate the
required contribution, can have very large effects on the
amount needed to fund the plan. One of the most important
actuarial assumptions is the rate of return on invested assets.
Increasing the rate of return on invested assets reduces the
cost of the plan.
In a defined benefit pension plan, such as the Social Security
System, there are three sources of funds for the payment of
benefits. The possible sources of funds for use in paying
benefits are as follow;
1. Contributions being made to fund the plan. The payroll
and self employment taxes currently being paid into the
system are the source of all benefit payments being

58
made at present. We are very close to reaching the time
when these contributions will not be sufficient to pay the
benefits due the Social Security and Medicare recipients.
2. Earnings on invested assets. Currently, the only assets in
the so called trust funds, are special issue government
securities1,2. These securities are nothing more than an
accounting entry on the books at the Treasury
Department. The interest is being credited at the rate of
return for short term treasury bonds. The crediting of this
interest is nothing more than a bookkeeping entry which
increases the amount in the so called trust fund. Any
payment of benefits from the earnings will require
additional taxes, because there are no actual assets
currently generating income needed to pay benefits. The
taxpayers are on the hook for all payments from the
earnings on these, so called, assets. Borrowing to pay
these benefits will simply defer, and increase, the
amount of taxes needed.
3. The assets being held by the pension plan. Currently, the
only assets are the special issue government securities
mentioned above. Paying down these assets will require
additional taxes, because these so called securities are
liabilities of the U.S. Government. These assets already
represent amounts which have been borrowed.
We need to exchange the special issue securities, for actual
assets earning income which can be used to pay benefits. If this
exchange is not made, we will have a massive increase in taxes.
There is a way to fix the Social Security System. The way we
can fix this problem, is by electing representatives to Congress
who will commit to setting up a pension style trust fund and
transferring income producing assets into the trust. Assets
producing income, which can be used to pay benefits.
Exchanging the current special issue government securities for
assets, which can produce income to pay benefits, will both
reduce the amount of the national debt, and solve the funding
problems of the Social Security System.
Another reason, we need to have actual assets in an actual
Social Security Trust Fund, is that the recent actions by the
Federal Reserve to stimulate the economy, and Congress to bail
out the major banks, will result in much higher inflation rates
and higher interest rates. The trust fund will need actual assets

59
such as the drilling rights in ANWR, the continental shelves and
the mineral rights on properties located in the inter-mountain
west, since actual assets will increase in value and compensate
for inflation. Other properties which can be transferred to the
trust fund are the stocks the Treasury Dept. received in
exchange for the bailout funds. Transferring stocks held by the
government to a pension trust will remove the companies,
affected by the transfer, from the control of the government. A
pension trust will either hold the stocks as an investment, or
sell the stocks to raise cash for reinvestment.
The pension funds are what is known as institutional investors.
The purpose of institutional investors is to professionally
manage investments for the beneficiaries of the assets being
invested. These institutional investors are the backbone of our
capitalist economic system, because they buy the stocks and
bonds issued by our corporations.
A prudently invested pension portfolio would have a far larger
return on investments, than the current investments in special
issue government securities.
The following illustration comparing the returns from the
California Personal Employment Retirement Program3 with the
returns on the Special Issue Government Securities 4, shows that
a prudently invested pension plan can be reasonably expected
to have an 8% or higher average rate of return on invested
assets.
Royalty and lease income from oil and gas properties currently
owned by the Federal Government will result in a substantially
higher return on investment.

60
HISTORICAL RATES OF RETURN FROM INFO ON CALPERS3 AND SOCIAL SECURITY SITES4
SOC. SEC. CALPERS CALPERS
YEAR END YEAR END YEAR END
12/31 6/30 12/31
1984 12.40% ­3.10% 12.90%
1985 10.78% 35.40% 28.00%
1986 7.91% 24.60% 15.90%
1987 8.40% 13.80% 4.30%
1988 8.82% 3.90% 12.80%
1989 8.66% 15.70% 21.30%
1990 8.63% 9.70% ­0.80%
1991 7.96% 6.50% 23.00%
1992 7.08% 12.50% 6.50%
1993 6.06% 14.50% 13.40%
1994 7.05% 2.00% ­1.00%
1995 6.88% 16.30% 25.30%
1996 6.59% 15.30% 12.80%
1997 6.59% 20.10% 19.00%
1998 5.63% 19.50% 18.50%
1999 5.87% 12.50% 16.00%
2000 6.24% 10.50% ­1.40%
2001 5.23% ­7.20% ­6.20%
2002 4.87% ­5.90% ­9.50%
2003 4.07% 3.90% 23.30%
2004 4.27% 16.70% 13.40%
2005 4.31% 12.70% 11.10%
2006 4.82% 12.30% 15.70%
2007 4.66% 19.10% 10.20%
2008 3.64% ­4.90% ­27.10%
­­­­­­­­­­­­­­­­­­­­­­­­ ­­­­­­­­­­­­­­­­­­­­­­­­ ­­­­­­­­­­­­­­­­­­­­­­­­
167.40% 276.40% 257.40%
DIV BY 25 DIV BY 25 DIV BY 25
­­­­­­­­­­­­­­­­­­­­­­­­ ­­­­­­­­­­­­­­­­­­­­­­­­ ­­­­­­­­­­­­­­­­­­­­­­­­
      AVERAGE 6.70% 11.06% 10.30%
============ ============ ============

The above figures are for the periods ended on June 30 and
December 31 of the years from 1984 through 2008. These
figures for return on assets demonstrate that an actual trust
fund can earn substantially more than the amounts being
credited to the Social Security accounts. A simple average was
used to keep the methodology the same for the comparison
between the return on the Social Security assets and the
CALPERS assets. A weighted average is more appropriate when
calculating the rate of return. The News Release issued with the
release of the 2009 OASDI Annual Report indicates the
effective annual rate of return was 5.1% in 2008.
To further demonstrate that the interest rate of 8% percent
which is used in illustration number 9 ( in the chapter

61
evaluating a combined Social Security and Medicare funding
model ), I have listed the valuation interest rate used by several
large defined benefit plans. Pension plans of U.S. corporations
must file a Form 5500, which is public information. The
Schedule B of this return contains the actuarial information for
these plans. This information is from the Schedule B of these
returns. The plans listed have nothing in common except that
they all have assets of several billion dollars. All of these plans
are using interest of 8% or higher to project the rate of return
on invested assets. The 2007 years were used because these
were the latest years for which the forms were available at the
time this book was written.

INTEREST RATES USED TO ESTIMATE FUTURE EARNINGS BY SOME LARGE DEFINED BENEFIT PLANS

VALUATION
COMPANY YEAR ASSETS INT RATE

DOW CHEMICAL COMPANY DEC 2007 7,177,178,067 8.00%

DELTA AIR LINES RETIREMENT PLAN MAR 2007 4,592,257,111 9.00%

EXXON MOBILE PENSION PLAN DEC 2007 9,707,590,707 9.00%

FORD MOTOR CO UAW RETIREMENT PLAN DEC 2007 20,206,900,287 8.50%

Collectively all of the illustrations demonstrate that no increase


in payroll taxes, or cuts in Social Security and Medicare benefits
will be necessary if sufficient assets are transferred to an actual
trust fund which can not be looted by Congress.
Please note that for pension purposes the use of average rates
of return over a long period of time are appropriate. The figures
in Illustration 3 show that the amounts credited to the fictitious
trust fund using the current methodology averaged 6.7%. The
reason the average is 6.7% is that the average includes the late
1980s and the 1990s when interest rates were much higher,
than at present. Raising this assumption to 8% is not a large
increase. We are currently in a period of unusually low interest
rates. The 1980s were a period of unusually high interest rates.
Pension assumptions cover a very long period of time.
Also note that an actual defined benefit style pension fund will
have to have a large amount of invested reserves to be able to
provide for fluctuations in the economy caused by economic

62
cycles. This type of investment fund does not currently exist,
because all interest and principal payments from the current
system, must come from the taxpayers, not from invested
assets.
An illustration showing the hypothetical growth of a social
security trust fund which earned just 90% of the return shown
by the California Personal Employment Retirement Program 3
( CALPERS ) trust fund, shows assets would be almost 1.5 trillion
dollars larger than the current trust fund, which is invested is
special issue government securities.
HYPOTHETICAL TRUST FUND EARNING 90 PERCENT OF THE CALPERS RETURN

RETURN AT   BALANCE 
CALPERS 90.0% OF   SOC SEC  FORWARD
RATE OF  CALPERS    SURPLUS PLUS
RETURN RATE   FOR YR SURPLUS

1984 NA NA 300,000,000 300,000,000


1985 28.00% 25.20% 9,400,000,000 12,144,400,000
1986 15.90% 14.31% 16,700,000,000 32,972,033,640
1987 4.30% 3.87% 19,600,000,000 54,606,571,342
1988 12.80% 11.52% 38,800,000,000 104,167,008,360
1989 21.30% 19.17% 52,400,000,000 186,580,903,863
1990 ­.80% ­.72% 58,200,000,000 243,018,481,355
1991 23.00% 20.70% 53,500,000,000 357,897,806,996
1992 6.50% 5.85% 50,700,000,000 432,500,778,705
1993 13.40% 12.06% 46,800,000,000 537,104,452,617
1994 ­1.00% ­.90% 56,800,000,000 588,559,312,543
1995 25.30% 22.77% 60,400,000,000 796,727,348,010
1996 12.80% 11.52% 66,400,000,000 962,559,618,500
1997 19.00% 17.10% 81,300,000,000 1,222,359,613,264
1998 18.50% 16.65% 99,400,000,000 1,541,832,588,872
1999 16.00% 14.40% 124,700,000,000 1,906,513,281,670
2000 ­1.40% ­1.26% 151,800,000,000 2,032,378,534,321
2001 ­6.20% ­5.58% 163,000,000,000 2,072,876,412,106
2002 ­9.50% ­8.55% 159,000,000,000 2,041,050,978,871
2003 23.30% 20.97% 155,600,000,000 2,657,288,689,140
2004 13.40% 12.06% 151,100,000,000 3,147,080,365,050
2005 11.10% 9.99% 173,500,000,000 3,652,306,343,519
2006 15.70% 14.13% 185,200,000,000 4,379,745,989,858
2007 10.20% 9.18% 186,500,000,000 4,985,427,371,727
2008 ­27.10% ­24.39% 180,800,000,000 3,906,184,515,763
­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
WHAT IF BALANCE 12­31­2008 3,906,184,515,763
BALANCE 12­31­2008 PER TRUST FUND REPORT 2,418,700,000,000
­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
DIFFERENCE 1,487,484,515,763
=================

IF THE SOCIAL SECURITY TRUST FUND HAD BEEN INVESTED IN FINANCIAL ASSETS
EARNING 90% OF THE YIELD ON THE CALPERS TRUST FUND. THERE WOULD HAVE
BEEN ALMOST 1.5 TRILLION DOLLARS MORE IN THE FUND. THIS COMPUTATION 
CONSIDERS THE YEARS WHERE CALPERS HAD LOSSES.

63
The rate of return for the California Personal Employment
Retirement Program is much higher than the return for the
current Social Security account at the Treasury Department.
The inclusion of royalties from the Oil and Gas properties held
by the federal government can substantially improve the return
on assets. A further consideration is that the royalty income will
increase as oil prices increase with inflation. The failure to
diversify the investment mix, and have a reasonable rate of
return on assets indicates the current system would not meet
the fiduciary standards expected from corporate plans. The
investment of assets in an employer's securities at very low
rates of return would be considered a prohibited transaction in a
corporate plan.
Establishing a pension style trust fund would also give us a
vehicle which can be used to remove government ownership
from companies like General Motors and Chrysler. An
institutional investor such as a pension plan will hold company
stock for dividends or capital appreciation. This stock would be
sold when necessary to raise capital for investment in other
investments necessary to provide a diversified investment
portfolio. Our government has no business owning or running
individual companies, and government ownership of these
companies must end.
When an actual pension style trust fund is established, it will be
a gigantic pool of investment capital and spur the development
of our economy.

64
EVALUATION OF THE SOCIAL SECURITY FUNDING MODEL

To understand the proposed changes we need to know how the


current system is constructed, why it has problems, and what
changing the current system will entail. It is possible to
evaluate the funding model of a large defined benefit pension
plan, like Social Security, by developing the asset accumulation
and expense payments for an average participant in the plan. If
the funding model works for an average participant in the plan,
the funding model will work for the entire plan. The information
used to make this evaluation is taken from the reams of data on
the Social Security Web Site for the 2009 year and the 2009
Annual Report of the Social Security Trust Fund 1.
To put these illustrations in context, we will provide some
background information on the concepts used in the design of
defined benefit pension plans. The basic concept in a pension
plan is that the cost of the plan is paid for while the participant
is working, because retirement benefits are part of the person's
compensation package. The contributions are placed in a trust
and prudently invested. The benefits are then paid from the
trust after the participant has qualified for receipt of the
benefits. This structure allows a large portion of the benefit
payments to be made from the earnings on the assets. A
participant in the Social Security System, who enters the work
force at age 18 and retires at age 66, will have 48 years of
compound earnings on his contributions from his first years
contributions. The power of compound interest results in a
much lower cost than would result from a pay as you go
program.
Despite some pious and self serving statements that there are
Social Security Trust Funds, the current system is in reality
nothing more than a pay as you go welfare plan. The so called
trust funds for Social Security, Disability and Survivors, and
Medicare are funded with special Issue Government Securities.
The securities are obligations of the Federal Government which
can not be sold or traded on the open market. Every year the
Treasury Department determines the amount of tax received
and then subtracts the amount paid out in benefits. The
difference is credited to the appropriate fund. The amount in
the fund is credited with interest at the nominal rate which was
paid on Special Issue Government Securities ( the earnings rate

65
for Short Term Government Bonds ). The resulting balance on
the books at the Treasury Department constitutes the OASDI
and Medicare Trust Funds. These securities are not the Short,
Intermediate or Long Term Bonds which are purchased on the
open market, or from the Government directly, to fund
corporate pension plans. Actual government bonds can be
bought and sold on the open market, and pay periodic interest
payments which can be reinvested.
There are no actual Trust Funds, with assets earning a
reasonable rate of return, being prudently invested for the
benefit of the participants in the system. The crediting of
interest at the rate on Special Issues is a sweetheart deal for
government, and a very poor deal for Social Security, because
the rate of earnings is not sufficient to provide the needed
funds to pay projected benefits. To illustrate this we have
prepared a set of illustrations showing the benefit computation
for a hypothetical average participant in Social Security, who
started working at age 18 earning the minimum wage, and
retired at age 66 earning the average wage in 2008 per figures
from the Social Security Annual Report 2.
The computation of the benefit is based on a complicated
formula using an index based on the increases in average
wages over a workers lifetime. There is a work sheet, and a
benefit calculator, available on the Social Security Web Site 3.
The following computation is based on the worksheet for a
person retiring at the end of 2008. The index amounts change
every year and the bend points in the computation are adjusted
for inflation every year also. The beginning salary for our
hypothetical average participant is based on 40 hours per week
at 1 dollar per hour ( the minimum wage in 1960 ) for 52
weeks. An annual increase in salary is applied each year to get
the Social Security average salary for 2008 at retirement.
The benefit is calculated on the high 35 years of indexed
earnings. It is interesting to note that in our computation, for a
hypothetical average participant, the high 35 years are not the
last 35 years. Anyone who uses the worksheet on the Social
Security Web Site should use care in making the computation of
their own benefits.
This salary and benefit calculation is being made to analyze the
funding model for Social Security. I was taught by an IRS
actuary in one of my classes on auditing Defined Benefit Plans

66
that, if the funding model will work for the average participant
in a large Defined Benefit Plan, the model will work for the
entire plan. Also, the accumulation of assets and the amount of
benefits can be comprehended for a single individual. It is
simply not possible for a non actuary to comprehend the figures
for the entire Social Security System.
The computation of the Social Security Benefit uses what are
referred to as indexed earnings. A person's actual wages are
adjusted for the increase in wages over the individual's working
lifetime. The highest 35 years are then determined and added
up. This total is then converted to the person's AIME ( Average
Indexed Monthly Earnings ). This is done by dividing the total by
420 ( 35 years times 12 months per year ) to get an average
monthly earnings figure. If the person has less than 35 years of
salary, the method effectively uses a zero for every year with
no earnings. The monthly benefit is then calculated by applying
the benefit formula to the resulting AIME. For 2008 this formula
provides for 90% of the first $744, 32% of the amount between
$744 and $4,483 of AIME, and 15% of the amount of the AIME
above $4,483. The computation for our hypothetical participant
is shown in the first spreadsheet illustration.
The second illustration in this report indicates that the assets
accumulated using the actual contribution percentages for our
average participant would only last 16 years. This is significant
since the actuarial tables used by the social security system
indicate a male will have a life expectancy of 15.64 years and a
female will have a life expectancy of 18.43 years for a
participant retiring at age 66. Since we are making calculations
for an average participant, and not for a male or female, our
target for life expectancy is 18 years because it is between the
male and female ages and somewhat closer to the female age.
Also it is a round number to use as a target, and sufficiently
conservative to prevent our hypothetical average participant
from outliving our projected assets. We want to determine if the
current contributions are sufficient to pay for the benefits of our
hypothetical average participant.
The third illustration indicates that, if the current tax rates were
applied to all years, the assets would last well past our
participant's life expectancy. Since the assets will last longer
than our average participant is expected to live, there is no
need to raise taxes or cut benefits. If the plan is provided the
necessary funds to cover the current shortfall caused by the

67
spending of assets, which should have been invested, the
current level of contributions will be enough to adequately fund
the old age pension portion of the plan.
Illustration 3, shown below, ends with a computation which
shows our average participant will receive benefits which are
over 5 times the amount of the contributions. This difference
should be paid out of the earnings on assets invested over the
participant 's 49 year working lifetime. Because there are no
assets in the so called trust accounts, the taxpayers will have to
pay 5 dollars to cover each 1 dollar looted from the Social
Security Funds by Congress. This payment is in addition to the
payments already made by the participant during his working
career.
Both illustration 2 and illustration 3 use a 6% estimate for
return on post retirement assets and a 4% adjustment for
inflation. These amounts were chosen because it is probable
that we are moving into an era of higher inflation and higher
interest rates. The use of 6% is an estimate of probable future
earnings using the special issue securities.
The tax rates shown in these examples include the cost of the
survivor and disability benefits which are being subtracted
before the pension contribution is computed. The survivor and
disability cost is a true insurance benefit. The life insurance
benefits are paid to a surviving spouse and minor children in
the form of an annuity. The disability benefit pays a monthly
payment to a disabled individual and to minor children of the
individual. These insurance benefits do not lend themselves to
the type of analysis that is applied to pension benefits since
death and disability can occur at any age. Because of these
facts, disability and survivor costs are being subtracted from
assets shown in the illustrations. The history and experience
with the Survivors and Disability Trust Fund indicates that the
proposed changes to the Old Age ( pension ) Trust fund will
correct any potential problems with the Survivors and Disability
Trust Fund.
These illustrations are set up using a computerized
spreadsheet. This method allows the use of linked cells in the
spreadsheet so that changing the value of a cell set up with a
variable will change the computations in the entire spreadsheet.
Using this methodology, we can estimate how long the assets
contributed will last, if invested in an actual trust fund.

68
ILLUSTRATION 1

COMPUTATION OF SOCIAL SECURITY BENEFITS FOR HYPOTHETICAL AVERAGE PARTICIPANT

ASSUMED STARTING SALARY: 2,080.00

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

WAGES OR MAXIMUM APPLICABLE INDEX INDEXED YRS HIGH


AGE YEAR SALARY SS WAGE SS WAGE FACTOR EARNINGS 35 YEARS
18 1960 2,080.00 4,800.00 2,080.00 10.08 20,966.40 1
19 1961 2,214.04 4,800.00 2,214.04 9.89 21,896.85 2
20 1962 2,356.72 4,800.00 2,356.72 9.42 22,200.28 3
21 1963 2,508.59 4,800.00 2,508.59 9.19 23,053.94 4
22 1964 2,670.25 4,800.00 2,670.25 8.83 23,578.29 5
23 1965 2,842.33 4,800.00 2,842.33 8.67 24,642.96 6 24,642.96
24 1966 3,025.49 6,600.00 3,025.49 8.18 24,748.51 7 24,748.51
25 1967 3,220.46 6,600.00 3,220.46 7.75 24,958.57 8 24,958.57
26 1968 3,427.99 7,800.00 3,427.99 7.25 24,852.95 9 24,852.95
27 1969 3,648.90 7,800.00 3,648.90 6.86 25,031.46 10 25,031.46
28 1970 3,884.04 7,800.00 3,884.04 6.53 25,362.81 11 25,362.81
29 1971 4,134.34 7,800.00 4,134.34 6.22 25,715.60 12 25,715.60
30 1972 4,400.77 9,000.00 4,400.77 5.66 24,908.34 13 24,908.34
31 1973 4,684.36 10,800.00 4,684.36 5.33 24,967.65 14 24,967.65
32 1974 4,986.23 13,200.00 4,986.23 5.03 25,080.75 15 25,080.75
33 1975 5,307.56 14,100.00 5,307.56 4.68 24,839.36 16 24,839.36
34 1976 5,649.59 15,300.00 5,649.59 4.38 24,745.19 17 24,745.19
35 1977 6,013.66 16,500.00 6,013.66 4.13 24,836.41 18 24,836.41
36 1978 6,401.19 17,700.00 6,401.19 3.83 24,516.57 19
37 1979 6,813.70 22,900.00 6,813.70 3.52 23,984.22 20
38 1980 7,252.79 25,900.00 7,252.79 3.23 23,426.51 21
39 1981 7,720.17 29,700.00 7,720.17 2.93 22,620.11 22
40 1982 8,217.68 32,400.00 8,217.68 2.78 22,845.15 23
41 1983 8,747.24 35,700.00 8,747.24 2.65 23,180.20 24
42 1984 9,310.94 37,800.00 9,310.94 2.50 23,277.34 25
43 1985 9,910.95 39,600.00 9,910.95 2.40 23,786.29 26
44 1986 10,549.64 42,000.00 10,549.64 2.33 24,580.65 27
45 1987 11,229.48 43,800.00 11,229.48 2.19 24,592.56 28 24,592.56
46 1988 11,953.13 45,000.00 11,953.13 2.09 24,982.04 29 24,982.04
47 1989 12,723.42 48,000.00 12,723.42 2.01 25,574.07 30 25,574.07
48 1990 13,543.34 51,300.00 13,543.34 1.92 26,003.22 31 26,003.22
49 1991 14,416.11 53,400.00 14,416.11 1.85 26,669.79 32 26,669.79
50 1992 15,345.11 55,500.00 15,345.11 1.76 27,007.40 33 27,007.40
51 1993 16,333.98 57,600.00 16,333.98 1.75 28,584.47 34 28,584.47
52 1994 17,386.58 60,600.00 17,386.58 1.70 29,557.19 35 29,557.19
53 1995 18,507.01 61,200.00 18,507.01 1.64 30,351.50 36 30,351.50
54 1996 19,699.64 62,700.00 19,699.64 1.56 30,731.44 37 30,731.44
55 1997 20,969.13 65,400.00 20,969.13 1.47 30,824.62 38 30,824.62
56 1998 22,320.43 68,400.00 22,320.43 1.40 31,248.60 39 31,248.60
57 1999 23,758.81 72,600.00 23,758.81 1.33 31,599.21 40 31,599.21
58 2000 25,289.88 76,200.00 25,289.88 1.26 31,865.24 41 31,865.24
59 2001 26,919.61 80,400.00 26,919.61 1.23 33,111.12 42 33,111.12
60 2002 28,654.37 84,900.00 28,654.37 1.22 34,958.33 43 34,958.33
61 2003 30,500.92 87,000.00 30,500.92 1.19 36,296.10 44 36,296.10
62 2004 32,466.47 87,900.00 32,466.47 1.13 36,687.11 45 36,687.11
63 2005 34,558.68 90,000.00 34,558.68 1.09 37,668.96 46 37,668.96
64 2006 36,785.72 94,200.00 36,785.72 1.05 38,625.00 47 38,625.00
65 2007 39,156.27 97,500.00 39,156.27 1.00 39,156.27 48 39,156.27
66 2008 41,679.58 102,000.00 41,679.58 1.00 41,679.58 49 41,679.58
-------------------------
SUM OF HIGH 35 YEARS 980,784.82
DIVISOR 420.00
-------------------------
DIVIDE BY 420 TO GET AIME 2,335.20

90% OF FIRST $744 669.60

32% OF AMOUNT BETWEEN $744 AND $4,483 509.18

15% OF AMOUNT ABOVE $4,483 0.00


-------------------------
PROJ ECTED MONTHLY SOC SEC BENEFIT 1,178.78
X 12.00
-------------------------
ANNUAL BENEFIT 14,145.42
=============

69
Illustrations 2 through 5 are designed to determine how long
the assets from a participant's Social Security contributions will
last using various scenarios. These projections are set up using
conservative assumptions because we want to be certain that
our hypothetical Social Security Beneficiary will not outlive
his/her assets.

70
ILLUSTRATION 2

SPREADSHEET TO ILLUSTRATE GROWTH IN ASSETS FROM SOCIAL SECURITY CONTRIBUTIONS.


ASSUMED POST RETIREMENT AVERAGE RATE OF RETURN ON INVESTED ASSETS: 6.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

ASSUMED STARTING SALARY: 2,080.00

ASSSUMED ANNUAL PREMIUM COST FOR DISABILITY BENEFITS: 1.80%

ASSSUMED POST RETIREMENT COST OF LIVING ADJ USTMENT: 4.00%

WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INTEREST ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT $ COST $ CONT $ RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 5.00% 104.00 37.44 66.56 NA 66.56
19 1961 2,214.04 4,800.00 2,214.04 6.25% 138.38 39.85 98.52 3.854% 167.65
20 1962 2,356.72 4,800.00 2,356.72 6.25% 147.29 42.42 104.87 3.854% 278.99
21 1963 2,508.59 4,800.00 2,508.59 7.25% 181.87 45.15 136.72 3.906% 426.60
22 1964 2,670.25 4,800.00 2,670.25 7.25% 193.59 48.06 145.53 4.135% 589.77
23 1965 2,842.33 4,800.00 2,842.33 7.25% 206.07 51.16 154.91 4.198% 769.43
24 1966 3,025.49 6,600.00 3,025.49 7.70% 232.96 54.46 178.50 4.948% 986.01
25 1967 3,220.46 6,600.00 3,220.46 7.80% 251.20 57.97 193.23 4.958% 1,228.12
26 1968 3,427.99 7,800.00 3,427.99 7.60% 260.53 61.70 198.82 5.479% 1,494.24
27 1969 3,648.90 7,800.00 3,648.90 8.40% 306.51 65.68 240.83 6.594% 1,833.59
28 1970 3,884.04 7,800.00 3,884.04 8.40% 326.26 69.91 256.35 7.260% 2,223.06
29 1971 4,134.34 7,800.00 4,134.34 9.20% 380.36 74.42 305.94 5.979% 2,661.92
30 1972 4,400.77 9,000.00 4,400.77 9.20% 404.87 79.21 325.66 5.927% 3,145.35
31 1973 4,684.36 10,800.00 4,684.36 9.70% 454.38 84.32 370.06 6.646% 3,724.45
32 1974 4,986.23 13,200.00 4,986.23 9.90% 493.64 89.75 403.88 7.490% 4,407.30
33 1975 5,307.56 14,100.00 5,307.56 9.90% 525.45 95.54 429.91 7.396% 5,163.17
34 1976 5,649.59 15,300.00 5,649.59 9.90% 559.31 101.69 457.62 7.313% 5,998.37
35 1977 6,013.66 16,500.00 6,013.66 9.90% 595.35 108.25 487.11 7.083% 6,910.34
36 1978 6,401.19 17,700.00 6,401.19 10.10% 646.52 115.22 531.30 8.198% 8,008.15
37 1979 6,813.70 22,900.00 6,813.70 10.16% 692.27 122.65 569.63 9.115% 9,307.72
38 1980 7,252.79 25,900.00 7,252.79 10.16% 736.88 130.55 606.33 11.000% 10,937.90
39 1981 7,720.17 29,700.00 7,720.17 10.70% 826.06 138.96 687.10 13.333% 13,083.35
40 1982 8,217.68 32,400.00 8,217.68 10.80% 887.51 147.92 739.59 12.865% 15,506.11
41 1983 8,747.24 35,700.00 8,747.24 10.80% 944.70 157.45 787.25 10.135% 17,864.91
42 1984 9,310.94 37,800.00 9,310.94 11.10% 1,033.51 167.60 865.92 12.396% 20,945.36
43 1985 9,910.95 39,600.00 9,910.95 11.40% 1,129.85 178.40 951.45 10.781% 24,154.93
44 1986 10,549.64 42,000.00 10,549.64 11.40% 1,202.66 189.89 1,012.77 7.906% 27,077.38
45 1987 11,229.48 43,800.00 11,229.48 11.40% 1,280.16 202.13 1,078.03 8.396% 30,428.83
46 1988 11,953.13 45,000.00 11,953.13 12.12% 1,448.72 215.16 1,233.56 8.823% 34,347.13
47 1989 12,723.42 48,000.00 12,723.42 12.12% 1,542.08 229.02 1,313.06 8.656% 38,633.27
48 1990 13,543.34 51,300.00 13,543.34 12.40% 1,679.37 243.78 1,435.59 8.625% 43,400.99
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 7.958% 48,382.95
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 7.083% 53,436.49
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 6.062% 58,407.21
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 7.052% 64,369.07
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 6.875% 70,756.18
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 6.594% 77,510.01
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 6.594% 84,843.75
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 5.625% 91,982.17
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 5.865% 99,895.36
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 6.240% 108,809.56
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 5.229% 117,352.69
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 4.865% 126,099.26
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 4.073% 134,468.38
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 4.271% 143,652.97
63 2005 34,558.68 90,000.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 4.312% 153,510.51
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 4.823% 164,813.61
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 4.656% 176,637.89
66 2008 41,679.58 102,000.00 41,679.58 12.40% 5,168.27 750.23 4,418.04 3.635% 187,476.72
-----------------
TOTAL 65,629.92 6.716% AVG RATE

71
ILLUSTRATION 2 CONTINUED

SPREADSHEET TO ILLUSTRATE PAYMENT OF BENEFITS USING A 6% POST RETIREMENT EARNINGS RATE.


ANNUAL INFLATION ADJ USTED EARN ON ACCUM YEARS
AGE YEAR BENEFIT FACTOR BENEFIT ASSETS BALANCE RETIRED
187,476.72
67 2009 14,145.42 1.000 14,145.42 11,248.60 184,579.90 1
68 2010 14,145.42 1.040 14,711.24 11,074.79 180,943.46 2
69 2011 14,145.42 1.082 15,299.69 10,856.61 176,500.38 3
70 2012 14,145.42 1.125 15,911.67 10,590.02 171,178.73 4
71 2013 14,145.42 1.170 16,548.14 10,270.72 164,901.31 5
72 2014 14,145.42 1.217 17,210.07 9,894.08 157,585.32 6
73 2015 14,145.42 1.265 17,898.47 9,455.12 149,141.97 7
74 2016 14,145.42 1.316 18,614.41 8,948.52 139,476.08 8
75 2017 14,145.42 1.369 19,358.98 8,368.56 128,485.66 9
76 2018 14,145.42 1.423 20,133.34 7,709.14 116,061.46 10
77 2019 14,145.42 1.480 20,938.68 6,963.69 102,086.47 11
78 2020 14,145.42 1.539 21,776.22 6,125.19 86,435.43 12
79 2021 14,145.42 1.601 22,647.27 5,186.13 68,974.29 13
80 2022 14,145.42 1.665 23,553.16 4,138.46 49,559.58 14
81 2023 14,145.42 1.732 24,495.29 2,973.57 28,037.86 15
82 2024 14,145.42 1.801 25,475.10 1,682.27 4,245.03 16
83 2025 14,145.42 1.873 26,494.11 254.70 -21,994.37 17
84 2026 14,145.42 1.948 27,553.87 -1,319.66 -50,867.91 18

This second illustration shows the historic accumulation of


assets and projected payouts of Social Security using historic
Social Security contributions, and earnings, with a 6% earnings
rate for post retirement computations. A four percent post
retirement inflation adjustment is used for the computation. The
projection indicates the assets would be used up in 16 years.
This illustration indicates that the contributions would not be
sufficient to fund the projected benefits for a single average
participant using the current plan structure. The shortfall is
caused by the low rate of return on assets. The large pending
shortfall of the system is also caused by the fact that in years
prior to 1984, all plan assets were spent to pay benefits and
there was no surplus.

72
ILLUSTRATION 3

SPREADSHEET TO ILLUSTRATE THE GROWTH IN ASSETS USING CURRENT SOCIAL SECURITY CONTRIBUTION LEVELS.

ASSUMED POST RETIREMENT AVERAGE RATE OF RETURN ON INVESTED ASSETS: 6.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

ASSUMED STARTING SALARY: 2,080.00

ASSSUMED ANNUAL PREMIUM COST FOR DISABILITY BENEFITS: 1.80%

ASSSUMED POST RETIREMENT COST OF LIVING ADJ USTMENT: 4.00%

WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INTEREST ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT COST CONT RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 12.40% 257.92 37.44 220.48 NA 220.48
19 1961 2,214.04 4,800.00 2,214.04 12.40% 274.54 39.85 234.69 2.917% 461.60
20 1962 2,356.72 4,800.00 2,356.72 12.40% 292.23 42.42 249.81 3.813% 729.01
21 1963 2,508.59 4,800.00 2,508.59 12.40% 311.07 45.15 265.91 3.854% 1,023.02
22 1964 2,670.25 4,800.00 2,670.25 12.40% 331.11 48.06 283.05 3.906% 1,346.02
23 1965 2,842.33 4,800.00 2,842.33 12.40% 352.45 51.16 301.29 4.135% 1,702.97
24 1966 3,025.49 6,600.00 3,025.49 12.40% 375.16 54.46 320.70 4.198% 2,095.16
25 1967 3,220.46 6,600.00 3,220.46 12.40% 399.34 57.97 341.37 4.948% 2,540.20
26 1968 3,427.99 7,800.00 3,427.99 12.40% 425.07 61.70 363.37 4.958% 3,029.51
27 1969 3,648.90 7,800.00 3,648.90 12.40% 452.46 65.68 386.78 5.479% 3,582.28
28 1970 3,884.04 7,800.00 3,884.04 12.40% 481.62 69.91 411.71 6.594% 4,230.20
29 1971 4,134.34 7,800.00 4,134.34 12.40% 512.66 74.42 438.24 7.260% 4,975.56
30 1972 4,400.77 9,000.00 4,400.77 12.40% 545.70 79.21 466.48 5.979% 5,739.53
31 1973 4,684.36 10,800.00 4,684.36 12.40% 580.86 84.32 496.54 5.927% 6,576.25
32 1974 4,986.23 13,200.00 4,986.23 12.40% 618.29 89.75 528.54 6.646% 7,541.85
33 1975 5,307.56 14,100.00 5,307.56 12.40% 658.14 95.54 562.60 7.490% 8,669.33
34 1976 5,649.59 15,300.00 5,649.59 12.40% 700.55 101.69 598.86 7.396% 9,909.37
35 1977 6,013.66 16,500.00 6,013.66 12.40% 745.69 108.25 637.45 7.313% 11,271.50
36 1978 6,401.19 17,700.00 6,401.19 12.40% 793.75 115.22 678.53 7.083% 12,748.38
37 1979 6,813.70 22,900.00 6,813.70 12.40% 844.90 122.65 722.25 8.198% 14,515.75
38 1980 7,252.79 25,900.00 7,252.79 12.40% 899.35 130.55 768.80 9.115% 16,607.65
39 1981 7,720.17 29,700.00 7,720.17 12.40% 957.30 138.96 818.34 11.000% 19,252.83
40 1982 8,217.68 32,400.00 8,217.68 12.40% 1,018.99 147.92 871.07 13.333% 22,690.89
41 1983 8,747.24 35,700.00 8,747.24 12.40% 1,084.66 157.45 927.21 12.865% 26,537.28
42 1984 9,310.94 37,800.00 9,310.94 12.40% 1,154.56 167.60 986.96 10.135% 30,213.79
43 1985 9,910.95 39,600.00 9,910.95 12.40% 1,228.96 178.40 1,050.56 12.396% 35,009.65
44 1986 10,549.64 42,000.00 10,549.64 12.40% 1,308.16 189.89 1,118.26 10.781% 39,902.30
45 1987 11,229.48 43,800.00 11,229.48 12.40% 1,392.46 202.13 1,190.32 7.906% 44,247.30
46 1988 11,953.13 45,000.00 11,953.13 12.40% 1,482.19 215.16 1,267.03 8.396% 49,229.34
47 1989 12,723.42 48,000.00 12,723.42 12.40% 1,577.70 229.02 1,348.68 8.823% 54,921.53
48 1990 13,543.34 51,300.00 13,543.34 12.40% 1,679.37 243.78 1,435.59 8.656% 61,111.13
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 8.625% 67,910.07
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 7.958% 74,940.94
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 7.083% 81,980.40
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 6.062% 88,793.03
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 7.052% 97,016.46
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 6.875% 105,774.51
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 6.594% 114,972.01
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 6.594% 124,919.22
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 5.625% 134,464.36
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 5.865% 145,031.43
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 6.240% 156,934.87
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 5.229% 168,178.35
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 4.073% 178,261.36
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 4.271% 189,316.34
63 2005 34,558.68 90,000.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 4.312% 201,142.88
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 4.823% 214,743.29
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 4.656% 228,892.30
66 2008 41,679.58 102,000.00 41,679.58 12.40% 5,168.27 750.23 4,418.04 3.635% 241,630.58
----------------
TOT 69,554.79 6.96% AVG

73
ILLUSTRATION 3 CONTINUED
ANNUAL INFLATION ADJ USTED EARN ON ACCUM YEARS
AGE YEAR BENEFIT FACTOR BENEFIT ASSETS BALANCE RETIRED
241,630.58
67 2009 14,145.42 1.000 13,714.13 14,497.83 242,414.28 1
68 2010 14,145.42 1.040 14,711.24 14,544.86 242,247.90 2
69 2011 14,145.42 1.082 15,299.69 14,534.87 241,483.09 3
70 2012 14,145.42 1.125 15,911.67 14,488.99 240,060.40 4
71 2013 14,145.42 1.170 16,548.14 14,403.62 237,915.88 5
72 2014 14,145.42 1.217 17,210.07 14,274.95 234,980.77 6
73 2015 14,145.42 1.265 17,898.47 14,098.85 231,181.15 7
74 2016 14,145.42 1.316 18,614.41 13,870.87 226,437.61 8
75 2017 14,145.42 1.369 19,358.98 13,586.26 220,664.88 9
76 2018 14,145.42 1.423 20,133.34 13,239.89 213,771.43 10
77 2019 14,145.42 1.480 20,938.68 12,826.29 205,659.04 11
78 2020 14,145.42 1.539 21,776.22 12,339.54 196,222.36 12
79 2021 14,145.42 1.601 22,647.27 11,773.34 185,348.42 13
80 2022 14,145.42 1.665 23,553.16 11,120.91 172,916.17 14
81 2023 14,145.42 1.732 24,495.29 10,374.97 158,795.84 15
82 2024 14,145.42 1.801 25,475.10 9,527.75 142,848.49 16
83 2025 14,145.42 1.873 26,494.11 8,570.91 124,925.30 17
84 2026 14,145.42 1.948 27,553.87 7,495.52 104,866.94 18
85 2027 14,145.42 2.026 28,656.03 6,292.02 82,502.93 19
86 2028 14,145.42 2.107 29,802.27 4,950.18 57,650.84 20
87 2029 14,145.42 2.191 30,994.36 3,459.05 30,115.54 21
88 2030 14,145.42 2.279 32,234.13 1,806.93 -311.66 22
89 2031 14,145.42 2.370 33,523.50 -18.70 -33,853.86 23
90 2032 14,145.42 2.465 34,864.44 -2,031.23 -70,749.53 24
91 2033 14,145.42 2.563 36,259.01 -4,244.97 -111,253.51 25
92 2034 14,145.42 2.666 37,709.37 -6,675.21 -155,638.10 26

TOTAL BENEFITS PAID IN FIRST 18 YEARS 362,333.85


TOTAL OF CONTRIBUTIONS MADE DURING CAREER 69,554.79
--------------------
DIVIDE BENEFITS PAID DURING LIFE BY CONTRIBUTIONS 5.21
AVG PARTICIPANTS BENEFITS ARE OVER 5 TIMES CONTRIBUTIONS

This third illustration shows what the accumulation of assets


would have been at current contribution levels, and projected
payouts of Social Security using a 6% post retirement earnings
assumption and a 4% factor for an annual inflation adjustment.
The projection indicates the assets would last 22 years. This is
longer than the life expectancy of our hypothetical participant.
This illustration indicates that current contribution levels would
be sufficient to fund an ongoing plan if sufficient assets were
contributed to fund the shortfall caused by Congress, which has
been spending the Social Security Surplus. No tax increase or
benefit cuts would be necessary. To put the second and third
illustrations in context, we need to review the history of the
Social Security System. Prior to 1984 the contribution levels had
been increasing at a steady rate because of the need to pay
benefits on a pay as you go basis.
The rates were originally very low because the the plan had not

74
matured to the point where a substantial amount of benefits
were being paid out. This situation allowed tax rates to be low
and relatively painless ( even though no amount of tax is
painless ). The increase in rates over time caused the level of
pain from this regressive tax, imposed on every dollar earned
by our average participant, to increase sharply. In 1983 the
benefit formula was changed to raise the retirement age for full
benefits from 65 to 67. An additional requirement was made to
the benefit formula to require 35 years of covered service to get
a full benefit. The change in the retirement age was phased in
over time with the retirement age of 67 applying to individuals
born after 1954.
The tax rate was also increased effective in 1984 and again in
1985, 1988 and 1990. In addition to the increase in tax rates,
there has been a continuous increase in the amount of a
person's salary subject to the tax. In 1960 when our
hypothetical participant entered the work force the maximum
salary subject to this tax was $4,200. In 2008 when our
participant retired the maximum salary subject to the tax was
$102,000. These maximums have always been above the
average pay levels and result in higher income individuals
subsidizing the benefit of the people at the lower end of the pay
scale, because the benefit formula only generates a 15%
benefit from the higher levels of income.
The reduction in benefits, combined with the increase in the tax
rates from the 1983 law changes, resulted in a surplus which
should have been invested to pay for future benefits. Instead of
setting up an actual trust fund, Congress spent the money and
created a fictitious trust fund which is nothing more than an
accounting entry on the books at the Treasury Department.
I once had a concurrent examination of a pension plan with a
Department of Labor criminal investigator. When discussing the
actions of Congress in regard to spending the Social Security
surplus, this individual stated that, if he found a corporate plan
where the assets were raided like Social Security funds are
being raided, he would write up the case to have the plan
trustees prosecuted for embezzlement. This action is not
currently an option with Social Security since the tax revenue
collected is put in the General Fund where Congress has the
ability to spend it. If the contributions to OASDI/Medicare were
put in an actual trust fund, where the money was required to be
invested under strict fiduciary standards, any looting of the

75
funds would subject those responsible for absconding with the
money to prosecution for embezzlement.
The only way to describe the actions of Congress is to say they
are criminal. It is going to cost the taxpayers $5 to replace
every $1 dollar pilfered by Congress. We must change the
system to stop the fiscal misfeasance of Congress. If the voters
do not replace the people responsible for the current mess, this
country will be facing national bankruptcy. The working people
simply can not tolerate an increase in the payroll tax, which is
what our current representatives in Washington will pass, if we
leave them in office.

76
ILLUSTRATION 4

SPREADSHEET TO ILLUSTRATE GROWTH IN ASSETS FROM SOCIAL SECURITY CONTRIBUTIONS WITH EARNINGS AT 8%

ASSUMED POST RETIREMENT AVERAGE RATE OF RETURN ON INVESTED ASSETS: 8.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

ASSUMED STARTING SALARY: 2,080.00

ASSSUMED ANNUAL PREMIUM COST FOR DISABILITY BENEFITS: 1.80%

ASSSUMED POST RETIREMENT COST OF LIVING ADJ USTMENT: 4.00%

WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INTEREST ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT COST CONT RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 4.50% 93.60 37.44 56.16 NA 56.16
19 1961 2,214.04 4,800.00 2,214.04 6.00% 132.84 39.85 92.99 8.000% 153.64
20 1962 2,356.72 4,800.00 2,356.72 6.00% 141.40 42.42 98.98 8.000% 264.92
21 1963 2,508.59 4,800.00 2,508.59 6.25% 156.79 45.15 111.63 8.000% 397.74
22 1964 2,670.25 4,800.00 2,670.25 7.25% 193.59 48.06 145.53 8.000% 575.09
23 1965 2,842.33 4,800.00 2,842.33 7.25% 206.07 51.16 154.91 8.000% 776.00
24 1966 3,025.49 6,600.00 3,025.49 7.25% 219.35 54.46 164.89 8.000% 1,002.97
25 1967 3,220.46 6,600.00 3,220.46 7.70% 247.98 57.97 190.01 8.000% 1,273.22
26 1968 3,427.99 7,800.00 3,427.99 7.80% 267.38 61.70 205.68 8.000% 1,580.75
27 1969 3,648.90 7,800.00 3,648.90 7.60% 277.32 65.68 211.64 8.000% 1,918.85
28 1970 3,884.04 7,800.00 3,884.04 8.40% 326.26 69.91 256.35 8.000% 2,328.71
29 1971 4,134.34 7,800.00 4,134.34 8.40% 347.28 74.42 272.87 8.000% 2,787.87
30 1972 4,400.77 9,000.00 4,400.77 9.20% 404.87 79.21 325.66 8.000% 3,336.56
31 1973 4,684.36 10,800.00 4,684.36 9.20% 430.96 84.32 346.64 8.000% 3,950.12
32 1974 4,986.23 13,200.00 4,986.23 9.70% 483.66 89.75 393.91 8.000% 4,660.05
33 1975 5,307.56 14,100.00 5,307.56 9.90% 525.45 95.54 429.91 8.000% 5,462.76
34 1976 5,649.59 15,300.00 5,649.59 9.90% 559.31 101.69 457.62 8.000% 6,357.40
35 1977 6,013.66 16,500.00 6,013.66 9.90% 595.35 108.25 487.11 8.000% 7,353.10
36 1978 6,401.19 17,700.00 6,401.19 9.90% 633.72 115.22 518.50 8.000% 8,459.84
37 1979 6,813.70 22,900.00 6,813.70 10.10% 688.18 122.65 565.54 8.000% 9,702.16
38 1980 7,252.79 25,900.00 7,252.79 10.16% 736.88 130.55 606.33 8.000% 11,084.67
39 1981 7,720.17 29,700.00 7,720.17 10.16% 784.37 138.96 645.41 8.000% 12,616.85
40 1982 8,217.68 32,400.00 8,217.68 10.70% 879.29 147.92 731.37 8.000% 14,357.57
41 1983 8,747.24 35,700.00 8,747.24 10.80% 944.70 157.45 787.25 8.000% 16,293.43
42 1984 9,310.94 37,800.00 9,310.94 10.80% 1,005.58 167.60 837.98 8.000% 18,434.89
43 1985 9,910.95 39,600.00 9,910.95 11.10% 1,100.12 178.40 921.72 8.000% 20,831.40
44 1986 10,549.64 42,000.00 10,549.64 11.40% 1,202.66 189.89 1,012.77 8.000% 23,510.68
45 1987 11,229.48 43,800.00 11,229.48 11.40% 1,280.16 202.13 1,078.03 8.000% 26,469.56
46 1988 11,953.13 45,000.00 11,953.13 11.40% 1,362.66 215.16 1,147.50 8.000% 29,734.63
47 1989 12,723.42 48,000.00 12,723.42 12.12% 1,542.08 229.02 1,313.06 8.000% 33,426.45
48 1990 13,543.34 51,300.00 13,543.34 12.12% 1,641.45 243.78 1,397.67 8.000% 37,498.24
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 8.000% 42,026.21
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 8.000% 47,014.89
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 8.000% 52,507.48
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 8.000% 58,551.06
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 8.000% 65,196.88
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 8.000% 72,500.80
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 8.000% 80,523.59
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 8.000% 89,331.44
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 8.000% 98,996.39
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 8.000% 109,596.83
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 8.000% 121,218.05
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 8.000% 133,952.86
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 8.000% 147,902.19
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 8.000% 163,175.81
63 2005 34,558.68 87,900.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 8.000% 179,893.09
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 8.000% 198,183.83
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 8.000% 218,189.10
66 2008 41,679.58 102,000.00 41,679.58 2 12.40% 5,168.27 750.23 4,418.04 8.000% 240,062.26
-----------------
TOTAL 65,228.92 8.00% AVG RATE

77
ILLUSTRATION 4 CONTINUED

SPREADSHEET TO ILLUSTRATE PAYMENT OF BENEFITS USING A 6% POST RETIREMENT EARNINGS RATE.

ANNUAL INFLATION ADJ USTED EARN ON ACCUM YEARS


AGE YEAR BENEFIT FACTOR BENEFIT ASSETS BALANCE RETIRED
240,062.26
67 2009 14,145.42 1.000 13,714.13 19,204.98 245,553.11 1
68 2010 14,145.42 1.040 14,711.24 19,644.25 250,486.12 2
69 2011 14,145.42 1.082 15,299.69 20,038.89 255,225.33 3
70 2012 14,145.42 1.125 15,911.67 20,418.03 259,731.68 4
71 2013 14,145.42 1.170 16,548.14 20,778.53 263,962.07 5
72 2014 14,145.42 1.217 17,210.07 21,116.97 267,868.97 6
73 2015 14,145.42 1.265 17,898.47 21,429.52 271,400.02 7
74 2016 14,145.42 1.316 18,614.41 21,712.00 274,497.62 8
75 2017 14,145.42 1.369 19,358.98 21,959.81 277,098.44 9
76 2018 14,145.42 1.423 20,133.34 22,167.88 279,132.97 10
77 2019 14,145.42 1.480 20,938.68 22,330.64 280,524.94 11
78 2020 14,145.42 1.539 21,776.22 22,441.99 281,190.71 12
79 2021 14,145.42 1.601 22,647.27 22,495.26 281,038.69 13
80 2022 14,145.42 1.665 23,553.16 22,483.10 279,968.62 14
81 2023 14,145.42 1.732 24,495.29 22,397.49 277,870.82 15
82 2024 14,145.42 1.801 25,475.10 22,229.67 274,625.38 16
83 2025 14,145.42 1.873 26,494.11 21,970.03 270,101.31 17
84 2026 14,145.42 1.948 27,553.87 21,608.10 264,155.54 18
85 2027 14,145.42 2.026 28,656.03 21,132.44 256,631.96 19
86 2028 14,145.42 2.107 29,802.27 20,530.56 247,360.25 20
87 2029 14,145.42 2.191 30,994.36 19,788.82 236,154.71 21
88 2030 14,145.42 2.279 32,234.13 18,892.38 222,812.96 22
89 2031 14,145.42 2.370 33,523.50 17,825.04 207,114.50 23
90 2032 14,145.42 2.465 34,864.44 16,569.16 188,819.22 24
91 2033 14,145.42 2.563 36,259.01 15,105.54 167,665.74 25
92 2034 14,145.42 2.666 37,709.37 13,413.26 143,369.63 26
93 2035 14,145.42 2.772 39,217.75 11,469.57 115,621.45 27
94 2036 14,145.42 2.883 40,786.46 9,249.72 84,084.71 28
95 2037 14,145.42 2.999 42,417.92 6,726.78 48,393.57 29
96 2038 14,145.42 3.119 44,114.63 3,871.49 8,150.42 30
97 2039 14,145.42 3.243 45,879.22 652.03 -37,076.77 31

This illustration shows that contributions made using historical


rates, for our hypothetical participant, would have lasted for 30
years, if the contributions had been made to an actual trust
fund with average earnings of 8%. This is further verification
that no increase in tax rates or benefit cuts are needed.

78
ILLUSTRATION 5

SPREADSHEET TO ILLUSTRATE GROWTH IN ASSETS USING CURRENT SOCIAL SECURITY CONTRIBUTION RATES.

ASSUMED POST RETIREMENT AVERAGE RETURN ON INVESTED ASSETS: 8.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

ASSUMED STARTING SALARY: 2,080.00

ASSSUMED ANNUAL PREMIUM COST FOR DISABILITY BENEFITS: 1.80%

ASSSUMED POST RETIREMENT COST OF LIVING ADJ USTMENT: 4.00%

WAGES OR MAXIMUM APPLICABLE SOC SEC SOC SEC DISAB INVESTABLE INT ACCUM
AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT COST CONT RATE BALANCE
18 1960 2,080.00 4,800.00 2,080.00 12.40% 257.92 37.44 220.48 NA 220.48
19 1961 2,214.04 4,800.00 2,214.04 12.40% 274.54 39.85 234.69 8.000% 472.81
20 1962 2,356.72 4,800.00 2,356.72 12.40% 292.23 42.42 249.81 8.000% 760.44
21 1963 2,508.59 4,800.00 2,508.59 12.40% 311.07 45.15 265.91 8.000% 1,087.19
22 1964 2,670.25 4,800.00 2,670.25 12.40% 331.11 48.06 283.05 8.000% 1,457.21
23 1965 2,842.33 4,800.00 2,842.33 12.40% 352.45 51.16 301.29 8.000% 1,875.07
24 1966 3,025.49 6,600.00 3,025.49 12.40% 375.16 54.46 320.70 8.000% 2,345.78
25 1967 3,220.46 6,600.00 3,220.46 12.40% 399.34 57.97 341.37 8.000% 2,874.81
26 1968 3,427.99 7,800.00 3,427.99 12.40% 425.07 61.70 363.37 8.000% 3,468.17
27 1969 3,648.90 7,800.00 3,648.90 12.40% 452.46 65.68 386.78 8.000% 4,132.40
28 1970 3,884.04 7,800.00 3,884.04 12.40% 481.62 69.91 411.71 8.000% 4,874.70
29 1971 4,134.34 7,800.00 4,134.34 12.40% 512.66 74.42 438.24 8.000% 5,702.92
30 1972 4,400.77 9,000.00 4,400.77 12.40% 545.70 79.21 466.48 8.000% 6,625.63
31 1973 4,684.36 10,800.00 4,684.36 12.40% 580.86 84.32 496.54 8.000% 7,652.23
32 1974 4,986.23 13,200.00 4,986.23 12.40% 618.29 89.75 528.54 8.000% 8,792.95
33 1975 5,307.56 14,100.00 5,307.56 12.40% 658.14 95.54 562.60 8.000% 10,058.98
34 1976 5,649.59 15,300.00 5,649.59 12.40% 700.55 101.69 598.86 8.000% 11,462.56
35 1977 6,013.66 16,500.00 6,013.66 12.40% 745.69 108.25 637.45 8.000% 13,017.01
36 1978 6,401.19 17,700.00 6,401.19 12.40% 793.75 115.22 678.53 8.000% 14,736.90
37 1979 6,813.70 22,900.00 6,813.70 12.40% 844.90 122.65 722.25 8.000% 16,638.10
38 1980 7,252.79 25,900.00 7,252.79 12.40% 899.35 130.55 768.80 8.000% 18,737.95
39 1981 7,720.17 29,700.00 7,720.17 12.40% 957.30 138.96 818.34 8.000% 21,055.32
40 1982 8,217.68 32,400.00 8,217.68 12.40% 1,018.99 147.92 871.07 8.000% 23,610.82
41 1983 8,747.24 35,700.00 8,747.24 12.40% 1,084.66 157.45 927.21 8.000% 26,426.89
42 1984 9,310.94 37,800.00 9,310.94 12.40% 1,154.56 167.60 986.96 8.000% 29,528.00
43 1985 9,910.95 39,600.00 9,910.95 12.40% 1,228.96 178.40 1,050.56 8.000% 32,940.80
44 1986 10,549.64 42,000.00 10,549.64 12.40% 1,308.16 189.89 1,118.26 8.000% 36,694.33
45 1987 11,229.48 43,800.00 11,229.48 12.40% 1,392.46 202.13 1,190.32 8.000% 40,820.20
46 1988 11,953.13 45,000.00 11,953.13 12.40% 1,482.19 215.16 1,267.03 8.000% 45,352.85
47 1989 12,723.42 48,000.00 12,723.42 12.40% 1,577.70 229.02 1,348.68 8.000% 50,329.76
48 1990 13,543.34 51,300.00 13,543.34 12.40% 1,679.37 243.78 1,435.59 8.000% 55,791.73
49 1991 14,416.11 53,400.00 14,416.11 12.40% 1,787.60 259.49 1,528.11 8.000% 61,783.18
50 1992 15,345.11 55,500.00 15,345.11 12.40% 1,902.79 276.21 1,626.58 8.000% 68,352.42
51 1993 16,333.98 57,600.00 16,333.98 12.40% 2,025.41 294.01 1,731.40 8.000% 75,552.01
52 1994 17,386.58 60,600.00 17,386.58 12.40% 2,155.94 312.96 1,842.98 8.000% 83,439.15
53 1995 18,507.01 61,200.00 18,507.01 12.40% 2,294.87 333.13 1,961.74 8.000% 92,076.03
54 1996 19,699.64 62,700.00 19,699.64 12.40% 2,442.76 354.59 2,088.16 8.000% 101,530.27
55 1997 20,969.13 65,400.00 20,969.13 12.40% 2,600.17 377.44 2,222.73 8.000% 111,875.42
56 1998 22,320.43 68,400.00 22,320.43 12.40% 2,767.73 401.77 2,365.97 8.000% 123,191.42
57 1999 23,758.81 72,600.00 23,758.81 12.40% 2,946.09 427.66 2,518.43 8.000% 135,565.17
58 2000 25,289.88 76,200.00 25,289.88 12.40% 3,135.94 455.22 2,680.73 8.000% 149,091.11
59 2001 26,919.61 80,400.00 26,919.61 12.40% 3,338.03 484.55 2,853.48 8.000% 163,871.87
60 2002 28,654.37 84,900.00 28,654.37 12.40% 3,553.14 515.78 3,037.36 8.000% 180,018.99
61 2003 30,500.92 87,000.00 30,500.92 12.40% 3,782.11 549.02 3,233.10 8.000% 197,653.60
62 2004 32,466.47 87,900.00 32,466.47 12.40% 4,025.84 584.40 3,441.45 8.000% 216,907.34
63 2005 34,558.68 90,000.00 34,558.68 12.40% 4,285.28 622.06 3,663.22 8.000% 237,923.14
64 2006 36,785.72 94,200.00 36,785.72 12.40% 4,561.43 662.14 3,899.29 8.000% 260,856.28
65 2007 39,156.27 97,500.00 39,156.27 12.40% 4,855.38 704.81 4,150.56 8.000% 285,875.35
66 2008 41,679.58 102,000.00 41,679.58 12.40% 5,168.27 750.23 4,418.04 8.000% 313,163.41
----------------
TOT 69,554.79 8.00% AVG

79
ILLUSTRATION 5 CONTINUED

SPREADSHEET TO ILLUSTRATE GROWTH IN ASSETS USING CURRENT SOCIAL SECURITY CONTRIBUTIONS EARNING 8%

ANNUAL INFLATION ADJ USTED EARN ON ACCUM YEARS


AGE YEAR BENEFIT FACTOR BENEFIT ASSETS BALANCE RETIRED
313,163.41
67 2009 14,145.42 1.000 14,145.42 25,053.07 324,071.06 1
68 2010 14,145.42 1.040 14,711.24 25,925.69 335,285.51 2
69 2011 14,145.42 1.082 15,299.69 26,822.84 346,808.67 3
70 2012 14,145.42 1.125 15,911.67 27,744.69 358,641.69 4
71 2013 14,145.42 1.170 16,548.14 28,691.33 370,784.88 5
72 2014 14,145.42 1.217 17,210.07 29,662.79 383,237.61 6
73 2015 14,145.42 1.265 17,898.47 30,659.01 395,998.15 7
74 2016 14,145.42 1.316 18,614.41 31,679.85 409,063.59 8
75 2017 14,145.42 1.369 19,358.98 32,725.09 422,429.69 9
76 2018 14,145.42 1.423 20,133.34 33,794.38 436,090.72 10
77 2019 14,145.42 1.480 20,938.68 34,887.26 450,039.31 11
78 2020 14,145.42 1.539 21,776.22 36,003.14 464,266.23 12
79 2021 14,145.42 1.601 22,647.27 37,141.30 478,760.25 13
80 2022 14,145.42 1.665 23,553.16 38,300.82 493,507.91 14
81 2023 14,145.42 1.732 24,495.29 39,480.63 508,493.25 15
82 2024 14,145.42 1.801 25,475.10 40,679.46 523,697.61 16
83 2025 14,145.42 1.873 26,494.11 41,895.81 539,099.31 17
84 2026 14,145.42 1.948 27,553.87 43,127.94 554,673.38 18
85 2027 14,145.42 2.026 28,656.03 44,373.87 570,391.23 19
86 2028 14,145.42 2.107 29,802.27 45,631.30 586,220.26 20

This illustration 5 shows the effect of using an 8% earnings


assumption and the current contribution rates for our
hypothetical average participant's entire working career. In this
situation the assets would grow to the point where benefits
could be paid forever because they are being paid from interest
on a continuously growing pile of invested assets. This type of
annuity is known as a perpetuity because it can be paid forever.
This illustration also shows the power of compound interest with
only a small increase in the earnings on assets. The average of
the returns was 6.96% using the historical earnings credited to
the participant's account ( shown in illustration 3 ). When this
was increased to 8%, our benefit payments were increased to a
perpetuity. This increase in assets is important because the
current structure of the Medicare program is a disaster.

80
 EVALUATION OF THE MEDICARE FUNDING MODEL
The following illustrations show the structural problems in the
Medicare system.
ILLUSTRATION 6 – MEDICARE ASSETS AND PAYMENTS USING HISTORICAL CONTRBUTIONS AND RATES.

SPREADSHEET TO ILLUSTRATE THE GROWTH IN MEDICARE CONTRIBUTIONS AND COSTS USING


HISTORICAL CONTRIBUTION PERCENTAGES. MEDICARE STARTED IN 1965.

ASSUMED AVERAGE RATE OF RETURN ON POST RETIREMENT ASSETS: 6.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.3000853%

ASSUMED STARTING SALARY: 3,012.85

ASSUMED POST RETIREMENT INCREASE IN MEDICAL COSTS: 8.00%

WAGES OR MAXIMUM APPLICABLE MEDICARE MEDICARE INT RATE INV ACCUM


AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT $ APPLIED EARNINGS BALANCE
23 1965 3,012.85 6,600.00 3,012.85 0.70% 21.09 0.000% NA 21.09
24 1966 3,202.67 6,600.00 3,202.67 1.20% 38.43 4.948% 1.04 60.57
25 1967 3,404.44 7,800.00 3,404.44 1.20% 40.85 4.958% 3.00 104.42
26 1968 3,618.92 7,800.00 3,618.92 1.20% 43.43 5.479% 5.72 153.57
27 1969 3,846.91 7,800.00 3,846.91 1.20% 46.16 6.594% 10.13 209.86
28 1970 4,089.27 7,800.00 4,089.27 1.20% 49.07 7.260% 15.24 274.17
29 1971 4,346.90 9,000.00 4,346.90 1.20% 52.16 5.979% 16.39 342.72
30 1972 4,620.76 10,800.00 4,620.76 2.00% 92.42 5.927% 20.31 455.45
31 1973 4,911.87 13,200.00 4,911.87 1.80% 88.41 6.646% 30.27 574.13
32 1974 5,221.32 14,100.00 5,221.32 1.80% 93.98 7.490% 43.00 711.12
33 1975 5,550.27 15,300.00 5,550.27 1.80% 99.90 7.396% 52.59 863.62
34 1976 5,899.94 16,500.00 5,899.94 1.80% 106.20 7.313% 63.16 1,032.97
35 1977 6,271.64 17,700.00 6,271.64 2.00% 125.43 7.083% 73.17 1,231.57
36 1978 6,666.76 22,900.00 6,666.76 2.10% 140.00 8.198% 100.96 1,472.54
37 1979 7,086.77 25,900.00 7,086.77 2.60% 184.26 9.115% 134.22 1,791.02
38 1980 7,533.25 29,700.00 7,533.25 2.60% 195.86 11.000% 197.01 2,183.89
39 1981 8,007.85 32,400.00 8,007.85 2.60% 208.20 13.333% 291.18 2,683.27
40 1982 8,512.35 35,700.00 8,512.35 2.60% 221.32 12.865% 345.20 3,249.80
41 1983 9,048.63 37,800.00 9,048.63 2.60% 235.26 10.135% 329.37 3,814.43
42 1984 9,618.70 39,600.00 9,618.70 2.70% 259.71 12.396% 472.84 4,546.97
43 1985 10,224.69 42,000.00 10,224.69 2.90% 296.52 10.781% 490.21 5,333.70
44 1986 10,868.86 43,800.00 10,868.86 2.90% 315.20 7.906% 421.68 6,070.58
45 1987 11,553.60 45,000.00 11,553.60 2.90% 335.05 8.396% 509.69 6,915.32
46 1988 12,281.49 48,000.00 12,281.49 2.90% 356.16 8.823% 610.14 7,881.62
47 1989 13,055.23 51,300.00 13,055.23 2.90% 378.60 8.656% 682.23 8,942.45
48 1990 13,877.72 53,400.00 13,877.72 2.90% 402.45 8.625% 771.29 10,116.19
49 1991 14,752.03 55,500.00 14,752.03 2.90% 427.81 7.958% 805.05 11,349.05
50 1992 15,681.42 57,600.00 15,681.42 2.90% 454.76 7.083% 803.85 12,607.66
51 1993 16,669.37 60,600.00 16,669.37 2.90% 483.41 6.062% 764.28 13,855.35
52 1994 17,719.55 61,200.00 17,719.55 2.90% 513.87 7.052% 977.08 15,346.30
53 1995 18,835.90 62,700.00 18,835.90 2.90% 546.24 6.875% 1,055.06 16,947.60
54 1996 20,022.58 65,400.00 20,022.58 2.90% 580.65 6.594% 1,117.52 18,645.78
55 1997 21,284.02 68,400.00 21,284.02 2.90% 617.24 6.594% 1,229.50 20,492.51
56 1998 22,624.93 72,600.00 22,624.93 2.90% 656.12 5.625% 1,152.70 22,301.34
57 1999 24,050.32 76,200.00 24,050.32 2.90% 697.46 5.865% 1,307.97 24,306.77
58 2000 25,565.51 80,400.00 25,565.51 2.90% 741.40 6.240% 1,516.74 26,564.92
59 2001 27,176.16 84,900.00 27,176.16 2.90% 788.11 5.229% 1,389.08 28,742.10
60 2002 28,888.28 87,000.00 28,888.28 2.90% 837.76 4.865% 1,398.30 30,978.17
61 2003 30,708.26 87,900.00 30,708.26 2.90% 890.54 4.073% 1,261.74 33,130.45
62 2004 32,642.91 90,000.00 32,642.91 2.90% 946.64 4.271% 1,415.00 35,492.09
63 2005 34,699.44 94,200.00 34,699.44 2.90% 1,006.28 4.312% 1,530.42 38,028.80
64 2006 36,885.53 94,200.00 36,885.53 2.90% 1,069.68 4.312% 1,639.80 40,738.28
65 2007 39,209.35 94,200.00 39,209.35 2.90% 1,137.07 4.312% 1,756.63 43,631.98
66 2008 41,679.58 94,200.00 41,679.58 2.90% 1,208.71 4.312% 1,881.41 46,722.10

81
ILLUSTRATION 6 CONTINUED

THE ANNUAL HEALTH COST OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE IS ONE VARIABLE LISTED AT THE TOP OF THE SPREADSHEET.
THE 11899.44 HEALTH CARE COST IS FROM INCREASING THE PRIOR YEARS COST BY 8%.

THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.

PER PERSON MEDICARE PAYMENT IN 2008 AS A STARTING FIGURE: 11,018.00

BALANCE MEDICARE REMAINING


FORWARD EARNINGS PREMIUM PAYMENT BALANCE
67 2009 46,722.10 2,803.33 1,156.80 11,899.44 38,782.79
68 2010 38,782.79 2,326.97 1,249.34 12,851.40 29,507.71
69 2011 29,507.71 1,770.46 1,349.29 13,879.51 18,747.95
70 2012 18,747.95 1,124.88 1,457.23 14,989.87 6,340.20
71 2013 6,340.20 380.41 1,573.81 16,189.06 -7,894.63
72 2014 -7,894.63 -473.68 1,699.72 17,484.18 -24,152.77
73 2015 -24,152.77 -1,449.17 1,835.70 18,882.92 -42,649.16

This illustration shows that, based on historical rates of


contributions and credited earnings, the Medicare assets at
retirement for our hypothetical participant will only last for four
years. The 6% post retirement earnings is being used to be
consistent with the Social Security illustrations, and the 8% post
retirement increases in health care cost is being used because
the Social Security actuaries estimate that an 8 or 9 percent
increase in health care cost is probable.
The average salary of 41,679.581 in 2008 is taken from figures
provided in the 2009 OASDI Annual Report.
The average medical expense of $11,0182 in 2008 is taken from
figures provided in the 2009 Medicare Annual Report.

82
ILLUSTRATION 7 – MEDICARE ASSETS AND PAYMENTS USING HISTORICAL CONTRBUTIONS AT AN 8% EARNINGS RATE.

SPREADSHEET TO ILLUSTRATE THE GROWTH IN MEDICARE CONTRIBUTIONS AND COSTS USING


HISTORICAL CONTRIBUTION PERCENTAGES AND AN 8% EARNINGS RATE. MEDICARE STARTED IN 1965.

ASSUMED AVERAGE RATE OF RETURN ON POST RETIREMENT ASSETS: 8.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.3000853%

ASSUMED STARTING SALARY: 3,012.85

ASSUMED POST RETIREMENT INCREASE IN MEDICAL COSTS: 8.00%

WAGES OR MAX APPLICABLE MEDICARE MEDICARE INT RATE INV ACCUM


AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT APPLIED EARNINGS BALANCE
23 1965 3,012.85 6,600.00 3,012.85 0.70% 21.09 0.000% NA 21.09
24 1966 3,202.67 6,600.00 3,202.67 1.20% 38.43 8.000% 1.69 61.21
25 1967 3,404.44 7,800.00 3,404.44 1.20% 40.85 8.000% 4.90 106.96
26 1968 3,618.92 7,800.00 3,618.92 1.20% 43.43 8.000% 8.56 158.94
27 1969 3,846.91 7,800.00 3,846.91 1.20% 46.16 8.000% 12.72 217.82
28 1970 4,089.27 7,800.00 4,089.27 1.20% 49.07 8.000% 17.43 284.32
29 1971 4,346.90 9,000.00 4,346.90 1.20% 52.16 8.000% 22.75 359.23
30 1972 4,620.76 10,800.00 4,620.76 2.00% 92.42 8.000% 28.74 480.38
31 1973 4,911.87 13,200.00 4,911.87 1.80% 88.41 8.000% 38.43 607.22
32 1974 5,221.32 14,100.00 5,221.32 1.80% 93.98 8.000% 48.58 749.79
33 1975 5,550.27 15,300.00 5,550.27 1.80% 99.90 8.000% 59.98 909.67
34 1976 5,899.94 16,500.00 5,899.94 1.80% 106.20 8.000% 72.77 1,088.65
35 1977 6,271.64 17,700.00 6,271.64 2.00% 125.43 8.000% 87.09 1,301.17
36 1978 6,666.76 22,900.00 6,666.76 2.10% 140.00 8.000% 104.09 1,545.27
37 1979 7,086.77 25,900.00 7,086.77 2.60% 184.26 8.000% 123.62 1,853.14
38 1980 7,533.25 29,700.00 7,533.25 2.60% 195.86 8.000% 148.25 2,197.26
39 1981 8,007.85 32,400.00 8,007.85 2.60% 208.20 8.000% 175.78 2,581.24
40 1982 8,512.35 35,700.00 8,512.35 2.60% 221.32 8.000% 206.50 3,009.06
41 1983 9,048.63 37,800.00 9,048.63 2.60% 235.26 8.000% 240.73 3,485.05
42 1984 9,618.70 39,600.00 9,618.70 2.70% 259.71 8.000% 278.80 4,023.56
43 1985 10,224.69 42,000.00 10,224.69 2.90% 296.52 8.000% 321.89 4,641.96
44 1986 10,868.86 43,800.00 10,868.86 2.90% 315.20 8.000% 371.36 5,328.52
45 1987 11,553.60 45,000.00 11,553.60 2.90% 335.05 8.000% 426.28 6,089.85
46 1988 12,281.49 48,000.00 12,281.49 2.90% 356.16 8.000% 487.19 6,933.21
47 1989 13,055.23 51,300.00 13,055.23 2.90% 378.60 8.000% 554.66 7,866.46
48 1990 13,877.72 53,400.00 13,877.72 2.90% 402.45 8.000% 629.32 8,898.24
49 1991 14,752.03 55,500.00 14,752.03 2.90% 427.81 8.000% 711.86 10,037.90
50 1992 15,681.42 57,600.00 15,681.42 2.90% 454.76 8.000% 803.03 11,295.70
51 1993 16,669.37 60,600.00 16,669.37 2.90% 483.41 8.000% 903.66 12,682.76
52 1994 17,719.55 61,200.00 17,719.55 2.90% 513.87 8.000% 1,014.62 14,211.25
53 1995 18,835.90 62,700.00 18,835.90 2.90% 546.24 8.000% 1,136.90 15,894.39
54 1996 20,022.58 65,400.00 20,022.58 2.90% 580.65 8.000% 1,271.55 17,746.60
55 1997 21,284.02 68,400.00 21,284.02 2.90% 617.24 8.000% 1,419.73 19,783.57
56 1998 22,624.93 72,600.00 22,624.93 2.90% 656.12 8.000% 1,582.69 22,022.37
57 1999 24,050.32 76,200.00 24,050.32 2.90% 697.46 8.000% 1,761.79 24,481.62
58 2000 25,565.51 80,400.00 25,565.51 2.90% 741.40 8.000% 1,958.53 27,181.55
59 2001 27,176.16 84,900.00 27,176.16 2.90% 788.11 8.000% 2,174.52 30,144.18
60 2002 28,888.28 87,000.00 28,888.28 2.90% 837.76 8.000% 2,411.53 33,393.48
61 2003 30,708.26 87,900.00 30,708.26 2.90% 890.54 8.000% 2,671.48 36,955.50
62 2004 32,642.91 90,000.00 32,642.91 2.90% 946.64 8.000% 2,956.44 40,858.58
63 2005 34,699.44 94,200.00 34,699.44 2.90% 1,006.28 8.000% 3,268.69 45,133.55
64 2006 36,885.53 94,200.00 36,885.53 2.90% 1,069.68 8.000% 3,610.68 49,813.92
65 2007 39,209.35 94,200.00 39,209.35 2.90% 1,137.07 8.000% 3,985.11 54,936.10
66 2008 41,679.58 94,200.00 41,679.58 2.90% 1,208.71 8.000% 4,394.89 60,539.70

83
ILLUSTRATION 7 CONTINUED

THE ANNUAL HEALTH COST OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE VARIABLE IS LISTED AT THE TOP OF THE SPREADSHEET.
THE HEALTH CARE COST IS INCREASED FRON THE PRIOR YEAR AT AN 8% RATE.

THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.

PER PERSON MEDICARE PAYMENT IN 2008: 11,018.00

BALANCE MEDICARE REMAINING


FORWARD EARNINGS PREMIUM PAYMENT BALANCE
67 2009 60,539.70 4,843.18 1,156.80 11,899.44 54,640.23
68 2010 54,640.23 4,371.22 1,249.34 12,851.40 47,409.40
69 2011 47,409.40 3,792.75 1,349.29 13,879.51 38,671.94
70 2012 38,671.94 3,093.75 1,457.23 14,989.87 28,233.06
71 2013 28,233.06 2,258.64 1,573.81 16,189.06 15,876.46
72 2014 15,876.46 1,270.12 1,699.72 17,484.18 1,362.11
73 2015 1,362.11 108.97 1,835.70 18,882.92 -15,576.14
74 2016 -15,576.14 -1,246.09 1,982.55 20,393.55 -35,233.22
75 2017 -35,233.22 -2,818.66 2,141.16 22,025.03 -57,935.76

This illustration indicates there would only be a nominal


increase in the period for which post retirement benefits would
be funded by increasing the interest rate to 8%. Historically
there simply has not been enough time for compound interest
to work its magic, and contribution levels ( tax rates ) have not
been sufficient to fund projected benefits. In view of this
funding shortfall, the major increase in benefits for prescription
costs was an irresponsible action. Perhaps the pharmaceutical
companies who are large contributors to the re-election funds of
our Congress persons was the catalyst for this legislation. This
type of action to please a special interest demonstrates the
problem with Congress.

84
ILLUSTRATION 8 – MEDICARE ASSETS AND PAYMENTS USING CURRENT CONTRIBUTION LEVELS EARNING 8%

SPREADSHEET TO ILLUSTRATE HOW MEDICARE CONTRIBUTIONS AND COSTS WOULD HAVE GROWN USING CURRENT
CONTRIBUTION PERCENTAGES AND A 8% EARNINGS RATE. MEDICARE STARTED IN 1985.

ASSUMED AVERAGE RATE OF RETURN ON INVESTED ASSETS ASSETS: 8.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

ASSUMED STARTING SALARY: 2,080.00

ASSUMED POST RETIREMENT INCREASE IN MEDICAL COSTS: 8.00%

WAGES OR MAXIMUM APPLICABLE MEDICARE MEDICARE INT RATE INV ACCUM


AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT APPLIED EARNINGS BALANCE
18 1960 2,080.00 4,800.00 2,080.00 2.90% 60.32 0.000% NA 60.32
19 1961 2,214.04 4,800.00 2,214.04 2.90% 64.21 8.000% 4.83 129.35
20 1962 2,356.72 4,800.00 2,356.72 2.90% 68.34 8.000% 10.35 208.05
21 1963 2,508.59 4,800.00 2,508.59 2.90% 72.75 8.000% 16.64 297.44
22 1964 2,670.25 4,800.00 2,670.25 2.90% 77.44 8.000% 23.80 398.67
23 1965 2,842.33 4,800.00 2,842.33 2.90% 82.43 8.000% 31.89 512.99
24 1966 3,025.49 6,600.00 3,025.49 2.90% 87.74 8.000% 41.04 641.77
25 1967 3,220.46 6,600.00 3,220.46 2.90% 93.39 8.000% 51.34 786.51
26 1968 3,427.99 7,800.00 3,427.99 2.90% 99.41 8.000% 62.92 948.84
27 1969 3,648.90 7,800.00 3,648.90 2.90% 105.82 8.000% 75.91 1,130.56
28 1970 3,884.04 7,800.00 3,884.04 2.90% 112.64 8.000% 90.45 1,333.65
29 1971 4,134.34 7,800.00 4,134.34 2.90% 119.90 8.000% 106.69 1,560.23
30 1972 4,400.77 9,000.00 4,400.77 2.90% 127.62 8.000% 124.82 1,812.67
31 1973 4,684.36 10,800.00 4,684.36 2.90% 135.85 8.000% 145.01 2,093.53
32 1974 4,986.23 13,200.00 4,986.23 2.90% 144.60 8.000% 167.48 2,405.62
33 1975 5,307.56 14,100.00 5,307.56 2.90% 153.92 8.000% 192.45 2,751.99
34 1976 5,649.59 15,300.00 5,649.59 2.90% 163.84 8.000% 220.16 3,135.98
35 1977 6,013.66 16,500.00 6,013.66 2.90% 174.40 8.000% 250.88 3,561.26
36 1978 6,401.19 17,700.00 6,401.19 2.90% 185.63 8.000% 284.90 4,031.79
37 1979 6,813.70 22,900.00 6,813.70 2.90% 197.60 8.000% 322.54 4,551.93
38 1980 7,252.79 25,900.00 7,252.79 2.90% 210.33 8.000% 364.15 5,126.42
39 1981 7,720.17 29,700.00 7,720.17 2.90% 223.89 8.000% 410.11 5,760.42
40 1982 8,217.68 32,400.00 8,217.68 2.90% 238.31 8.000% 460.83 6,459.56
41 1983 8,747.24 35,700.00 8,747.24 2.90% 253.67 8.000% 516.77 7,230.00
42 1984 9,310.94 37,800.00 9,310.94 2.90% 270.02 8.000% 578.40 8,078.42
43 1985 9,910.95 39,600.00 9,910.95 2.90% 287.42 8.000% 646.27 9,012.11
44 1986 10,549.64 42,000.00 10,549.64 2.90% 305.94 8.000% 720.97 10,039.01
45 1987 11,229.48 43,800.00 11,229.48 2.90% 325.65 8.000% 803.12 11,167.79
46 1988 11,953.13 45,000.00 11,953.13 2.90% 346.64 8.000% 893.42 12,407.85
47 1989 12,723.42 48,000.00 12,723.42 2.90% 368.98 8.000% 992.63 13,769.46
48 1990 13,543.34 51,300.00 13,543.34 2.90% 392.76 8.000% 1,101.56 15,263.78
49 1991 14,416.11 53,400.00 14,416.11 2.90% 418.07 8.000% 1,221.10 16,902.95
50 1992 15,345.11 55,500.00 15,345.11 2.90% 445.01 8.000% 1,352.24 18,700.19
51 1993 16,333.98 57,600.00 16,333.98 2.90% 473.69 8.000% 1,496.02 20,669.89
52 1994 17,386.58 60,600.00 17,386.58 2.90% 504.21 8.000% 1,653.59 22,827.69
53 1995 18,507.01 61,200.00 18,507.01 2.90% 536.70 8.000% 1,826.22 25,190.61
54 1996 19,699.64 62,700.00 19,699.64 2.90% 571.29 8.000% 2,015.25 27,777.15
55 1997 20,969.13 65,400.00 20,969.13 2.90% 608.10 8.000% 2,222.17 30,607.43
56 1998 22,320.43 68,400.00 22,320.43 2.90% 647.29 8.000% 2,448.59 33,703.31
57 1999 23,758.81 72,600.00 23,758.81 2.90% 689.01 8.000% 2,696.27 37,088.58
58 2000 25,289.88 76,200.00 25,289.88 2.90% 733.41 8.000% 2,967.09 40,789.08
59 2001 26,919.61 80,400.00 26,919.61 2.90% 780.67 8.000% 3,263.13 44,832.87
60 2002 28,654.37 84,900.00 28,654.37 2.90% 830.98 8.000% 3,586.63 49,250.48
61 2003 30,500.92 87,000.00 30,500.92 2.90% 884.53 8.000% 3,940.04 54,075.04
62 2004 32,466.47 87,900.00 32,466.47 2.90% 941.53 8.000% 4,326.00 59,342.57
63 2005 34,558.68 90,000.00 34,558.68 2.90% 1,002.20 8.000% 4,747.41 65,092.18
64 2006 36,785.72 94,200.00 36,785.72 2.90% 1,066.79 8.000% 5,207.37 71,366.34
65 2007 39,156.27 97,500.00 39,156.27 2.90% 1,135.53 8.000% 5,709.31 78,211.18
66 2008 41,679.58 102,000.00 41,679.58 2.90% 1,208.71 8.000% 6,256.89 85,676.78

85
ILLUSTRATION 8 - CONTINUED

THE ANNUAL HEALTH COST OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE IS A VARIABLE LISTED AT THE TOP OF THE SPREADSHEET.
THE $11,899.44 HEALTH CARE COST IS FROM INCREASING THE PRIOR YEARS COST OF $11,018 BY 8%.

THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.

PER PERSON MEDICARE PAYMENT IN 2008 AS A STARTING FIGURE: 11,018.00

BALANCE MEDICARE REMAINING


FORWARD EARNINGS PREMIUM PAYMENT BALANCE
67 2009 85,676.78 6,854.14 1,156.80 11,899.44 81,788.28
68 2010 81,788.28 6,543.06 1,249.34 12,851.40 76,729.30
69 2011 76,729.30 6,138.34 1,349.29 13,879.51 70,337.43
70 2012 70,337.43 5,626.99 1,457.23 14,989.87 62,431.79
71 2013 62,431.79 4,994.54 1,573.81 16,189.06 52,811.09
72 2014 52,811.09 4,224.89 1,699.72 17,484.18 41,251.51
73 2015 41,251.51 3,300.12 1,835.70 18,882.92 27,504.41
74 2016 27,504.41 2,200.35 1,982.55 20,393.55 11,293.77
75 2017 11,293.77 903.50 2,141.16 22,025.03 -7,686.61
76 2018 -7,686.61 -614.93 2,312.45 23,787.04 -29,776.12
77 2019 -29,776.12 -2,382.09 2,497.44 25,690.00 -55,350.77

This illustration shows that if Medicare had been in place for the
entire working career of our hypothetical participant, with an
average rate of return on assets at 8%, the assets would only
fund retiree health care for 8 years when an 8% inflation
adjustment is used for cost increases caused by medical
inflation.
These illustrations demonstrate that the current funding model
for Medicare is simply not adequate to cover projected costs.
When we consider that the Old Age pension portion of Social
Security is over funded, we can consider using a combination of
both funds to cover the combined costs of both Social Security
and Medicare.

This illustration shows the need to control the costs of medical


care and limit the increases in medical costs. The only effective
way to limit the increase in costs is through free market
competition.

The following chapter shows the asset accumulation and


projected expenditures when the old age pension portion of
Social Security and the post retirement health care cost
covered by Medicare are combined.

86
EVALUATION OF A COMBINED FUNDING MODEL
ILLUSTRATION 9 – SHOWING THE EFFECT OF COMBINING SOCIAL SECURITY AND MEDICARE FUNDS
SPREADSHEET TO SHOW HOW SOCIAL SECURITY AND MEDICARE CONTRIBUTIONS AND COSTS WOULD HAVE
GROWN USING CURRENT CONTRIBUTION PERCENTAGES OVER A PARTICIPANT'S ENTIRE CAREER.

ASSUMED AVERAGE RATE OF RETURN ON INVESTED ASSETS: 8.00%

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

ASSUMED STARTING SALARY: 2,080.00

ASSUMED POST RETIREMENT INFLATION ADJUSTMENT IN BENEFITS: 4.00%

ASSUMED POST RETIREMENT INCREASE IN MEDICAL COSTS: 8.00%

WAGES OR MAXIMUM APPLICABLE INVESTABLE INVESTABLE INV ACCUM


AGE YEAR SALARY SS WAGE SS WAGE CONT % CONT EARNINGS BALANCE
18 1960 2,080.00 4,800.00 2,080.00 14.30% 297.44 0.00 297.44
19 1961 2,214.04 4,800.00 2,214.04 14.30% 316.61 24.80 638.84
20 1962 2,356.72 4,800.00 2,356.72 14.30% 337.01 52.11 1,027.96
21 1963 2,508.59 4,800.00 2,508.59 14.30% 358.73 83.24 1,469.93
22 1964 2,670.25 4,800.00 2,670.25 14.30% 381.85 118.59 1,970.37
23 1965 2,842.33 4,800.00 2,842.33 14.30% 406.45 158.63 2,535.45
24 1966 3,025.49 6,600.00 3,025.49 14.30% 432.65 203.84 3,171.93
25 1967 3,220.46 6,600.00 3,220.46 14.30% 460.53 254.75 3,887.21
26 1968 3,427.99 7,800.00 3,427.99 14.30% 490.20 311.98 4,689.39
27 1969 3,648.90 7,800.00 3,648.90 14.30% 521.79 376.15 5,587.33
28 1970 3,884.04 7,800.00 3,884.04 14.30% 555.42 446.99 6,589.74
29 1971 4,134.34 7,800.00 4,134.34 14.30% 591.21 527.18 7,708.13
30 1972 4,400.77 9,000.00 4,400.77 14.30% 629.31 616.65 8,954.09
31 1973 4,684.36 10,800.00 4,684.36 14.30% 669.86 716.33 10,340.28
32 1974 4,986.23 13,200.00 4,986.23 14.30% 713.03 827.22 11,880.53
33 1975 5,307.56 14,100.00 5,307.56 14.30% 758.98 950.44 13,589.95
34 1976 5,649.59 15,300.00 5,649.59 14.30% 807.89 1,087.20 15,485.04
35 1977 6,013.66 16,500.00 6,013.66 14.30% 859.95 1,238.80 17,583.80
36 1978 6,401.19 17,700.00 6,401.19 14.30% 915.37 1,406.70 19,905.87
37 1979 6,813.70 22,900.00 6,813.70 14.30% 974.36 1,592.47 22,472.70
38 1980 7,252.79 25,900.00 7,252.79 14.30% 1,037.15 1,797.82 25,307.66
39 1981 7,720.17 29,700.00 7,720.17 14.30% 1,103.98 2,024.61 28,436.26
40 1982 8,217.68 32,400.00 8,217.68 14.30% 1,175.13 2,274.90 31,886.29
41 1983 8,747.24 35,700.00 8,747.24 14.30% 1,250.86 2,550.90 35,688.05
42 1984 9,310.94 37,800.00 9,310.94 14.30% 1,331.46 2,855.04 39,874.56
43 1985 9,910.95 39,600.00 9,910.95 14.30% 1,417.27 3,189.96 44,481.79
44 1986 10,549.64 42,000.00 10,549.64 14.30% 1,508.60 3,558.54 49,548.93
45 1987 11,229.48 43,800.00 11,229.48 14.30% 1,605.82 3,963.91 55,118.66
46 1988 11,953.13 45,000.00 11,953.13 14.30% 1,709.30 4,409.49 61,237.45
47 1989 12,723.42 48,000.00 12,723.42 14.30% 1,819.45 4,899.00 67,955.90
48 1990 13,543.34 51,300.00 13,543.34 14.30% 1,936.70 5,436.47 75,329.07
49 1991 14,416.11 53,400.00 14,416.11 14.30% 2,061.50 6,026.33 83,416.90
50 1992 15,345.11 55,500.00 15,345.11 14.30% 2,194.35 6,673.35 92,284.60
51 1993 16,333.98 57,600.00 16,333.98 14.30% 2,335.76 7,382.77 102,003.13
52 1994 17,386.58 60,600.00 17,386.58 14.30% 2,486.28 8,160.25 112,649.66
53 1995 18,507.01 61,200.00 18,507.01 14.30% 2,646.50 9,011.97 124,308.13
54 1996 19,699.64 62,700.00 19,699.64 14.30% 2,817.05 9,944.65 137,069.83
55 1997 20,969.13 65,400.00 20,969.13 14.30% 2,998.59 10,965.59 151,034.01
56 1998 22,320.43 68,400.00 22,320.43 14.30% 3,191.82 12,082.72 166,308.55
57 1999 23,758.81 72,600.00 23,758.81 14.30% 3,397.51 13,304.68 183,010.74
58 2000 25,289.88 76,200.00 25,289.88 14.30% 3,616.45 14,640.86 201,268.05
59 2001 26,919.61 80,400.00 26,919.61 14.30% 3,849.50 16,101.44 221,219.00
60 2002 28,654.37 84,900.00 28,654.37 14.30% 4,097.58 17,697.52 243,014.10
61 2003 30,500.92 87,000.00 30,500.92 14.30% 4,361.63 19,441.13 266,816.85
62 2004 32,466.47 87,900.00 32,466.47 14.30% 4,642.70 21,345.35 292,804.91
63 2005 34,558.68 90,000.00 34,558.68 14.30% 4,941.89 23,424.39 321,171.19
64 2006 36,785.72 94,200.00 36,785.72 14.30% 5,260.36 25,693.70 352,125.24
65 2007 39,156.27 97,500.00 39,156.27 14.30% 5,599.35 28,170.02 385,894.61
66 2008 41,679.58 102,000.00 41,679.58 14.30% 5,960.18 30,871.57 422,726.36
------------------- --------------------------------------
93,833.35 328,893.01

THIS PORTION OF THE SPREADSHEET SHOWS THE ASSET ACCUMULATION FOR OUR AVERAGE
PARTICIPANT WITHOUT THE PORTION APPLICABLE TO DISABILITY AND SURVIVORS INSURANCE WHICH IS
BEING TREATED AS AN ANNUAL EXPENSE FOR INSURANCE. NO ADJUSTMENT HAS BEEN MADE
FOR MEDICARE WAGES ABOCE THE MAXIMUM SOCIAL SECURITY WAGE SINCE OUR HYOTHETICAL AVERAGE
PARTICIPANT DOES NOT HAVE ANY INCOME ABOVE THE LIMIT.

87
ILLUSTRATION 9 – CONTINUED

THE HEALTH COST PAYMENT OF $11,018 IS TAKEN FROM THE 2009 MEDICARE ANNUAL REPORT.
THE POST RETIREMENT INFLATION RATE IS A VARIABLE LISTED AT THE TOP OF THE SPREADSHEET.
THE 11,038.68 HEALTH CARE COST IS FROM INCREASING THE PRIOR YEARS COST OF $11,018 BY 8%.

THE ASSET UTILIZATION SHOWS THE BALANCE FORWARD PLUS EARNING AND PREMIUMS PAID
LESS THE COST OF BENEFITS FOR THE PARTICIPANT FOR THE YEAR.

PER PERSON MEDICARE PAYMENT IN 2008 AS A STARTING FIGURE: 11,018.00

BALANCE SOC SEC MEDICARE BENEFIT MEDICARE REMAINING


FORWARD EARNINGS BENEFIT PAYMENT TOTAL PREMIUM BALANCE
67 2009 409,375.78 32,750.06 13,876.48 11,899.44 25,775.92 1,156.80 417,506.72
68 2010 417,506.72 33,400.54 14,431.54 12,851.40 27,282.93 1,203.07 424,827.40
69 2011 424,827.40 33,986.19 15,008.80 13,879.51 28,888.31 1,251.19 431,176.48
70 2012 431,176.48 34,494.12 15,609.15 14,989.87 30,599.02 1,301.24 436,372.82
71 2013 436,372.82 34,909.83 16,233.52 16,189.06 32,422.58 1,353.29 440,213.36
72 2014 440,213.36 35,217.07 16,882.86 17,484.18 34,367.04 1,407.42 442,470.81
73 2015 442,470.81 35,397.67 17,558.17 18,882.92 36,441.09 1,463.72 442,891.11
74 2016 442,891.11 35,431.29 18,260.50 20,393.55 38,654.05 1,522.27 441,190.62
75 2017 441,190.62 35,295.25 18,990.92 22,025.03 41,015.95 1,583.16 437,053.08
76 2018 437,053.08 34,964.25 19,750.56 23,787.04 43,537.59 1,646.49 430,126.22
77 2019 430,126.22 34,410.10 20,540.58 25,690.00 46,230.58 1,712.35 420,018.08
78 2020 420,018.08 33,601.45 21,362.20 27,745.20 49,107.40 1,780.84 406,292.97
79 2021 406,292.97 32,503.44 22,216.69 29,964.81 52,181.51 1,852.07 388,466.97
80 2022 388,466.97 31,077.36 23,105.36 32,362.00 55,467.36 1,926.16 366,003.13
81 2023 366,003.13 29,280.25 24,029.57 34,950.96 58,980.53 2,003.20 338,306.05
82 2024 338,306.05 27,064.48 24,990.76 37,747.04 62,737.79 2,083.33 304,716.07
83 2025 304,716.07 24,377.29 25,990.39 40,766.80 66,757.19 2,166.66 264,502.83
84 2026 264,502.83 21,160.23 27,030.00 44,028.14 71,058.15 2,253.33 216,858.25
85 2027 216,858.25 17,348.66 28,111.20 47,550.39 75,661.60 2,343.46 160,888.78
86 2028 160,888.78 12,871.10 29,235.65 51,354.43 80,590.08 2,437.20 95,607.00
87 2029 95,607.00 7,648.56 30,405.08 55,462.78 85,867.86 2,534.69 19,922.40
88 2030 19,922.40 1,593.79 31,621.28 59,899.80 91,521.08 2,636.08 -67,368.81
89 2031 -67,368.81 -5,389.50 32,886.13 64,691.79 97,577.92 2,741.52 -167,594.71

This illustration 9 indicates that if contributions had been made


at current levels for the entire working life time of our
hypothetical average participant, there would be sufficient
assets to pay both Social Security and Medicare benefits for
over 22 years. Because our illustration shows that anticipated
assets would be more than sufficient to satisfy benefit
requirements, no increase in the level of contributions would be
required once the current funding problem is resolved. In fact, it
would become possible for a reduction in the amount of the
contributions needed to fund the plan.

The average salary of 41,679.581 and the average medical


expense of $11,0182 are the same as in the prior illustrations.

88
PROPOSALS TO RAISE TAXES OR CUT 
BENEFITS
During the last presidential campaign, candidates were asked
about saving Social Security. A couple of candidates ( Fred
Thompson and Mitt Romney ) proposed de-indexing salaries
from inflation. Their candidacies immediately went down in
flames. Others ducked the issue or proposed a bipartisan
commission to study the issue. A bipartisan commission is
political cover for politicians who plan on doing something the
voters won't like.

There have been proposals to raise taxes or cut benefits. These


proposals amount to outright theft when we consider the
computations contained in this book. The current level of
contributions ( taxes ) would provide more than enough assets,
to cover all projected benefits, if the contributions were
invested in a pension style trust fund which Congress could not
spend.

An increase in taxes would be just that, an increase in taxes. A


payroll tax increase would continue the Social Security Surplus
for a few more years so Congress could continue to spend the
surplus on various pork barrel projects. Any action which does
not stop Congress from spending the money, is not a solution to
the problem.

Another proposal is that the retirement age be increased to 70 1.


This action would result in a participant paying into the system
for 3 more years, and receiving benefits for three fewer years.
This action would also serve to extend the surplus for a few
more years, so Congress can continue to spend the surplus.

A third proposal is to means test2 the receipt of Social Security


Benefits. Such an action would be outright theft because
anyone who has retired in the last decade has already paid for
the benefits they are currently receiving. To limit or reduce the
benefits for people who have been thrifty enough ( or fortunate
enough ) to be able to save for their old age, punishes
responsible behavior. This type of class envy is inexcusable and
must not be tolerated from any of our legislators.

89
A fourth proposal is to eliminate the cap on the amount of
earned income subject to the Social Security and Disability
portion of the payroll tax. This would also be a tax increase so
Congress can continue to spend the excess. This proposal is an
attempt to tax the rich, which will not actually raise much
revenue for the Social Security System. The rich and super rich
do not receive their income in a form which is classified as
earned income. They receive income from capital gains,
interest, dividends and rent. They make money on invested
money, which is why they are rich.

The following computation shows what the benefit computation


in example 1 would have been without the indexing.

90
ILLUSTRATION 10

COMPUTATION OF SOCIAL SECURITY BENEFITS FOR HYPOTHETICAL AVERAGE PARTICIPANT


WITHOUT INDEXING OF WAGES FOR INFLATION

ASSUMED STARTING SALARY: 2,080.00

ASSUMED AVERAGE RATE OF SALARY INCREASE DURING CAREER: 6.4442201%

WAGES OR MAXIMUM APPLICABLE HIGH


AGE YEAR SALARY SS WAGE SS WAGE 35 YEARS
18 1960 2,080.00 4,800.00 2,080.00
19 1961 2,214.04 4,800.00 2,214.04
20 1962 2,356.72 4,800.00 2,356.72
21 1963 2,508.59 4,800.00 2,508.59
22 1964 2,670.25 4,800.00 2,670.25
23 1965 2,842.33 4,800.00 2,842.33
24 1966 3,025.49 4,800.00 3,025.49
25 1967 3,220.46 6,600.00 3,220.46
26 1968 3,427.99 6,600.00 3,427.99
27 1969 3,648.90 7,800.00 3,648.90
28 1970 3,884.04 7,800.00 3,884.04
29 1971 4,134.34 7,800.00 4,134.34
30 1972 4,400.77 7,800.00 4,400.77
31 1973 4,684.36 9,000.00 4,684.36
32 1974 4,986.23 10,800.00 4,986.23 4,986.23
33 1975 5,307.56 13,200.00 5,307.56 5,307.56
34 1976 5,649.59 14,100.00 5,649.59 5,649.59
35 1977 6,013.66 15,300.00 6,013.66 6,013.66
36 1978 6,401.19 16,500.00 6,401.19 6,401.19
37 1979 6,813.70 17,700.00 6,813.70 6,813.70
38 1980 7,252.79 22,900.00 7,252.79 7,252.79
39 1981 7,720.17 25,900.00 7,720.17 7,720.17
40 1982 8,217.68 29,700.00 8,217.68 8,217.68
41 1983 8,747.24 32,400.00 8,747.24 8,747.24
42 1984 9,310.94 35,700.00 9,310.94 9,310.94
43 1985 9,910.95 37,800.00 9,910.95 9,910.95
44 1986 10,549.64 39,600.00 10,549.64 10,549.64
45 1987 11,229.48 42,000.00 11,229.48 11,229.48
46 1988 11,953.13 43,800.00 11,953.13 11,953.13
47 1989 12,723.42 45,000.00 12,723.42 12,723.42
48 1990 13,543.34 48,000.00 13,543.34 13,543.34
49 1991 14,416.11 51,300.00 14,416.11 14,416.11
50 1992 15,345.11 53,400.00 15,345.11 15,345.11
51 1993 16,333.98 55,500.00 16,333.98 16,333.98
52 1994 17,386.58 57,600.00 17,386.58 17,386.58
53 1995 18,507.01 60,600.00 18,507.01 18,507.01
54 1996 19,699.64 61,200.00 19,699.64 19,699.64
55 1997 20,969.13 62,700.00 20,969.13 20,969.13
56 1998 22,320.43 65,400.00 22,320.43 22,320.43
57 1999 23,758.81 68,400.00 23,758.81 23,758.81
58 2000 25,289.88 72,600.00 25,289.88 25,289.88
59 2001 26,919.61 76,200.00 26,919.61 26,919.61
60 2002 28,654.37 80,400.00 28,654.37 28,654.37
61 2003 30,500.92 84,900.00 30,500.92 30,500.92
62 2004 32,466.47 87,000.00 32,466.47 32,466.47
63 2005 34,558.68 87,900.00 34,558.68 34,558.68
64 2006 36,785.72 90,000.00 36,785.72 36,785.72
65 2007 39,156.27 94,200.00 39,156.27 39,156.27
66 2008 41,679.58 94,200.00 41,679.58 41,679.58
-----------------------
SUM OF HIGH 35 YEARS 569,399.43
DIVISOR 420.00
-----------------------
DIVIDE BY 420 TO GET AIME 1,355.71

90% OF FIRST $744 669.60

32% OF AMOUNT BETWEEN $744 AND $4,483 195.75

15% OF AMOUNT ABOVE $4,483 0.00


-----------------------
PROJECTED MONTHLY SOC SEC BENEFIT 865.35
X 12.00
-----------------------
ANNUAL BENEFIT 10,384.18
===========

91
When we compare the annual benefit of $14,145 from the
computation using indexed wages, with the benefit of $10,384
from non-indexed wages listed above, we can see a very large
cut in benefits.

All of these benefit cuts are gimmicks designed to extend the


period of time during which Congress can spend the Social
Security Surplus. As long as the contributions to Social Security
( payroll taxes ) are sent to the General Fund where Congress
has the ability to spend the money, we will not have a fix for the
problem.

If you look at the computation at the end of illustration 3, you


can see that it will cost 5 dollars in benefits to replace every
one dollar pilfered from Social Security by Congress.

We need to harness the power of compound interest and have


reinvested earnings, from income producing assets, available to
pay benefits from the Social Security system.

92
OTHER IMPENDING THREATS TO THE
SOLVENCY OF SOCIAL SECURITY
Another major threat to Social Security is the proposal to
include illegal immigrants in the system 1,2. The current system
requires 10 years of covered service before a person becomes
eligible for a benefit. The system also requires 35 years of
service for a full benefit and the computation formula reduces
benefits for less than 35 years of service.

A legal resident will have a valid Social Security Number (SSN)


and be paying into the system. This is not true of illegal
immigrants who will not have a valid SSN. Benefits must be
limited to U.S. citizens and legal residents. Any attempt to allow
coverage of illegal aliens will seriously weaken the system. Any
attempt to allow illegal residents to reconstruct a work history
will simply be an invitation for massive fraud. The illegals have
already demonstrated that they are not going to obey our laws,
and will manufacture false documents to qualify for benefits.
The voters must remove members of congress who will allow
benefits for illegal aliens.

A second threat is the continued assault on the level of pay. The


benefit structure in Social Security is front loaded with a larger
benefit, relative to the level of income, for the lower paid
employees. This country is going down a road which will lead to
most employees being low paid, and this will destroy the
current funding model. The assault 3 on the income of the
middle class in this country must be stopped.

A solution to this problem is to repeal the 16 th amendment and


replace the income tax with a Revenue Tariff. This act would
impose a consumption tax at the border and effectively level
the international playing field for U.S. workers. A Revenue Tariff
would also slow or stop the outsourcing of American jobs. I'm
located in Macomb County Michigan, and the foreclosure crisis
in this community is caused by the loss of jobs due to
outsourcing. Michigan has lost over 400,000 manufacturing
jobs, and has been in an economic recession or depression
since 2002.

93
The decreasing level of income and loss of jobs will continue
until the voters start electing individuals to all levels of
government who will obey their oath to support and defend the
Constitution. The people have always risen to the occasion,
when confronted with major problems, and we will do so again.
This is the United States of America and we can solve these
problems.

94
CONSTITUTIONAL PROBLEMS WITH
SOCIAL SECURITY
THE PAYROLL TAX

The Old Age Survivors and Disability Insurance ( OASDI ) and


Medicare ( HI ) systems are funded by a mandatory contribution
from the individual participants in the program. Employers are
required to make a matching contribution. The tool being used,
to enforce payment of an individuals contribution, is a per
capita excise tax imposed on the participant's wages, or net
income in the case of self employed individuals. There is no
authority in the Constitution to allow the Federal Government to
require a mandatory payment to fund the OASDI / Medicare
program, or any other program for the purchase of insurance
coverage. This type of mandate is not one of the enumerated
powers allowed to the Federal Government by the Constitution.
In addition, the per capita excise tax used to enforce the
mandatory contribution is in fact one of the powers specifically
prohibited to the Federal Government by the Constitution.

The power to make this type of mandate is specifically reserved


to the States by the 10th Amendment which reads as follows;
"The powers not delegated to the United States by the Constitution, nor  
prohibited by it to the States, are reserved to the States respectively, or to the  
people".

The wording in the Internal Revenue Code is phrased in a way


to make the payroll tax appear to be an income tax. This action
is an attempt to make the payroll tax appear to be allowed by
the 16th Amendment to the Constitution.

The 16th Amendment reads as follows;

"The Congress shall have power to lay and collect taxes on incomes,  
from whatever source derived, without apportionment among the  
several states, and without regard to any census or enumeration.". 

This amendment was adopted in 1913 because, prior to the


income tax, the funding for the Federal Government came from
import tariffs and various excise taxes. The import tariffs were

95
drying up as a source of revenue since the United States was
changing from an agricultural society, to a self sufficient
manufacturing nation.

Please note that the Amendment allowed taxes on incomes


( both plural ). This language allows an income tax to be
imposed on all sources of income because a separate tax can
be levied on each source of income. The language does not
allow an unlimited number of income taxes to be applied to a
single source of income. Multiple income taxes applied to the
same income can rapidly accumulate to the point where the
sum of the taxes exceed the amount of the income.

This amendment allowed an income tax, but did not otherwise


remove the prohibition on per capita taxes contained in Article I,
Section 9 of the Constitution, The relevant section reads as
follows;

"No capitation, or other direct, Tax shall be laid unless in Proportion  
to the Census or Enumeration herein before directed to be taken.".  

This provision still prohibits a per capita excise tax, since the
16th Amendment only allowed an income tax, and did not
remove the prohibition on other types of per capita taxes.

The Internal Revenue Code section for the tax imposed on


employees is Section 3101 and the section for the tax imposed
on employers is Section 3111. The current language for these
tax law provisions is as follows.

§ 3101. Rate of tax


(a) Old-age, survivors, and disability insurance

In addition to other taxes, there is hereby imposed on the income of every


individual a tax equal to the following percentages of the wages (as defined in
section 3121(a)) received by him with respect to employment (as defined in
section 3121(b) —

In cases of wages received during: The rate shall be:

1984, 1985, 1986, or 1987 5.7 percent


1988 or 1989 6.06 percent
1990 or thereafter 6.2 percent.

96
(b) Hospital insurance

In addition to the tax imposed by the preceding subsection, there is hereby


imposed on the income of every individual a tax equal to the following
percentages of the wages (as defined in section 3121(a)
received by him with respect to employment (as defined in section 3121(b) —

(1) with respect to wages received during the calendar years 1974
through 1977, the rate shall be 0.90 percent;
(2) with respect to wages received during the calendar year 1978,
the rate shall be 1.00 percent;
(3) with respect to wages received during the calendar years 1979
and 1980, the rate shall be 1.05 percent;
(4) with respect to wages received during the calendar years 1981
through 1984, the rate shall be 1.30 percent;
(5) with respect to wages received during the calendar year 1985, the
rate shall be 1.35 percent; and
(6) with respect to wages received after December 31, 1985, the
rate shall be 1.45 percent.

Sec. 3102. Deduction of tax from wages


TITLE 26, ,Subtitle C CHAPTER 21, Sub chapter A, Sec. 3102.
STATUTE

(a) Requirement

The tax imposed by section 3101 shall be collected by the employer of the
taxpayer, by deducting the amount of the tax from the wages as and when
paid. .........

§ 3111. Rate of tax

(a) Old-age, survivors, and disability insurance

In addition to other taxes, there is hereby imposed on every employer an


excise tax, with respect to having individuals in his employ, equal to the
following percentages of the wages (as defined in section 3121(a) paid by him
with respect to employment (as defined in section 3121(b) —

In cases of wages received during: The rate shall be:

1984, 1985, 1986, or 1987 5.7 percent


1988 or 1989 6.06 percent
1990 or thereafter 6.2 percent.

97
(b) Hospital insurance

In addition to the tax imposed by the preceding subsection, there is hereby


imposed on every employer an excise tax, with respect to having individuals
in his employ, equal to the following percentages of
the wages (as defined in section 3121(a) paid by him with respect to
employment (as defined in section 3121(b) —

(1) with respect to wages paid during the calendar years 1974
through 1977, the rate shall be 0.90 percent;
(2) with respect to wages paid during the calendar year 1978, the
rate shall be 1.00 percent;
(3) with respect to wages paid during the calendar years 1979
and 1980, the rate shall be 1.05 percent;
(4) with respect to wages paid during the calendar years 1981
through 1984, the rate shall be 1.30 percent;
(5) with respect to wages paid during the calendar year 1985, the
rate shall be 1.35 percent; and
(6) with respect to wages paid after December 31, 1985, the rate
shall be 1.45 percent.

The total of sections 3101 and 3111 is the total amount paid
into the OASDI/Medicare program for each employee. Section
3111 on the employer's matching portion is specifically labeled
as an excise tax, not an income tax.

West's Encyclopedia of American Law, 2nd Edition, provides


descriptions of legal terms, documents and concepts as they
apply to United States law. This dictionary contains the
following definition for the term excise tax.

“A tax imposed on the performance of an act, the engaging in


an occupation, or the enjoyment of a privilege. A tax on the
manufacture, sale, or use of goods or on the carrying on of an
occupation or activity, or a tax on the transfer of property. In
current usage the term has been extended to include various
license fees and practically every internal revenue tax except
the income tax (e.g., federal alcohol and tobacco excise taxes
).”

When reviewing the statutory language it is very easy to get


hung up on the specifics of the language which make it appear
that these items are an income tax, when in fact they are a tool
to enforce a mandatory contribution to the OASDI/Medicare
system. Since this type of mandatory contribution is not
included in the enumerated powers of the Federal Government,

98
it is a power which belongs to the various states.
Section 3102 of the Internal Revenue Code ( IRC ) requires the
payroll tax to be withheld from wages when paid. This is similar
to the withholding treatment for the Income Tax, but does not
make the payroll tax an Income Tax. The Income Tax
withholding is an estimate which will apply to an annual tax
liability. The payroll tax is a fixed percentage of the amount of
wages paid for the payroll period. The heading of the Code
section, imposing the tax, labels this tax as being for the
OASDI/Medicare programs. The fixed percentage for the
OASDI/Medicare program is excised ( carved out ) of the
employees paycheck before the employee receives his net
paycheck. The Income Tax is applied to the employees wages
which include the amount of the payroll tax. This is the same
type of arrangement which applies to a sales tax applied to
alcohol or tobacco. The excise tax on these items is included in
the price of the product, and the sales tax is applied to the total
which includes the amount of the excise tax.

This comparison is made to show that the payroll tax is


structured as an excise tax and not a general tax on income.
Because the payroll tax is a per capita excise tax, and not an
Income Tax, it is prohibited by Article I, Section 9 of the
Constitution. The fact that Code Section 3111 clearly labels the
employer's portion of the payroll tax as an excise tax, should
remove all doubt. The 1937 Supreme Court cases on the Social
Security System do not address the nature and constitutionality
of the payroll and self employment tax. A discussion of these
court cases is included in this book.

The fact that our current Social Security/Medicare System is


based on an unconstitutional Federal mandate with an
unconstitutional per capita excise tax to enforce payment, will
also be a problem with any national program of universal
health insurance. Health care reform is in fact health insurance
reform and should be handled at the state level under our
Constitutional form of government.

There are two options available to correct the fact that the
current system violates the Constitution. The first way to
address the problem is to get candidates elected to Congress
who will work to change the law in accord with the proposals in
this book. The second option is to try to get the courts to rule

99
that the Social Security Payroll Tax is unconstitutional.
I support the option of getting the law changed and not going to
court.

If anyone does want to pursue court action the steps to follow


will be as follows.

1. File a Form 8431 with the IRS claiming a refund of your


payroll tax because the tax is a mandated purchase of
benefits which is not included in the Federal powers
enumerated in the Constitution. The IRS will reject your
claim and will probably add your name to it's database of
tax protesters.

2. The next step will be to file an appeal of the rejected


claim in Federal District Court ( going to Tax Court would
be a waste of time ). It is necessary to file the claim first
because you must exhaust administrative procedures
before you can take the issue to court. This step will
normally require that you hire an attorney for a case you
will probably lose. If you are successful in getting a judge
who will follow the Constitution, you will have your case
appealed by the IRS. If you lose you will have to appeal. If
you appeal, the Circuit Court will be able to avoid the
issue by not hearing the case.

The nature of our court system is such that several individuals


would need to simultaneously appeal claim rejections in several
different circuits ( there are 13 different circuits ), to have any
chance of getting a Judge who would actually look at the
Constitutional issue. Another reason for filing in several circuits
would be to try and get a favorable result in one or
more circuits. This split in the circuits would then provide the
possibility of having the case accepted by the Supreme Court,
because of a split in the circuits.

It should be noted that courts are creatures of precedent and


are not likely to rule against a system which has been in place
for 70 years. We need to get people elected to Congress, who
will address this issue, so that we do not have to rely on a court
system which has shown itself to be unwilling to follow the
Constitution. If someone does take this issue to Federal Court
and has the good luck to have the case heard by a judge who

100
does recognize that the current payroll tax does violate the
constitution, the resulting court decision would provide an
incentive for Congress to make the changes outlined in this
book.

In addition to the individual mandate, discussed above, there is


also a constitutional problem with the employers matching
contribution into the Social Security System. The employers
portion of the tax is an excise tax, and is clearly labeled as an
excise tax. The amount of this excise tax can vary between
individuals, because income above the Taxable Wage Base is
not taxed. This variation between individuals causes a problem,
because the Constitution requires that Excise Taxes be uniform
throughout the United States.

The first clause of Article I, Section 8 of the Constitution reads


as follows;

"The Congress shall have power to lay and collect taxes, Duties,  
Imposts and Excises, to pay the Debts and provide for  the common  
Defense and general Welfare of the United States; but all Duties,  
Imposts and Excises shall be uniform throughout the United States;”

The following computation shows that the employer excise tax


for three different hypothetical individuals will result in different
levels of excise tax.
INDIVIDUAL A INDIVIDUAL B INDIVIDUAL C

SALARY $50,000.00 $150,000.00 $250,000.00

2009 TAXABLE WAGE BASE $106,800.00 $106,800.00 $106,800.00

CURRENT EMPLOYER MATCH ( OASDI ) $3,100.00 $6,621.60 $6,621.60

CURRENT EMPLOYER MATCH ( MEDICARE ) $725.00 $2,175.00 $3,625.00


­­­­­­­­­­­­­­­­­­­­­­­ ­­­­­­­­­­­­­­­­­­­­­­­ ­­­­­­­­­­­­­­­­­­­­­­­
EMPLOYER EXCISE TAX $3,825.00 $8,796.60 $10,246.60
============ ============ ============

The illustration listed above demonstrates that the employer


portion of the payroll tax is not uniform. This issue is also
discussed in the chapter on the 1937 Supreme Court Cases.
The issues listed above could be used as a reason to claim a
refund of taxes assessed under laws which violate the

101
Constitution. The denial of these claims could become the basis
of court action. In our tax and court system, the action of the
court, on a specific court case, will only apply to the plaintiffs in
that case, unless the IRS agrees to apply the court decisions to
all taxpayers. It is doubtful most individuals will be in a position
to pursue claims in court. They should consider filing a
protective claim contingent on the results of the pending
litigation of the individuals who are in a position to go to court.
The preparation of a Form 8431 should be considered by
individuals, who want to protect their right to any potential
refunds of payroll taxes and employers in the employer's
portion of the payroll taxes. The litigation process for this type
of issue can take years. Because there is a statute of limitations
on claims for refund, the use of a protective claim will protect
the right to a refund, if the citizens and taxpayers can get the
issues decided by a court which is willing to abide by the
Constitution.

IRS Publication 6562 provides the following guidance for


preparing a protective claim;

“Protective claim for refund. If your right to a refund is


contingent on future events and may not be determinable until
after the time period for filing a claim for refund expires,
you can file a protective claim for refund. A protective claim can
be either a formal claim or an amended return for credit or
refund. Protective claims are often based on current litigation or
expected changes in the tax law, other legislation, or
regulations. A protective claim preserves your right to claim a
refund when the contingency is resolved. A protective claim
does not have to state a particular dollar amount or demand an
immediate refund. However, to be valid, a protective claim
must:
 Be in writing and be signed,
 Include your name, address, social security number or
individual taxpayer identification number, and other
contact information,
 Identify and describe the contingencies affecting the
claim,
 Clearly alert the IRS to the essential nature of the claim,
and
 Identify the specific year(s) for which a refund is sought.

102
Generally, the IRS will delay action on the protective claim until
the contingency is resolved. Once the contingency is resolved,
the IRS may obtain additional information necessary to process
the claim and then either allow or disallow the claim.

Mail your protective claim for refund to the address listed in the
instructions for Form 1040X, under Where To File.”

A claim for refund of payroll taxes should use form 843, since
the 1040X Form is designed for Income Tax claims.

The Constitutional problems with the Social Security System


can be fixed without destroying the Social Security System. We
need to change the system into a contributory defined benefit
plan, with the states mandating the contributions to the plan.
The states have the authority under the Constitution to make
this type of mandate. They also have a very strong vested
interest in protecting the retirement income of their citizens. If
we did not have the Social Security System, most of the senior
citizens in the various states would be on the states' welfare
roles. 

103
 THE 1937 SUPREME COURT CASES

On May 24, 1937, the Supreme Court issued opinions on three


cases involving the Social Security System. The cases were
released at the same time and contain references to each other.
These cases are Steward Machine Co. v. Collector of Internal
Revenue1, Helvering v. Davis, 301 U.S. 6192 and Carmichael v.
Southern Coal and Coke Co., 301 U.S. 495 3.

The focus of the Steward Machine case was the federal portion
of the system of unemployment insurance established by the
Social Security Act of 1935. The focus of the Carmichael v.
Southern Coal and Coke was the state portion of the
unemployment tax. The Helvering v. Davis case considered the
old age and survivors portion of the Social Security Act.

This book will provide brief reviews of the Carmichael and


Steward cases and a longer review of the Helvering case, since
it addresses the old age benefit programs.

The Carmichael v. Southern Coal and Coke Co. case was


appealed from the Alabama State Supreme Court which held
that the state law was valid unless the federal law were to be
held invalid. The Supreme Court held that the state law was
valid as the Federal Statute was upheld by the Steward Machine
case. The following is an excerpt from the Carmichael case;

“Relationship of the State and Federal Statutes.


There remain for consideration the contentions that
the state act is invalid because its enactment was
coerced by the adoption of the Social Security Act,
and that it involves an unconstitutional surrender of
state power. Even though it be assumed that the
exercise of a sovereign power by a state, in other
respects valid, may be rendered invalid because of
the coercive effect of a federal statute enacted in
the exercise of a power granted to the national
government, such coercion is lacking here. It is
unnecessary to repeat now those considerations which
have led to our decision in the Chas. C. Steward
Machine Co. Case, that the Social Security Act has no

104
such coercive effect. As the Social Security Act is
not coercive in its operation, the Unemployment
Compensation Act cannot be set aside as an
unconstitutional product of coercion. The United
States and the State of Alabama are not alien
governments. They coexist within the same territory.
Unemployment within it is their common concern.
Together the two statutes now before us embody a
cooperative legislative effort by state and national
governments for carrying out a public purpose common
to both, which neither could fully achieve without
the cooperation of the other. The Constitution does
not prohibit such cooperation.”

The opinion specifically allows cooperation between the Federal


and State governments and is relevant because such
cooperation will be needed to fix the funding and Constitutional
problems with the Old Age Survivors and Disability Insurance
( OASDI ) and Medicare ( HI ) portions of the Social Security
System.

There is a Constitutional problem with the state unemployment


provisions as they are applied in today's system of
unemployment. The states use what is known as an experience
rate for individual employers. This experience rate is used to
raise the tax rate for employers who have employees leave and
file claims for unemployment. This experience rate causes the
taxes paid by the employer to the state, to violate the
Constitutional requirement that excise taxes be uniform, and
can cause the tax to exceed the rate for the Federal
Unemployment Tax.

The Steward Machine case considered the unemployment tax


imposed on employers.

The unemployment provisions of the act imposed an excise tax


on employers ( with exemptions and exceptions ), with a
provision that the employer could claim a credit for
unemployment tax paid to the state. This was argued as being
a violation of the tenth amendment, which limits the powers of
the Federal Government to those contained in the Constitution.
The Steward case held in a 5 to 4 decision that the Federal
portion of the unemployment tax did not violate the

105
Constitution.

The Steward Machine Co. v. Collector of Internal Revenue case


found that;

First. The tax, which is described in the statute as an excise,


is laid with uniformity throughout the United States as a duty,
an impost or an excise upon the relation of employment. …

Second. The excise is not invalid under the provisions of the


Fifth Amendment by force of its exemptions.

Third. The excise is not void as involving the coercion of the


States in contravention of the Tenth Amendment or of restrictions
implicit in our federal form of government.

The first part of this finding by the court is that the law does not
violate the requirement of uniformity because the law is the
same in all parts of the United States. This requirement is
contained in the first paragraph of Article I, Section 8 of the
Constitution. The mention of this requirement shows that the
Court was aware of the constitutional requirements. The written
decision makes specific mention of the requirement that an
excise tax must be uniform throughout the country, while
ignoring the fact that different employers will be subject to
different levels of tax. This is an example of deliberate and
malicious misreading of the Constitution which requires “all
Duties, Imposts and Excises” to be uniform.

The second part of the finding provides that the Social Security
Act does not violate the Fifth Amendment. The problem with
this conclusion is that the individual protections in the Fifth
Amendment are simply not at issue for a tax being imposed on
employers. The item appears to be an effort to include a valid
opinion in the decision in an effort to support questionable parts
of the overall finding.

The third part of the finding is problematical, because it


severely weakens and undercuts the idea that we have a
Republican form of government, where the Federal
Government has limited powers. This portion of Justice
Cardozo's opinion is very long, and cites the severe financial
distress of the depression as the reason the Social Security Act
was needed, and that the General Welfare clauses in the
Constitution allowed the federal portion of the unemployment

106
tax. For more information on these items, see the chapter on
the Constitutional problems with Social Security.

The Helvering v. Davis case, and the Steward Machine Co. case
came to the U.S. Supreme Court through the Federal Court
System. Helvering v. Davis ruled that the Social Security System
was not a violation of the 10th Amendment which reserves to
the states any power not delegated to the Federal Government
by the Constitution. The court found that the general welfare
clauses, in the preamble to the Constitution and in Article I,
Section 8 of the Constitution, gave the federal government the
power and authority to set up the Social Security System. The
decision did not rule on the constitutionality of the payroll tax
imposed on employees by the Social Security Act. The following
information and quotes from the decision is presented to show
what the decision did and did not rule on.

The following is a direct quote from the written decision on


Helvering v. Davis which describes the issues, and the route
used the get the case to the Supreme Court.

“This suit is brought by a shareholder of the Edison Electric


Illuminating Company of Boston, a Massachusetts corporation, to
restrain the corporation from making the payments and deductions
called for by the act, which is stated to be void under the
Constitution of the United States. The bill tells us that the
corporation has decided to obey the statute, that it has reached
this decision in the face of the complainant's protests, and that
it will make the payments and deductions unless restrained by a
decree. The expected consequences are indicated substantially as
follows: The deductions from the wages of the employees will
produce unrest among them, and will be followed, it is predicted,
by demands that wages be increased. If the exactions shall
ultimately be held void, the company will have parted with moneys
which as a practical matter it will be impossible to recover.
Nothing is said in the bill about the promise of indemnity. The
prediction is made also that serious consequences will ensue if
there is a submission to the excise. The corporation and its
shareholders will suffer irreparable loss, and many thousands of
dollars will be subtracted from the value of the shares. The
prayer is for an injunction and for a declaration that the act is
void.

The corporation appeared and answered without raising any issue


of fact. Later the United States Commissioner of Internal Revenue
and the United States Collector for the District of
Massachusetts, petitioners in this court, were allowed to
intervene. They moved to strike so much of the bill as has

107
relation to the tax on employees taking the ground that the
employer not being subject to tax under those provisions, may not
challenge their validity, and that the complainant shareholder,
whose rights are no greater than those of his corporation, has
even less standing to be heard on such a question. The
intervening defendants also filed an answer which restated the
point raised in the motion to strike, and maintained the validity
of Title VIII in all its parts. The District Court held that the
tax upon employees was not properly at issue, and that the tax
upon employers was constitutional. It thereupon denied the prayer
for an injunction, and dismissed the bill. On appeal to the
Circuit Court of Appeals for the First Circuit, the decree was
reversed, one judge dissenting. The court held that Title II was
void as an invasion of powers reserved by the Tenth Amendment to
the states or to the people and that Title II in collapsing
carried Title VIII along with it. As an additional reason for
invalidating the tax upon employers, the court held that it was
not an excise as excises were understood when the Constitution
was adopted. Cf. Davis v. Boston & Maine R. R. Co.,--F. (2d)--,
decided the same day.

A petition for certiorari followed. It was filed by the


intervening defendants, the Commissioner and the Collector, and
brought two questions, and two only, to our notice. We were asked
to determine:

(1) "whether the tax imposed upon employers by Section 804 of the
Social Security Act is within the power of Congress under tile
Constitution", and

(2) "whether the validity of the tax imposed upon employees by


Section 801 of the Social Security Act is properly in issue in
this case, and if it is, whether that tax is within the power of
Congress under the Constitution."

The defendant corporation gave notice to the Clerk that it joined


in the petition, but it has taken no part in any subsequent
proceedings. A writ of certiorari issued.”

This excerpt from the decision indicated that the case was
brought by a shareholder of the corporation. The corporation
had decided to obey the Act and was not contesting the tax
when it answered the shareholders request for an injunction
against the payment of the tax.

While the case was pending in the Federal District Court, the
United States Commissioner of Internal Revenue and the United
States Collector for the District of Massachusetts, were allowed
to intervene.

108
The IRS asked the court to remove the portion of the suit which
applied to the tax on employees on the grounds that the
shareholder lacked standing to contest this issue.

The District Court held that the tax upon employees was not
properly at issue, and that the tax upon employers was
constitutional. It thereupon denied the request for an injunction,
and dismissed the case.

The decision of the District Court was appealed to the Circuit


Court of Appeals for the First Circuit, where the decree was
reversed, one judge dissenting. The Appeals Court held that
the Social Security Act was an invasion of powers reserved by
the Tenth Amendment to the states or to the people. This
holding also found the tax on employers was invalid because
the Title II ( the Old age and Survivors portion of the Social
Security Act ) in collapsing carried Title VIII ( the payroll tax
portion of the act )along with it. As an additional reason for
invalidating the tax upon employers, the court held that it was
not an excise as excises were understood when the Constitution
was adopted.

The IRS then appealed this decision to the Supreme Court,


asking the court to determine whether the payroll tax portions
of the act were within the power of Congress under the
Constitution.

This sequence of events must be understood in order to


understand the decision of the Supreme Court, which upheld
the Old Age and Survivors portion of the Act and the excise tax
imposed on employers.

The Supreme Court did not rule on the constitutionality of the


tax imposed on employees, because this issue was removed by
the District Court ( at the request of the IRS ), because the
petitioner lacked standing. The finding of the Court of Appeals
was reversed and the decision by the District Court was
affirmed. By affirming the District Court decision the Supreme
Court avoided having to render a decision on the employee
portion of the tax ( the individual mandate ).

The following is a quoted from the text of the case, which


provides the legal issues in the case.

109
“The Social Security Act is challenged once again.

In No. 837, Steward Machine Co. v. Davis,--U.S.--, decided this


day, we have upheld the validity of Title IX of the act, imposing
an excise upon employers of eight or more. In this case Titles
VIII and II are the subject of attack. Title VIII lays another
excise upon employers in addition to the one imposed by Title IX
(though with different exemptions). It lays a special income tax
upon employees to be deducted from their wages and paid by the
employers. Title II provides for the payment of Old Age Benefits,
and supplies the motive and occasion, in the view of the
assailants of the statute, for the levy of the taxes imposed by
Title VIII. The plan of the two titles will now be summarized
more fully.

Title VIII, as we have said, lays two different types of tax, an


"income tax on employees", and "an excise tax on employers." The
income tax on employees is measured by wages paid during the
calendar year. Section 801. The excise tax on the employer is to
be paid "with respect to having individuals in his employ", and,
like the tax on employees, is measured by wages. Section 804.
Neither tax is applicable to certain types of employment, such as
agricultural labor, domestic service, service for the national or
state governments, and service performed by persons who have
attained the age of 65 years. Section 811 (b). The two taxes are
at the same rate. Sections 801, 804. For the years 1937 to 1939,
inclusive, the rate for each tax is fixed at one per cent.
Thereafter the rate increases of 1 per cent every three years,
until after December 31,1948, the rate for each tax reaches 3 per
cent. Ibid. In the computation of wages all remuneration is to be
included except so much as is in excess of $3,000 during the
calendar year affected. Section 811 (a). The income tax on
employees is to be collected by the employer, who is to deduct
the amount from the wages "as and when paid". Section 802 (a). He
is indemnified against claims and demands of any person by reason
of such payment. Ibid. The proceeds of both taxes are to be paid
into the Treasury like internal-revenue taxes generally, and are
not earmarked in any way. Section 807 (a). There are penalties
for nonpayment. Section 807 (c).

Title II has the caption "Federal Old-Age Benefits." The benefits


are of two types, first, monthly pensions, and second, lump sum
payments, the payments of the second class being relatively few
and unimportant.

The first section of this title creates an account in the United


States Treasury to be known as the "Old-Age Reserve Account".
Section 201. No present appropriation, however, is made to that
account. All that the statute does is to authorize appropriations
annually thereafter, beginning with the fiscal year which ends
June 30, 1937. How large they shall be is not known in advance.
The "amount sufficient as an annual premium" to provide for the
required payments is "to be determined on a reserve basis in

110
accordance with accepted actuarial principles, and based upon
such tables of mortality as the Secretary of the Treasury shall
from time to time adopt, and upon an interest rate of 3 per
centum per annum compounded annually."

Section 201 (a). Not a dollar goes into the Account by force of
the challenged act alone, unaided by acts to follow.

Section 202 and later sections prescribe the form of benefits.


The principal type is a monthly pension payable to a person after
he as attained the age of 65. This benefit is available only to
one who as worked for at least one day in each of at least five
separate years since December 31, 1936, who has earned at least
$2,000 since that date, and who is not then receiving wages "with
respect to regular employment." Sections 202 (a), (d), 210 (c).
The benefits are not to begin before January 1, 1942. Section 202
(a). In no event are they to exceed $85 a month. Section 202 (b).
They are to be measured (subject to that limit) by a percentage
of the wages the percentage decreasing at stated intervals as the
wages become higher. Section 202 (a). In addition to the monthly
benefits, provision is made in certain contingencies for "lump
sum payments" of secondary importance. A summary by the
Government of the four situations calling for such payments is

printed in the margin.

The court in this discussion of the issues, refers to the tax on


employees as being a “special income tax” ( text highlighted by
me for clarity ). This reference indicates the court was in fact
aware that this tax was not the income tax allowed by the 16 th
amendment. The court was asked by the IRS to determine, “ (1)
whether the tax imposed upon employers by Section 804 of the
Social Security Act is within the power of Congress under the
Constitution", and (2) "whether the validity of the tax imposed
upon employees by Section 801 of the Social Security Act is
properly in issue in this case, and if it is, whether that tax is
within the power of Congress under the Constitution."

The actual decision rendered by the Court did not rule on the
validity of section VIII of the Social Security Act. Instead of
ruling on the tax section of the act., the court ruled that Title II
of the Act was allowed by the General Welfare clauses
contained in the Constitution.

The ruling portion of the decision is quoted below.

111
“Held:

(1) Title II being valid, there is no occasion to inquire whether


Title VIII must fall if Title II were void. P. 645.

(2) The tax upon employers is a valid excise or duty upon the
relation of employment. Steward Machine Co. v. Davis, ante, p.
548. P. 645.

(3) The tax is not invalid as a result of its exemptions. Steward


Machine Co. v. Davis, ante, p. 548. P. 646. 89 F.2d 393,
reversed.”

Items 2 and 3 in the holding apply to the employer portion of


the tax, not the employee portion of the tax.

The court could have rendered a decision on the employee


portion of the tax, as requested by the IRS. By affirming the
District Court decision, The Supreme Court effectively
determined that the tax on employees was not an issue in the
case, because the shareholder did not have standing on this
issue. This action ducked the issue and the court avoided
having to rule that the employee portion of the tax was not the
income tax allowed by the 16th Amendment.

When we consider that the Court addressed the uniformity


requirement of excise taxes, required by Article I, Section 8 of
the Constitution, by ignoring ( in the Steward Machine case )
that different employers could have different levels of tax.
When we consider that both the Helvering and the Stewart
Machine Co. decision were written by Justice Cardozo. The
question we must consider is, why did the Court duck the issue
of the individual mandate for payment, imposed by the payroll
tax on the individual?

The obvious answer is that the Court did not want to include an
issue which would show an obvious violation of the Constitution.

The payroll tax imposed on an individual's pay is a per-capita


excise tax ( which is still prohibited by Article I, Section 9 of the
Constitution ) and not an income tax.

More information on this tax is provided in the chapter on the


Constitutional Problems with the Social Security Tax.
The problem with the lack of uniformity in the current

112
unemployment tax system could be easily addressed by
Congress. All that is necessary to correct this issue is for
Congress to eliminate the exceptions which exclude some
income from the tax, and to substantially lower the tax rate.
This would result in a uniform rate of tax based on the entire
amount of payroll, and eliminate the per-capita computation of
the amount of the tax. The way to fix the old age portion of the
tax is contained in the chapter on how to fix the Social Security
system.

There is no reason for the court to avoid holding that the


Federal Government should abide by the restrictions in the
Constitution.

These Supreme Court decisions illustrate that our court system,


and our Judges do in fact ignore the requirements in our
Constitution, when they want to reach a specific decision on a
particular case or issue. The Steward case held that being
uniform throughout the United States satisfied the uniformity
requirement, while ignoring the fact that the tax being imposed
was not in fact uniform. In the Helvering case, the individual
payroll tax issue was not addressed, since the issue was
dismissed by the District Court because the petitioner did not
have standing.

A current issue from the last election illustrates that these types
of actions, by the courts, are still a problem and we can not rely
on the courts to solve major problems.

During the last presidential election, there were numerous court


cases contesting the eligibility of Barack Obama to hold the
office of President. Allegations were being made that he was
born in Mombasa, Kenya, and thereby did not meet the “natural
born citizen” requirement of the Constitution. The allegations
were confirmed by Barack Obama's refusal to release copies of
the birth records filed in Hawaii. These cases were extensively
covered by WorldNetDaily.com, which is one of the news sites
on the Internet.

In my experience as an auditor, I learned that the most


important items of information were always the items the
subject of the audit did not want to provide. The refusal to
provide copies of the original birth record raises serious

113
questions.

I know from my experience that Hawaii did record foreign births


in the 1960s. I was in the Army and stationed in Japan from
1965 to 1967. This was considered good duty because a
soldier's family could accompany him, and live off post ( or in
on post housing, in the case of officers and noncoms ). In
discussions with my married colleagues, I was informed that if a
wife ( there were no female soldiers in the unit ) became
pregnant, she would go back to the states and visit her parents,
to have the child. In the event that the birth was early, they
would go back to the states by way of Hawaii and record the
birth there, so they would have a U.S. sourced birth document.
The recording in Hawaii, of births outside of the United States,
was well known in the expatriate community.

The court cases contesting Barack Obama's eligibility were


dismissed for various reasons ( including lack of standing ), and
the Supreme Court has simply refused to hear the appeal of any
of these cases. The Supreme Court does not want to rule on this
issue, because it might be forced to rule that our current
president is not eligible to hold office. The records, which
President Obama has refused to make public, might indicate he
was in fact born in Mombasa, Kenya, and is not eligible to serve
as President.

114
THE 1960 SUPREME COURT CASE
On June 20, 1960 the Supreme Court issued an opinion which
held that there was no contractual right to a social security
benefit. The case was Flemming v. Nestor, 363 U.S. 603 (1960)1.

This was a case contesting the denial of Social Security benefits


to an alien who immigrated to this country from Bulgaria in
1913, and became eligible for old-age benefits in November,
1955. In July, 1956, he was deported for having been a member
of the Communist Party from 1933 to 1939. This being one of
the benefit-termination and deportation grounds ( section 202(n
) ) specified in the Social Security Act as amended in 1954.

The District Court held that he was deprived of an "accrued


property right." This decision was appealed to the Supreme
Court.

MR. JUSTICE HARLAN delivered the opinion of the Court.


The following is quoted from from the court case;

“We think that the District Court erred in holding that § 202(n)
deprived appellee of an "accrued property right." Appellee's
right to Social Security benefits cannot properly be considered
to have been of that order.
The general purposes underlying the Social Security Act were
expounded by Mr. Justice Cardozo in Helvering v. Davis. The issue
here, however, requires some inquiry into the statutory scheme by
which those purposes are sought to be achieved. Payments under
the Act are based upon the wage earner's record of earnings in
employment or self-employment covered by the Act, and take the
form of old-age insurance and disability insurance benefits
inuring to the wage earner (known as the "primary beneficiary"),
and of benefits, including survivor benefits, payable to named
dependents ("secondary beneficiaries") of a wage-earner. Broadly
speaking, eligibility for benefits depends on satisfying
statutory conditions as to (1) employment in covered employment
or self-employment; (2) the requisite number of "quarters of
coverage" -- i.e., three-month periods during which not less than
a stated sum was earned -- the number depending generally on age;
and (3) attainment of the retirement age. Entitlement to benefits
once gained is partially or totally lost if the beneficiary earns
more than a stated annual sum, unless he or she is at least 72
years old. Of special importance in this case is the fact that
eligibility for benefits, and the amount of such benefits, do not
in any true sense depend on contribution to the program through

115
the payment of taxes, but rather on the earnings record of the
primary beneficiary.
The program is financed through a payroll tax levied on employees
in covered employment, and on their employers. The tax rate,
which is a fixed percentage of the first $4,800 of employee
annual income, is set at a scale which will increase from year to
year, presumably to keep pace with rising benefit costs. The tax
proceeds are paid into the Treasury "as internal revenue
collections, and each year an amount equal to the proceeds is
appropriated to a Trust Fund, from which benefits and the
expenses of the program are paid. It was evidently contemplated
that receipts would greatly exceed disbursements in the early
years of operation of the system, and surplus funds are invested
in government obligations, and the income returned to the Trust
Fund. Thus, provision is made for expected increasing costs of
the program.
The Social Security system may be accurately described as a form
of social insurance, enacted pursuant to Congress' power to
"spend money in aid of the general welfare, " Helvering v.
Davis”, whereby persons gainfully employed, and those who employ
them, are taxed to permit the payment of benefits to the retired
and disabled, and their dependents. Plainly the expectation is
that many members of the present productive work force will in
turn become beneficiaries rather than supporters of the program.
But each worker's benefits, though flowing from the contributions
he made to the national economy while actively employed, are not
dependent on the degree to which he was called upon to support
the system by taxation. It is apparent that the noncontractual
interest of an employee covered by the Act cannot be soundly
analogized to that of the holder of an annuity, whose right to
benefits is bottomed on his contractual premium payments.
It is hardly profitable to engage in conceptualizations regarding
"earned rights" and "gratuities". The "right" to Social Security
benefits is in one sense "earned," for the entire scheme rests on
the legislative judgment that those who in their productive years
were functioning members of the economy may justly call upon that
economy, in their later years, for protection from "the rigors of
the poor house as well as from the haunting fear that such a lot
awaits them when journey's end is near." But the practical
effectuation of that judgment has of necessity called forth a
highly complex and interrelated statutory structure. Integrated
treatment of the manifold specific problems presented by the
Social Security program demands more than a generalization. That
program was designed to function into the indefinite future, and
its specific provisions rest on predications as to expected
economic conditions which must inevitably prove less than wholly
accurate, and on judgments and preferences as to the proper
allocation of the Nation's resources which evolving economic and
social conditions will of necessity in some degree modify.
To engraft upon the Social Security system a concept of "accrued
property rights" would deprive it of the flexibility and boldness

116
in adjustment to ever-changing conditions which it demands. It
was doubtless out of an awareness of the need for such
flexibility that Congress included in the original Act, and has
since retained, a clause expressly reserving to it "[t]he right
to alter, amend, or repeal any provision" of the Act. That
provision makes express what is implicit in the institutional
needs of the program. See Analysis of the Social Security System,
Hearings before a Subcommittee of the Committee on Ways and
Means, House of Representatives, 83d Cong., 1st Sess., pp. 920-
921. It was pursuant to that provision that § 202(n) was enacted.
We must conclude that a person covered by the Act has not such a
right in benefit payments as would make every defeasance of
"accrued" interests violative of the Due Process Clause of the
Fifth Amendment.”

The above section is expressed in legalese and is difficult to


read. This language can be summarized by saying that, the
court decision held the following. Social Security is not like an
annuity where a participant is contractually entitled to a benefit
paid for by premium payments. There is no linkage between the
taxes paid and the benefits under the Social Security program.
The Social Security System is in fact a welfare program and
Congress can reduce or eliminate benefits anytime Congress
wants. This is different than a Defined Benefit Pension Plan
where the participants have a vested accrued benefit.
There were two dissents written on this decision. The dissents
indicate that some judges found the provision which deprived
the participant of his Social Security Benefits was a violation his
5th Amendment right to due process, was a bill of attainder, and
also an ex post facto law. The majority decision considered
these issues and concluded that they did not apply because
there was no contractual right to the benefit.
The following is quoted from the Justice Black's dissent and in
my view reflects what most people think the Social Security
System represents. This is a dissent and since the majority
rules, the Social Security System is legally a welfare program.

MR. JUSTICE BLACK, dissenting.


"Social security is not a handout; it is not charity; it is not
relief. It is an earned right based upon the contributions and
earnings of the individual. As an earned right, the individual is
eligible to receive his benefit in dignity and self-respect."
Social Security benefits have rightly come to be regarded as
basic financial protection against the hazards of old age and

117
disability. As stated in a recent House Report:
"The old-age and survivors insurance system is the basic program
which provides protection for America's families against the loss
of earned income upon the retirement or death of the family
provider. The program provides benefits related to earned income
and such benefits are paid for by the contributions made with
respect to persons working in covered occupations."

This Supreme Court decision does in fact follow the current law.
The current system is a pay as you go welfare plan.
The Social Security System can be changed from a welfare
program where Congress can decide to reduce or eliminate
benefits at any time, by changing the system to a defined
benefit pension plan. In a pension plan a person does have a
contractual right to an accrued benefit. A pension plan provides
a contractual right to the benefits provided by the pension
document. This contractual right is appropriate in view of the
fact that Social Security recipients have already paid for the
benefits.
We need to make the changes discussed in the chapter titled
How to Fix Social Security, and cover our senior citizens with a
defined benefit pension plan which does provide a vested
accrued benefit. We will then need to fund the plan with income
producing assets such as oil, gas and other mineral producing
properties so that the trust fund will have the assets needed to
pay all future benefit requirements.

118
ENERGY
ENDING OUR COUNTRY'S DEPENDENCE ON
IMPORTED OIL

The U.S. Government holds property all over this country which
can be transferred to a Social Security Trust Fund. This property
includes closed military bases as well as wilderness areas rich in
natural resources which can be developed to end our
dependence on imported oil. The price of oil will increase as the
world wide demand continues to push the price up. There is an
enormous amount of potential revenue available if the drilling
rights in such areas as ANWR ( the Arctic National Wildlife
Refuge ) and the continental shelves off our coasts are
transferred to an actual Social Security Trust Fund, which can
license drilling rights to oil companies on favorable terms to the
trust. In addition there are oil rich properties including oil shale,
and oil sands, in the inter mountain areas of the west which can
be tapped. We need to tap the cash flow, from our own reserves
of petroleum, to solve the Social Security funding problems. In
the long term we will have to increase our use of alternative
energy sources such as hydrogen, wind and solar, but in the
short term ( the next few decades ) this country will rely on
petroleum.

The development of these resources is necessary to end our


dependence on imported oil, which in and of itself is a major
national security issue. When these oil producing properties are
transferred to the Social Security Trust Fund, we will need to
have legislation to accommodate this change.

Legislation to remove appellate jurisdiction from the Federal


Courts on any lawsuit seeking to prevent the development of
these resources will be needed ( this type of legislation would
be in the form of a concurrent House Senate Joint Resolution ).
This power is contained in Article III of the Constitution. This
action is necessary because environmental extremists have
been using the courts to prevent the development of these
resources1. Funding Social Security and Medicare is more
important than stopping a temporary disruption of the habitat
for a few percent of the Northern Caribou.

119
Properties such as closed military bases and unneeded federal
real estate can be transferred to the trust fund and then seller
financed. This method of sale will minimize any impact on credit
markets and return the property to the trust fund in the event of
any default. As an alternative, the property can be leased to
companies for use as wind farms or for solar arrays.

Any property in what have been wilderness areas should be


transferred with deed restrictions requiring the property to be
accessible by the citizens as well as a requirement, that the
development of any portion of the property, be consistent with
the need to protect the environment, while developing these
properties.

The restrictions must also prohibit any transfer of the properties


to any international body, and prohibit the property being
designated as a U.N. World Heritage Site.

This action is necessary to counter a recent practice of radical


environmentalists, who are having wilderness areas labeled as
Heritage Sites2 to prevent any development of the areas. This
action is intended to stop the people from ever having access to
these areas. These properties are owned by the Citizens of the
United States and U.S. Citizens should have access to these
properties.

In addition to ending our dependence on foreign oil, the


establishment of an actual Social Security Trust Fund will create
a pool of investment capital which will rapidly grow into the
largest Institutional Investor in the world.

Currently a number of countries that are not friends of the


United States are setting up Sovereign Wealth Funds which are
buying interests in U.S. corporations. We recently had the
country of Dubai try to buy a major port importing goods into
the U.S.. Some individuals have claimed that Dubai is a friend
of the U.S., and we should not have been concerned. The
response to this is that Iran was an ally of the U.S. when Iran
was ruled by the Shah. Because a country is an ally at present
does not mean it will always be our friend.

Communist China has recently tried to buy a 21% interest 3 in


3com. 3com is a major manufacturer of computer networking

120
hardware, and having a potential foreign enemy own a
company manufacturing networking hardware, with hidden
back doors into our country's computer networks, would be a
major national security problem. Communist China is not a
friend of the U.S. and is playing us for a sucker by manipulating
the value of the yuan and generating a 200 billion dollar trade
surplus with the United States each year. This surplus is being
used to buy up our companies, and puts the U.S. into the debt
of Communist China.

We need to make these changes for various reasons, in addition


to saving the Social Security System. Stopping this country's
dependence on foreign oil, and keeping ownership of our
companies in American hands are additional important reasons
to have a real Social Security Trust.

A broadly diversified investment portfolio, operating under the


same rules which apply to our corporate pension plans will be
able to cover the costs of our Social Security System, after we
properly fund the plan with income producing assets. This will
enable us to provide the needed funding for the Social Security
System.

We need to determine if there are sufficient assets available to


provide the income needed to correct the fiscal misfeasance on
the part of our Congress. First we need to answer a
fundamental question. How much is needed to fund an actual
Social Security Trust?

The 2009 Annual Report of the Board of Trustees of the Federal


Old-Age and Survivors Insurance and Disability Insurance Trust
Funds provides, on page 3, that the unfunded liability for the
trust funds would be 5.64 trillion dollars. Other estimates5 place
the liability slightly higher.

There have been reports citing an unfunded liability in the


amount of 596 trillion dollars being circulated by individuals who
are trying to frighten the people into cutting projected benefits
in the Social Security System. These projections are an example
of a half-truth being the worst form of a lie. The projection may
be technically accurate, but only provides half of the
computation necessary to determine the additional funding
needed. A proper actuarial calculation will subtract the present

121
value of projected future contributions, to the program, from
the present value of the projected benefits. Presenting only half
of the facts is not helpful in addressing the problem, because
the numbers are so large that people are frightened into
believing there is no possible way to solve the problem.

Information from the Bureau of Land Management indicates


that there are oil and gas properties which can be developed, to
address both our energy needs and to provide revenue to help
fund an actual Social Security Trust. Assuming an oil price of
$100 per barrel, with a 16 2/3 percent royalty, potential royalty
revenues from known undeveloped reserves would exceed 24
Trillion dollars as shown in the following table. The figures in this
table only show a portion of the potential oil, gas and mineral
resources. The Atlantic off shore potential 7 and the potential
resources around the Florida coast8 are not shown. The table
also does not show the potential royalty revenue from natural
gas9 and coal10 reserves located on federal land. Even when the
royalty sharing with the states is considered, there will be
sufficient revenue to satisfy the future revenue needs of the
Social Security / Medicare system, while sufficient assets are
accumulated to fund the reserves necessary to guarantee the
solvency of an actual Social Security Pension Trust.
OIL IN PLACE ESTIMATED ROYALTY POTENTIAL
BARRELS RECOVERABLE PRICE PERCENT ROYALTY INCOME

UTAH TAR SANDS 11


12,000,000,000 12,000,000,000 $100 16.666% $199,992,000,000.00

CALIFORNIA OFF SHORE 12


10,130,000,000 10,130,000,000 $100 16.666% $168,826,580,000.00

ALASKA OFF SHORE 13


23,600,000,000 23,600,000,000 $100 16.666% $393,317,600,000.00

ALASKA ANWR 14
10,400,000,000 10,400,000,000 $100 16.666% $173,326,400,000.00

BAKKEN FORMATION 15
1,500,000,000,000 3,645,000,000 $100 16.666% $60,747,570,000.00

GREEN RIVER OIL SHALE 16


1,230,000,000,000 1,230,000,000,000 $100 16.666% $20,499,180,000,000.00
------------------------------
$21,495,390,150,000.00
================

The big ticket items listed above are the Bakken Formation and
the Green River Oil Shale deposits.

Development of the Bakken Formation has started on privately


owned land, and this formation is now producing a substantial
amount of oil. The Bakken name was taken from the name of
the farmer on whose property, the first producing well was
drilled. The actual geologic formation is known as the Williston
Basin which covers a large portion of eastern Montana and

122
western North Dakota.

The development of this formation is now possible with the use


of a lateral drilling technique and forcing water at extreme
pressure into the well to fracture the very dense rock containing
the oil. The fractures are then filled with a porous material
which allows the oil to flow through the cracks into the drilled
area and be recovered. This illustrates the innovative
capabilities of our oilmen, and bodes well for the continued
development of what are referred to as unconventional sources
of oil.

The Bakken formation is a big ticket item because there is a


potential for a large increase in estimated reserves. In 2008 the
USGS increased the estimated reserves in the Bakken formation
by 25 times, over it's estimate made in 1995. There is a body of
work by a USGS scientist named Leigh Price 17. This work before
his death, estimated the recoverable reserves as being from
271 and 503 billion barrels of oil. The 3.645 billion barrel
estimate was made, based on 2008 technology. The increase in
the estimate from the 1995 estimate gives credibility to the
Leigh Price estimates.

The Green River Oil Shale deposits are located in the inter
mountain west and cover parts of Wyoming, Utah and Colorado.
The existence of these deposits has been known for over a
hundred years and the material in the oil shale was used to
lubricate wagon wheels by early settlers. The term oil shale is
not very descriptive because the rock in question is not shale
and the mineral is not oil. The mineral is a substance called
Kerogen, which is geologically younger than oil, and must be
heated to be converted into oil. This heating process is normally
performed by the pressure of the earth above, for normal oil
formations. The Green River Oil Shale is located at the surface
and has not been subjected to the pressure necessary to
convert the Kerogen into oil. Developing this resource will be
expensive because the material will have to be mined and then
cooked to convert the Kerogen into petroleum. The process, of
extracting the oil, is similar to what is currently being used to
extract oil from the Alberta Oil Sands in Canada. The process is
both capital and labor intensive, and requires a lot of water to
cool the heated rock after the oil is removed.

123
The area, where these reserves are located, is one of the most
arid parts of this country and it might be necessary to run a
pipeline to the Pacific, to get the water needed to process the
oil.

Because of the potential costs involved, it will be necessary to


have legislation in place to ensure that when some eco-terrorist
decides the Mormon Cricket is an endangered species, he will
not be able to use the Environmental Protection Laws and the
Endangered Species Act, along with the Federal Courts, to halt
operations after billions dollars have been spent to start
developing the shale oil properties. The ability of Congress to
provide the necessary legislation is covered in the sections of
this book covering the checks and balances in our Constitution.
A sample of the legislation needed is provided on pages 34 and
35.

The U.S. uses an enormous amount of oil, and our own oil and
natural gas reserves need to be tapped. We will probably still be
importing oil from Canada after these resources are developed,
but we can eliminate imports from countries which are not our
friends.

There is a lot of misinformation and disinformation available on


the web. A lot of this appears to be an effort, on the part of the
eco-terrorists, to convince us that we can not develop the
available resources. In 1994, President Clinton vetoed a bill to
authorize drilling in ANWR because it would take too long to
develop. The idea that we must see immediate results is
absurd, if President Clinton had not vetoed the bill, we would
have oil flowing from ANWR now. The Social Security System is
going to need lease and royalty revenues for all of the
foreseeable future. An ancient Chinese philosopher named Lao-
tzu once said that; “A journey of 1000 miles must begin with a
single step.” We must start the process of funding the Social
Security / Medicare System with assets which will provide the
necessary income, so that the taxpayers do not have to foot the
bill.

The current amount of royalty and lease income to the U.S.


Treasury is minimal because almost none of the resources
owned by the Federal Government are currently being tapped.

124
The available resources are far in excess of the amount needed
to fix the funding problems with the Social Security / Medicare
System. There are enough resources to allow the establishment
of a debt elimination trust to pay off our national debt, in
addition to solving the problems of Social Security. First we must
fix Congress by electing people to Congress who will stop the
out of control spending and balancing the budget.

Use of these resources will allow us to become self sufficient in


our energy needs while we transition to renewable energy
sources. If we do not take the actions needed to stop the eco-
terrorists, we will become a bankrupt third world country.

We must answer a call for action and stop the decline of our
country!
 

125
CALL FOR ACTION!
 ANSWER THE CALL!

This country is in serious trouble because we have a Congress


that has embarked on a spending program which will
impoverish our children, and grand children, with massive
deficits and borrowing. In addition many members of Congress
have given ( or sold ) their allegiance to the cultists who
worship at the altars of free trade or global warming.

The people need to replace all of our legislators who are part of
the problem. This book contains a copy of the roll call vote on
the veto override of the 2007 water bill. The big spenders in
Congress have identified themselves by voting to override the
veto of this pork laden bill.

The House of Representatives was set up to be the peoples'


house. The people can vote the big spenders out of office. The
term of office for the House of Representatives is only two
years, because the founding fathers of our country wanted the
house to be made up of people who would represent the entire
population.

The Senate has a six year term because the senators were
supposed to represent the various states. The 17 th Amendment
to the Constitution provided for the direct election of senators
instead of appointment by the the various states. This has given
us an elected aristocracy because many senators continually
get reelected and serve for life. The important thing to note is
that a senator is elected, and can be replaced every 6 years by
voters.

The people can elect patriots, who will make the changes
needed to take back this country from the extremists. Our
elected Congress persons are people the same as you and me.
They are not divinely appointed to positions of power. They are
elected. This country needs patriots who will answer the call to
take action, and who will remove the incumbents.

Ask yourself whether or not you are a patriot 1.

126
The Constitution provides the following requirements for
Representatives in the House and for Senators.

Article I, Section 2

No Person shall be a Representative who shall not have attained the  
Age of twenty five Years, and been seven Years a Citizen of the United  
States, and who shall not, when elected, be an Inhabitant of that State  
in which he shall be chosen.

Article I, Section 3

No Person shall be a Senator who shall not have attained the Age of  
thirty Years, and been nine Years a Citizen of the United States, and  
who shall not, when elected, be an Inhabitant of that State in which  
he shall be chosen.

These positions are to be filled by people who are elected, and


who take an oath to protect and defend the Constitution of the
United States.

If you have attended a Tea Party, you are one of the people.

If you have organized a Tea Party, you are already a leader of


the people.

If you are a Member of the Campaign for Liberty, you are one of
the people.

If you are a Member of the 9-12 project, you are one of the
people.

If you are a Member of any similar organization, you are one of


the people.

If you have had your job outsourced to a third world country,


you are one of the people.

If you have lost your business because of government action,


you are one of the people.

If you are a mother who has raised children, you are one of the
people, and you have experience in the most important job in

127
our society.

If you are eligible to vote, you are one of the people.

You do not have to be a lawyer. One of the problems with our


current Congress is the very large number of lawyers who are
elected. A lot of lawyers derive their income by using the legal
system to extort money from individuals, or businesses, who
are perceived as having deep pockets. This same attitude is
carried over to their position in Congress, where they perceive
the taxpayers as having deep pockets.

You, as a Patriot, and one of the people, can answer the call to
take action.

If you can not abide with the pro-abortion, anti-family and anti-
Christian policies of the Democrat party, you will need to run as
a Republican.

If you can not abide with a party leadership which worships at


the altar of free trade, and is owned by the businesses which
are outsourcing our jobs to third world sweatshops, you will
need to run as a Democrat.

If you are disgusted with both, you should consider running


against the incumbent, in the incumbent party primary. When
you decide to act, you should try to defeat your target
incumbent in the primary election, where you will need a
smaller number of votes to win, because of the low turnout in
primaries. To achieve success you will need to gain the support
of people who attended the Tea Parties, and all of their friends
and relatives. This may require some of them to register in a
different party.

People who normally identify with one party, or the other, need
to reconsider the party labels. The actual choice is between an
incumbent or a non-incumbent. You may wish to think of the
choice as being between a Porker or a Patriot.

The call to action also extends to state and local elections, as


well as school board elections. The advantage of running for
state, local and school board election is that you may not be
required to move, and many of these positions are part time

128
jobs, which will not require you to leave your current job. You
will have to check out you local election laws to determine how
to proceed.

Incumbents have money in their campaign war chests from


donations by special interest groups who want to keep the
bought and paid for politicians in power.

You will need an active grassroots organization to combat the


money and party organizations you will be opposing. This will
require you to ask for help from the people who attend the tea
parties, are members of the Campaign for Liberty or other
similar organizations in your target district.

You will need to get the grass-root organizations to select and


support a single candidate for your district, because multiple
candidates will split the vote, and allow the reelection of the big
spending incumbent.

After a candidate wins the primary , he or she will receive the


vote of the brain dead, straight ticket, party line voters, of his or
her party, in addition to the voters who won't vote for the other
party.

My observation of the effects of gerrymandering is that the


winner of a partisan primary, over an incumbent, will be able to
count on around 40 percent of the vote. This dependable vote
will give the winner of the primary a base vote in the general
election, and make it difficult for the opposing party to elect a
candidate.

The general election is normally decided by the 30 to 40


percent of the electorate who think for themselves, and
evaluate the candidates and issues. If we can elect a patriot
over an incumbent in a primary, our patriot will only need an
additional 10 percent of the vote, to win the general election.
The job of the candidate is to persuade these voters that he is
the best candidate. The job of the patriots in this country is to
select the best candidate, without regard to party affiliation.
The best candidate will probably not include the current
incumbents.

We need people who will honor the oath of office, to support

129
and defend the Constitution. We need candidates who will vote
against any spending or programs which are not specifically
allowed by the Constitution.

This book is a call for action. I am asking you to answer the call
and run for office. If you can not run and if you have a good
candidate in your district who will honor his or her oath of
office, then support that candidate, and get all of your friends,
neighbors and relatives to support that candidate. If the
candidate is in another party, then register in the other party so
you can support the candidate of your choice. You are voting for
the candidate, not the party. If there are good candidates
running for different offices in different parties, you will have to
decide which candidate is running for the position most
important to you, because you will only be able to vote in the
primary of one party. In many states you will need to make this
choice in advance of the primary, because you may need to
register as a member of the party in which you wish to vote.

The strategy of having a group of patriots rally behind a single


candidate in the incumbent party primary can work. If you
doubt this, take a look at the leadership of the Democrat Party.
Ask yourself if these radical left wing extremists represent the
views of the majority of the citizens. The short answer to this
question is, “no.” The Democrat Party was taken over by an
organized effort, which ran left wing extremists, in the primary
elections. The patriots in this country can use the same tactics,
to restore this country to the Constitutionally limited Republic
designed by our country's founding fathers.

The book “The Shadow Party” by David Horowitz and Richard


Poe provides details about how extremists took control of the
Democrat party. The actions to subvert a party which once
represented the working people of this country, must be
countered by patriots who are willing to join the battle.

We can restructure Social Security and prevent national


bankruptcy. We can end our country's dependence on imported
oil. We can stop the out of control spending and restore the
republic.

An election is like a gun fight. There are no second place


winners. The people who answer the call, to challenge the

130
incumbents, and stop the spending, are patriots. We Americans
need to encourage and support them in their efforts. The
people also need to monitor public officials' performance after
they are elected, and remove them, if they betray us.

Our Constitution has provided a mechanism to clean up the


current mess. We can replace the radicals, and pork barrel
spenders, in Congress who are responsible for the problems. We
must use the power granted to us by the founding fathers. We
must use our Constitution. We must hold our representatives
accountable to the Oath of Office.

Answer the call!

131
Not Yours to Give
Col. Davy Crockett

From The Life of Colonel David Crockett


Member of the U.S. Congress 1827-31 & 1832-35

Compiled from The Life of Colonel David Crockett


by Edward S. Ellis (Philadelphia: Porter & Coates, 1884) 1,2

One day in the House of Representatives, a bill was taken up


appropriating money for the benefit of a widow of a
distinguished naval officer. Several beautiful speeches had been
made in its support. The Speaker was just about to put the
question when Crockett arose:

"Mr. Speaker --- I have as much respect for the memory of the
deceased, and as much sympathy for the suffering of the living,
if suffering there be, as any man in this house, but we must not
permit our respect for the dead or our sympathy for a part of
the living to lead us into an act of injustice to the balance of the
living. I will not go into an argument to prove that Congress has
no power to appropriate this money as an act of charity. Every
member upon this floor knows it. We have the right, as
individuals, to give away as much of our own money as we
please in charity; but as members of Congress we have no right
to appropriate a dollar of the public money. Some eloquent
appeals have been made to us upon the ground that it is a debt
due the deceased. Mr. Speaker, the deceased lived long after
the close of the war; he was in office to the day of his death,
and I have never heard that the government was in arrears to
him."

"Every man in this House knows it is not a debt. We cannot,


without the grossest corruption, appropriate this money as the
payment of a debt. We have not the semblance of authority to
appropriate it as a charity. Mr. Speaker, I have said we have the
right to give as much money of our own as we please. I am the
poorest man on this floor. I cannot vote for this bill, but I will
give one week's pay to the object, and, if every member of
Congress will do the same, it will amount to more than the bill
asks."

Later when asked by a friend why he had opposed the

132
appropriation, Crockett gave this explanation:

"Several years ago I was one evening standing on the steps of


the Capitol with some other members of Congress when our
attention was attracted by a great light over in Georgetown. It
was evidently a large fire. We jumped into a hack and drove
over as fast we could. In spite of all that could be done, many
houses were burned and many families made houseless, and
besides, some of them had lost all but the clothes they had on.
The weather was very cold, and when I saw so many women
and children suffering, I felt that something ought to be done
for them. The next morning a bill was introduced appropriating
$20,000 for their relief. We put aside all other business and
rushed it through as soon as it could be done.

The next summer, when it began to be time to think about the


election, I concluded I would take a scout around among the
boys of my district. I had no opposition there, but, as the
election was some time off, I did not know what might turn up.
When riding one day in part of my district in which I was more
of a stranger than any other, I saw a man in a field plowing and
coming toward the road. I gauged my gait so that I should meet
as he came to the fence. As he came up, I spoke to the man. He
replied politely, but as I thought, rather coldly.

I began, 'Well, friend, I am one of those unfortunate beings


called candidates, and-'

'Yes, I know you; you are Colonel Crockett, I have seen you once
before and voted for you the last time you were elected. I
suppose you are out electioneering right now, but you had
better not waste your time or mine. I shall not vote for you
again.'

This was a sockdolager, I begged him to tell me what was the


matter.

'Well, Colonel, it is hardly worth while to waste time or words


upon it. I do not see how it can be mended, but you gave a vote
last winter which shows that either you have not capacity to
understand the Constitution, or that you are wanting in the
honesty and firmness to be guided by it. In either case you are
not the man to represent me. But I beg your pardon for

133
expressing it in that way. I did not intend to avail myself of the
privilege of the constituent to speak plainly to a candidate for
the purpose of insulting or wounding you.

I intend by it only to say that your understanding of the


Constitution is very different from mine; and I will say to you
what, but for my rudeness, I should not have said that I believe
you to be honest. But an understanding of the Constitution
different from mine I cannot overlook because the Constitution,
to be worth anything, must be held sacred and rigidly observed
in all its provisions. The man who wields power and
misinterprets it, is the more dangerous the more honest he is.'

'I admit the truth of all you say, but there must be some
mistake about it, for I do not remember that I gave any vote last
winter upon any constitutional questions.'

'No, Colonel, there is no mistake. Though I live here in the


backwoods and seldom go from home, I take the papers from
Washington and read very carefully all the proceedings in
Congress. My papers say that last winter you voted for a bill to
appropriate $20,000 to some sufferers by a fire in Georgetown.
Is that true?'

'Well, my friend, I may as well own up. You have got me there.
But certainly nobody will complain that a great and rich country
like ours should give the insignificant amount of $20,000 to
relive its suffering women and children, particularly with a full
and overflowing Treasury, and I am sure, if you had been there,
you would have done just as I did.'

'It is not the amount, Colonel, that I complain of, it is the


principle. In the first place, the government ought to have in the
Treasury no more than enough for its legitimate purposes. But
that has nothing to do with the question. The power of
collecting and disbursing money at pleasure is the most
dangerous power that can be intrusted to man, particularly
under our system of collecting revenue by a tariff, which
reaches every man in the country, no matter how poor he may
be and the poorer he is, the more he pays in proportion to his
means.

What is worse, it presses upon him without his knowledge

134
where the weight centers, for there is not a man in the United
States who can ever guess how much he pays to the
government. So you see, that while you are contributing to
relieve one, you are drawing it from thousands who are even
worse off than he. If you had the right to give anything, the
amount was simply a matter of discretion with you, and you had
as much right to give $20,000,000 as $20,000.

If you had the right to give to one, you have the right to give to
all and as the Constitution neither defines charity nor stipulates
the amount, you are at liberty to give to any and everything
which you may believe, or profess to believe, is a charity, and
to any amount you may think proper. You will very easily
perceive what a wide door this would open for fraud and
corruption and favoritism on the one hand, and for robbing the
people on the other. No, Colonel, Congress has no right to give
charity.

Individual members may give as much of their own money as


they please, but they have no right to touch a dollar of the
public money for that purpose. If twice as many houses had
been burned in this country as in Georgetown, neither you nor
any other member of Congress would have thought to
appropriating a dollar for our relief. There are about two
hundred and forty members of Congress. If they had shown
their sympathy for the sufferers by contributing each one
week's pay, it would have made over $13,000. There are plenty
of men in and around Washington who could have given
$20,000 without depriving themselves of even a luxury of life.

The Congressmen chose to keep their own money, which, if


reports to be true, some of them spend not very credibly; and
the people about Washington, no doubt, applauded you for
relieving them from the necessity of giving by giving what was
not yours to give. The people have delegated to Congress, by
the Constitution, the power to do certain things. To do these, it
is authorized to collect and pay moneys, and for nothing else.
Everything beyond this is usurpation and a violation of the
Constitution.

So you see, Colonel, you have violated the Constitution in what I


consider a vital point. It is a precedent fraught with danger for
the country, for when Congress once begins to stretch its power

135
beyond the limits of the Constitution, there is no limit to it and
no security for the people. I have no doubt you acted honestly,
but that does not make it any better, except as far as you are
personally concerned and you see that I cannot vote for you.'

'I tell you I felt streaked. I saw if I should have opposition, and
this man should go talking, he would set others to talking and in
that district I was a gone fawn-skin. I could not answer him and
the fact is, I was so fully convinced that he was right, I did not
want to. But I must satisfy him and I said to him:

Well, my friend, you hit the nail upon the head when you said I
had not sense enough to understand the Constitution. I
intended to be guided by it and thought I had studied it fully. I
have heard many speeches in Congress about the powers of
Congress, but what you have said here at your plow has got
more hard, sound sense in it than all the fine speeches I ever
heard. If I had ever taken the view of it that you have, I would
have put my head into the fire before I would have given that
vote; and if you will forgive me and vote for me again, if I ever
vote for another unconstitutional law, I wish I may be shot.'

He haughtingly replied: 'Yes, Colonel, you have sworn to that


once before, but I will trust you again upon one condition. You
say that you are convinced that your vote was wrong. Your
acknowledgment of it will do more good than beating you for it.
If, as you go around the district, you will tell people about this
vote and that you are satisfied it was wrong, I will not only vote
for you, but will do what I can to keep down opposition, and
perhaps, I may exert some little influence in that way.'

'If I don't, I said, I wish I may be shot, and to convince you that I
am in earnest in what I say, I will come back this way in a week
or ten days, and if you will get up a gathering of the people, I
will make a speech to them. Get up a barbeque and I will pay
for it.'

No, Colonel, we are not rich people in this section, but we have
plenty of provisions to contribute for a barbeque and some to
spare for those who have none. The push of crops will be over in
a few days and we can afford a day for a barbeque. This is
Thursday. I will see to getting up on Saturday week. Come to my
house on Friday and we will go together and I promise you a

136
very respectable crowd to see and hear you.'

'Well, I will be there. But one thing more before I say good-bye. I
must know your name.'

'My name is Bunce.'

'Not Horatio Bunce?'

'Yes.'

'Well, Mr. Bunce, I never saw you before though you say you
have seen me, but I know you very well. I am glad I have met
you and very proud that I may hope to have you for my friend.'

It was one of the luckiest hits of my life that I met him. He


mingled but little with the public, but was widely known for his
remarkable intelligence and incorruptible integrity and for a
heart brimful and running over with kindness and benevolence,
which showed themselves not only in words but in acts. He was
the oracle of the whole country around him, and his fame had
extended far beyond the circle of his immediate acquaintance.
Though I had never met him before, I had heard much of him,
and but for this meeting it is very likely I should have had
opposition, and have been beaten. One thing is very certain, no
man could now stand up in that district under such a vote.

At the appointed time I was at his house, having told our


conversation to every crowd I had met, and to every man I
stayed all night with, and I found that it gave the people an
interest and a confidence in me stronger than I had ever seen
manifested before. Though I was considerably fatigued when I
reached his house, and under ordinary circumstances, should
have gone early to bed, I kept up until midnight talking about
the principles and affairs of government, and got more real,
true knowledge of them than I had got all my life before.

I have known and seen much of him since, for I respect him -
no, that is not the word - I reverence and love him more than
any living man, and I go to see him two or three times every
year; and I will tell you, sir, if every one who professes to be a
Christian lived and acted and enjoyed as he does, the religion of
Christ would take the world by storm.

137
But, to return to my story. The next morning I went to the
barbeque and to my surprise, found about a thousand men
there. I met a good many whom I had not known before, and
they and my friend introduced me around until I had got pretty
well acquainted - at least, they all knew me. In due time notice
was given that I would speak to them. They gathered up around
a stand that had been erected. I opened my speech by saying:

Fellow-citizens - I present myself before you today feeling like a


new man. My eyes have lately been opened to truths which
ignorance or prejudice, or both, had heretofore hidden from my
view. I feel that I can today offer you the ability to render you
more valuable service than I have ever been able to render
before. I am here today more for the purpose of acknowledging
my error than to see your votes. That I should make this
acknowledgment is due to myself as well as to you. Whether
you will vote for me is a matter for your consideration only.

I went on to tell them about the fire and my vote for the
appropriation and then told them why I was satisfied it was
wrong. I closed by saying:

And now, fellow citizens, it remains only for me to tell you that
most of the speech you have listened to with so much interest
was simply a repetition of the arguments by which your
neighbor, Mr. Bunce, convinced me of my error. It is the best
speech I ever made in my life, but he is entitled to the credit for
it. And now I hope he is satisfied with his convert and that he
will get up here and tell you so. He came upon the stand and
said:

'Fellow citizens, it affords me great pleasure to comply with the


request of Colonel Crockett. I have always considered him a
thoroughly honest man, and I am satisfied that he will faithfully
perform all that he has promised to you today.'

He went down, and there went up from that crowd such a shout
for Davy Crockett as his name never called forth before. I am
not much given to tears, but I was taken with a choking then
and felt some big drops rolling down my cheeks. And I tell you
now that the remembrance of those few words spoken by such
a man, and the honest, hearty shout they produced, is worth
more to me than all the reputation I have ever made, or ever

138
shall make, as a member of Congress."

"Now, sir," concluded Crockett, "you know why I made that


speech yesterday."

“There is one thing which I will call to your attention, you


remember that I proposed to give a week's pay. There are in
that House many very wealthy men - men who think nothing of
spending a week's pay, or a dozen of them, for a dinner or a
wine party when they have something to accomplish by it.
Some of those same men made beautiful speeches upon the
great debt of gratitude which the country owed the deceased--a
debt which could not be paid by money--and the insignificance
and worthlessness of money, particularly so insignificant a sum
as $20,000 when weighed against the honor of the nation. Yet
not one of them responded to my proposition. Money with them
is nothing but trash when it is to come out of the people. But it
is the one great thing for which most of them are striving, and
many of them sacrifice honor, integrity, and justice to obtain it.”
---------------------------------------------------------------------------------------
The item above was from a book which was originally published
in 1862 according to information from the Library of Congress2.
This book is now in the public domain because the copyright
has expired.

139
MY THIRD PARTY EXPERIENCE

I previously ran for Congress as a candidate for the U.S.


Taxpayers Party of Michigan, which is the Michigan affiliate of
the Constitution Party. The old U.S. Taxpayers Party name is still
used in Michigan, because Michigan law does not let the party
change its name without a full scale petition drive to get ballot
access under a new name. This is one example of the tactics
used by the major parties to marginalize and eliminate third
parties.

The idea of using federal property to pay for the cost of Social
Security Benefits was originally proposed by Howard Phillips,
the founder of the Constitution Party. His proposal was to phase
out the Social Security System, and use the property owned by
the Federal Government as a source of funds, to pay off existing
recipients. The proposal to phase out the Social Security System
is simply not workable in my opinion. We need a system which
provides a social safety net for retirees.

I was not happy with the Republican Party because of the


deficit spending while the Congress was controlled by
Republicans. I was also not willing to support free trade
agreements which were being used to outsource our jobs to
third world sweat shops.

My objections to the Democrat Party are even deeper and more


fundamental. The pro-abortion, anti-family and anti-Christian
nature of the Democrat party is actually offensive. The party
has a litmus test, which wants all members to agree with a non-
existent constitutional right of abortion on demand.

The following explains why I considered a third party 1 to be


necessary.

Why consider a third party?

This country needs a viable third party, or a coalition of third


parties and independents in Congress, to stop the corruption in
Washington. The power structure in our capital actually
promotes corruption and must be changed. While we have
always had some corrupt politicians, the structure of the system

140
promotes a pervasive and continuing form of corruption.

The problems are caused by the combination of the two party


system, the seniority system, and the committee structure in
Congress.

The two party system has resulted in almost all of our


politicians in Washington being either a Republican or a
Democrat. Because there are only two parties, one party will
have the ability to have a majority vote as long as the party
members vote as a block. The parties are able to enforce party
discipline because the committee chairmen are always senior
members of the party leadership. The committee chairmen can
block any legislation proposed by any party member who does
not toe the party line. This situation promotes the continuation
of the status quo and the gridlock in Congress, which is
stopping legislation needed for the good of this country.

The committee system is inherently a good idea because we


need legislation, affecting various issues, to be drafted and
revised by individuals with expertise in the areas which will be
affected by the legislation. This system also allows legislation to
be reviewed by a large number of people who can consider
what ramifications may occur, and hopefully avoid unintended
consequences. When legislation is pushed through Congress by
the party leadership, for the benefit of special interest groups,
the result can be a disaster. One recent example is the subsidy
for ethanol made from grains such as corn and soybeans. The
use of basic food stocks for fuel is grossly irresponsible, and has
resulted in a huge spike in the cost of groceries. There have
also been food riots and starvation in various developing
countries around the world, because Congress passed
legislation to benefit a few agri-business companies such as
ADM ( Archer Daniels Midland ).

The problem with the current system is that the Committee


Chairmen are, by tradition , the senior committee members in
the majority party ( nothing in the Constitution requires the
seniority system ). This results in a situation where the
individuals who are the most likely to be corrupt ( because they
have been in Congress the longest ) are the ones who hold all
the power to move or kill proposed legislation. I do not want to
imply that all Committee Chairmen are corrupt, but the placing

141
of their own desire for personal or party power above the
interest of the voters and taxpayers is a very pernicious form of
institutionalized corruption, and must be ended.

If a viable third party could emerge, and have enough members


in Congress, so that neither of the major parties have a
majority. It would change the power structure so that
Committee Chairmen, who place party or personal power above
the interests of the country, could be voted out of their
Chairmanships. This change would enable the passage of
legislation which is needed for the good of this Country. It would
also stop legislation crafted for the benefit of the special
interest groups, who contribute to the re-election funds of the
Committee Chairmen.

If the voters in this country are not willing to make the effort to
elect third party or independent candidates, they will get more
of the same from Congress. The special interest groups know
how the system is structured, and they will continue to buy the
favor of various Committee Chairman, so they can continue to
have the power to influence legislation.

I believed that, if a third party could get candidates elected by


supporting the Social Security and energy issues discussed in
this report, the major parties will move to adopt the issues as
their own, to stop the growth of the third party. Neither major
party will acknowledge that the current problems are caused by
the current politicians. The Republicans would cite the need to
drill now, and the Democrats would cite a need to protect senior
citizens, but both would act if they faced a possibility that a
viable third party would emerge. Both major parties are, in
reality, separate parts of a single party which could be referred
to as the incumbent party.

The changes needed to fix Social Security and end our


dependence on imported oil can be made using the two party
system, if candidates using these issues cause long term
incumbents, in safe districts, to be voted out of office. The
remaining incumbents will adopt the issues to keep from being
removed when faced by a challenger using these issues. The
lack of a viable third party will mean that the underlying cause
of the corruption in Washington will continue. To fix Social
Security this approach may be necessary, until the press is

142
willing to cover third party candidates, and voters are willing to
elect third party candidates. A person must get elected before
he can propose the necessary legislation.

My conclusions after being a third party candidate

My experience as a third party candidate showed me that the


media will simply ignore a third party candidate. I proposed a
way to fix Social Security, without raising taxes or cutting
benefits, and also end our reliance on imported oil. The media
was not willing to cover these ideas. Because of this experience
I am now considering a run for Congress as a Republican, so I
can get out the message that this country can fix some very
serious problems.

The proposals to fix Social Security, and eliminate our


dependence on imported oil, still need to be adopted. I am now
willing to consider running as a Republican Party candidate
because there is a movement, within the Republican Party, to
return to the small government roots of the party. The
Democrat party of today is not the populist party of John
Kennedy and Scoop Jackson, and is not an option. There are
good people in both parties and the extremists must be
removed to stop the animosity which blocks civil political
discourse.
Until the media starts covering all candidates for elective office,
we will continue to have a one party system, with 90% of the
incumbents in Congress being re-elected. My call for action
proposes some ways this situation can by addressed. We are in
dire need of individuals who will run for office, and truly make a
commitment to honor the oath of office.
If enough patriots can get elected as members of both parties,
these individuals can form a Patriot Caucus, vote out the the
current committee chairmen, and end the institutional
corruption in Congress. This process will not be easy or pretty,
but it can ( and must ) be done.

143
ABOUT THE AUTHOR - LES TOWNSEND

I grew up on a dairy farm outside of Blanchard Michigan and


graduated from Blanchard High School in 1964.

Service in the U.S. Army Security Agency as a Radio Intercept


Operator from 1964 to 1968. Served in Japan 1965 to 1967.
Served in Korea 1967 to 1968 on the Korean DMZ, which was a
combat zone at the time of service. Stationed at the northern
most U.S. outpost in South Korea. Two months of the 13 month
tour of duty were were spent in an Army Hospital, where I came
very close to losing a leg, because of a staph infection in a
knee joint.

Attended Central Michigan University on the GI Bill from 1969 to


1972. Graduated with honors and Bachelor of Science in
Business Administration, with a minor in Political Science.

Employed by the Internal Revenue Service from 1972 to 1995.


This service included every non-criminal enforcement position
in the IRS. Eleven years of the employment were spent as a
Pension Agent auditing and reviewing pension plans of all types,
including defined benefit plans. I was an Appeals Officer at the
time I retired.

Started a small pension administration business after accepting


an early retirement offer from the IRS. The business was
growing up to 9-11-2001 when the economy shut down and a
number of my clients went out of business. The economy in the
Detroit Metro area went into an economic depression and my
business had severe financial problems. At this time I sold my
home in an effort to get my financial affairs in order. This was
not entirely successful as I was diagnosed with prostate cancer
two weeks after closing on my house. At a time when I needed
to be able to devote 12 hours a day to salvaging my business, I
was not able to do anything.

I was on pain pills and not able to do much of anything after the
surgery, to remove the cancerous prostate. During this period, I
failed to file a required change of address notice with the State
Insurance Commissioner, and as a result my license to sell
insurance was revoked. Because of the loss of the license, I was

144
forced to turn most of my pension administration clients over to
a different pension administration firm. The bottom line is that I
survived the battle with cancer ( my last PSA test was 0.03 ),
but my business did not survive the cancer and the tender
attentions of our government regulators.

I have concluded that the good Lord wanted me to be doing


something different. I am now running for Congress as
candidate with no name recognition or money. I only have a
plan which will save Social Security and end our dependence on
imported oil. If people vote for me, the praise will have to go to
the Lord. I have learned that I can not rely on my own abilities.

I have a website which is currently a billboard for the political


campaign at www.voteforles.info.

145
THE PROBLEMS

1. Social Security News Release


May 12, 2009
http://www.ssa.gov/pressoffice/pr/trustee09-pr.htm

2. Summary of the 2009 Annual Social Security and Medicare


Trust Fund Reports
http://www.ssa.gov/OACT/TRSUM/index.html

IT'S A GERRYMANDERED COUNTRY

1. Random House Webster's college dictionary


2001 Second Revised and Updated Edition p 516

2. The Shadow Party: How George Soros, Hillary Clinton and Sixties
Radicals Seized Control of the Democratic Party
by David Horowitz and Richard Poe
http://www.amazon.com/Shadow-Party-Hillary-Radicals-
Democratic/dp/1595551034/ref=sr_1_1?
ie=UTF8&s=books&qid=1255817062&sr=1-1

OATH OF OFFICE

1. Cornell University Law School - U.S. Code Collection


TITLE 5, PART III, Subpart B, CHAPTER 33, SUBCHAPTER II, § 3331
Oath of Office – Congress

2. The New International Webster's standard dictionary


2006 Edition p 199

3. Ibid; p 223

4. Ibid; p 265

5. Ibid; p 94

6. Cornell University Law School - U.S. Code Collection


TITLE 28, PART I, Part 1, CHAPTER 21, § 453
Oath of Office - Judiciary

7. Military Plain Facts – Military Oath of Office for Commissioned Officers


Military Oath of Office for Commissioned Officers
http://military.plainfacts.net/military­ceremonies/military­oath­of­
office­for­commissioned­officers/
8. Military Plain Facts – Military Oath of Enlistment
Military Oath of Office
http://military.plainfacts.net/military-ceremonies/military-oath-of-
enlistment/

146
A HISTORY OF FISCAL MISFEASANCE

1. Congressional Budget Office


Historical Budget Data
http://www.cbo.gov/budget/historical.shtml

IGNORE WHAT THEY SAY! WATCH HOW THEY VOTE!

1. U.S. Custom House Guide, Nov. 6, 2007


On November 2, President Bush vetoed the 2007 Water Resources
Development Act (HR 1495).
http://blogs.customhouseguide.com/news/?p=116

2. Roll Call Vote 1040 Tally


http://clerk.house.gov/evs/2007/roll1040.xml
3. Roll Call Congress.org - Roll Call Vote 406 Tally. - Senate
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_
cfm.cfm?congress=110&session=1&vote=00406

CHECKS AND BALANCES

1. Constitution of the United States


http://www.archives.gov/exhibits/charters/constitution.html

2. Blacks Law Dictionary


Revised Fourth Edition
Copyright ©1967 By West Publishing Company

3. Ibid; p 239

4. Ibid; p 861

5. Ibid; p 744

6. Ibid; p 1150

7. Ibid; p 1235

EXCEPTIONS AND REGULATIONS

1. Marbury v. Madison 5 U.S. 137


http://www.law.cornell.edu/supct/html/historics/USSC_CR_0005_0137_ZO.html

2. Cato Policy Analysis No. 19 ? March 16, 1998


Money and School Performance
Lessons from the Kansas City Desegregation Experiment
http://www.cato.org/pubs/pas/pa-298.html

147
THE GLOBAL WARMING CULT

1. Anchorage Daily News 4-19-2009


Court ends Alaska offshore drilling plan
http://www.adn.com/money/industries/oil/story/762894.html

2. The Bismark Tribune, January 19, 2008


New North Dakota refinery would benefit state
http://www.bismarcktribune.com/news/opinion/mailbag/article_
b19e593e-0aa6-5535-a3ee-f319c67879f3.html

The Bismark Tribune, October 3, 2008


Refinery should make diesel
http://www.bismarcktribune.com/news/state-and-regional/article_
4bf25d3a-47f0-5cbc-9d1f-ce2530386676.html

3. WorldNetDaily October 17, 2009


Thatcher adviser: Copenhagen goal is 1­world government
http://www.wnd.com/index.php?fa=PAGE.view&pageId=113219

4. Random House Webster's college dictionary p 390

5. Ibid; p 1263

6. USA Today – 6/9/2009


by James R. Healey, Sharon Silke Carty and Chris Woodyard,
Closing day comes, and Chrysler dealers aren't happy
http://www.usatoday.com/money/autos/2009-06-08-chrysler-
dealerships-shuttered_N.htm
7. Fox News, May 15, 2009
GM Begins Announcing its 1,100 Dealership Closures
http://www.foxnews.com/story/0,2933,520281,00.html

8. New Websters Dictionary and Thesaurus p 757

CONSERVATIVE, NOT REGRESSIVE

1. Random House Webster's college dictionary p 263

2. Ibid; p 990

3. Ibid; p 991

HOW TO FIX SOCIAL SECURITY

1. The United States Postal Service


An American History 1775 - 2006, p40
http://www.usps.com/cpim/ftp/pubs/pub100.pdf

148
2. Forbes - Bruce Bartlett, 05-15-09
The 81% Tax Increase To pay for government's promises on Social
Security and Medicare.
http://www.forbes.com/2009/05/14/taxes-social-security-opinions-
columnists-medicare.html

HISTORICAL BACKGROUND OF SOC. SEC.

1. Historical Background and Development of Social Security


http://www.ssa.gov/history/briefhistory3.html

2. Ibid;

3. U.S. Supreme Court Case


Helvering v. Davis, 301 U.S. 619
Http://www.law.cornell.edu/socsec/course/readings/301us619.htm

4. EBRI 2008 Data Book, Chapter 7, Table 7.5


http://www.ebri.org/pdf/publications/books/databook/DB.Chapter
%2007.pdf

5. The Social Security Act of 1935 Title III and Title IX

6. The Social Security Act of 1935


Title II and Title VIII

7. Social Security: What Every Taxpayer Should Know, p 206


Copyright 1992 by A. Haeworth Robertson
former chief Actuary of the Social Security Administration

8. Ibid; p. 259

9. Ibid; p. 175

10. The Medicare Prescription Drug, Improvement, and Modernization


Act of 2003 (MMA) (P.L.108-173) gives elderly and disabled people
on Medicare access to drug coverage beginning in 2006.

11. 2009 Medicare Annual Report Officially Titled “2009 Annual Report of
the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds Page 178.

12 Ibid; p. 137

WHAT IS A PENSION PLAN?

1. 2009 Medicare Annual Report Officially Titled “2009 Annual Report of


the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds”. Page 24

149
2. CALPERS Facts at a Glance
http://www..ca.gov/index.jsp?bc=/about/facts/home.xml

3. Social Security Website


Trust Fund Data - Interest Rates
http://www.ssa.gov/OACT/ProgData/intRates.html

EVALUATION OF THE SOCIAL SECURITY FUNDING MODEL

1 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Http://www.ssa.gov/OACT/TR/2009/index.html

2. Ibid; p.107, Table V.C1

3. Social Security Benefit Worksheet


http://www.ssa.gov/pubs/10070.html

EVALUATION OF THE MEDICARE FUNDING MODEL

1 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Page 107, Table V.C1
Http://www.ssa.gov/OACT/TR/2009/index.html

2. 2009 Medicare Annual Report Officially Titled “2009 Annual Report of


the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds”.
Page 5, Table II.B1 Medical Data for Calendar Year 2008.
http://www.cms.hhs.gov/reportstrustfunds/

EVALUATION OF THE COMBINED SOCIAL SECURITY AND MEDICARE


FUNDING MODEL

1 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Page 107, Table V.C1
Http://www.ssa.gov/OACT/TR/2009/index.html

2. 2009 Medicare Annual Report Officially Titled “2009 Annual Report of


the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds”.
Page 5, Table II.B1 Medical Data for Calendar Year 2008.
http://www.cms.hhs.gov/reportstrustfunds/

150
PROPOSALS TO RAISE TAXES OR CUT BENEFITS

1. MSNBC Article - Aug. 1, 2008


Actuaries say raise retirement age for benefits
http://www.msnbc.msn.com/id/25955929/

2. U.S News & World Report - Monday, October 19, 2009


Obama Hides Medicare Means-Testing in Plain Sight--In His Big Budget
http://www.usnews.com/blogs/john-farrell/2009/03/09/obama-hides-
medicare-means-testing-in-plain-sight--in-his-big-budget.html

3. CNN/Money - February 28, 2005


Social Security: Nixing the wage cap
By Jeanne Sahadi - senior writer
http://money.cnn.com/2005/02/24/retirement/wagecap_elimination/
index.htm

IMPENDING THREATS TO THE SOLVENCY OF SOCIAL SECURITY

1. Fox News article dated Feb. 20, 2003 2008 with an example of how
illegal aliens are in fact qualifying for benefits.
http://www.foxnews.com/story/0,2933,79013,00.html

2. Senior Citizens League article March 2007


by Mary Johnson, Social Security and Medicare Policy Analyst
http://www.tscl.org/NewContent/102880.asp

3. Examiner.com Detroit - May 24, 2009


Obama Continues Bush's assault on the middle class
http://www.examiner.com/x-9462-LA-Independent-
Examiner~y2009m5d24-Obama-continuing-Bushs-assault-on-the-
middle-class

THE CONSTITUTIONAL PROBLEMS WITH THE PAYROLL TAX

1. IRS Form 843


http://www.irs.gov/pub/irs-pdf/f843.pdf

2. IRS Publication 656


http://www.irs.gov/publications/p556/index.html

THE 1937 SUPREME COURT CASES

1. U.S. Supreme Court Case


Steward Machine Co. v. Collector of Internal Revenue, 301 U.S. 548
http://www.law.cornell.edu/supct/html/historics/USSC_CR

2. U.S. Supreme Court Case


Helvering v. Davis , 301 U.S. 619
ttp://www.law.cornell.edu/socsec/course/readings/301us619.htm

151
3. U.S. Supreme Court Case
Carmichael v. Southern Coal and Coke Co., 301 U.S. 495
http://supreme.justia.com/us/301/495/

THE 1960 SUPREME COURT CASE

1. U.S. Supreme Court Case


Flemming v. Nestor, 363 U.S. 603
http://supreme.justia.com/us/363/603/case.html

ENDING OUR COUNTRY'S DEPENDENCE ON IMPORTED OIL

1. Anchorage Daily News article April 17, 2009


Court ends Alaska offshore drilling plan
http://www.adn.com/money/industries/oil/story/762894.html

2. UNESCO World Heritage


http://whc.unesco.org/en/about/

3. WorldNetDaily, October 4, 2007


China deal 'shark in a fish bow'
http://www.wnd.com/news/article.asp?ARTICLE_ID=57973

4. 2009 OASDI Annual Report Officially Titled “The 2009 Annual Report
of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds”.
Http://www.ssa.gov/OACT/TR/2009/index.html

5. National Center for Policy Analysis - May 12, 2009


Measuring Social Security's True Liability
http://www.ncpa.org/pub/ba658

6.. USA Today 5/29/2007


Taxpayers on the hook for $59 trillion
http://www.usatoday.com/news/washington/2007-05-28-federal-
budget_N.htm

7. Scientific American - September 12, 2008


Can Offshore Drilling Really Make the U.S. Oil Independent?
http://www.scientificamerican.com/article.cfm?id=can-offshore-
drilling- make-us-independent

8. Reuters - June 9, 2009


US Senate panel OKs drilling near Florida coast
http://www.reuters.com/article/marketsNews/
idUSN0932836020090609

9. Bureau of Land Management Oil and Gas


http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas.html

152
10. Bureau of Land Management Coal
http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy.html

Coal
http://www.eia.doe.gov/neic/infosheets/coalreserves.html

11. EIS Information Center - Utah Tar Sands


http://ostseis.anl.gov/guide/tarsands/index.cfm

12. San Francisco Chronicle - July 22, 2008


The lowdown on offshore oil reserves
http://www.sfgate.com/cgi-bin/article.cgi?
f=/c/a/2008/07/22/MN6M11SN60.DTL

13. Ibid

14. USGS - ANWR


Artic National Wildlife Refuge, 1002 Area
Petroleum Assessment, 1998
http://pubs.usgs.gov/fs/fs-0028-01/fs-0028-01.pdf

15. Assessment of Undiscovered Oil Resources in the Devonian-


Mississippian Bakken Formation, Williston Basin Province,
Montana and North Dakota, 2008
http://geology.com/usgs/bakken-formation-oil.shtml/

16. Casper Star-Tribune, June 2, 2009


http://www.trib.com/articles/2009/06/03/news/wyoming/
5b39e8212110c0e6872575c90081529d.txt

BLM _ Bureau of Land Management


Oil Shale and Tar Sands
http://www.blm.gov/wo/st/en/prog/energy/oilshale_2.html

17. The North Dekota Department of Mineral Resources


Assessment of The Bakken Formation By Ed Murphy
https://www.dmr.nd.gov/ndgs/newsletter/winter09/PDF/DMR
%20assessment.pdf

A CALL FOR ACTION!

1. Random House Websters college dictionary


2001 Second Revised and Updated Edition p 901
1. A person who loves, supports and defends his or her country and
its interests. 2. A person who regards himself or her self as a
defender, especially of individual rights, against presumed
interference by the federal government.

153
NOT YOURS TO GIVE

1. Not Yours to Give


This speech on the house floor is listed in numerous places on the
Internet.
http://www.pointsouth.com/csanet/greatmen/crockett/crocket2.htm

2. Library of Congress
Main Title: The life and adventures of Colonel David Crockett.
Published/Created: New York, London, Beadle and company [1862]
http://catalog.loc.gov/cgi-bin/Pwebrecon.cgi?
DB=local&BBID=7368168&v3=1

MY THIRD PARTY EXPERIENCE

1. Random House Websters college dictionary


2001 Second Revised and Updated Edition p 1271
A third party in a two party system is defined as; a usually
temporary political party comprised of independents

154
INDEX OF TABLES AND ILLUSTRATIONS

Revenues, outlays and debt held by the public from 1969 to 2008 11

House Roll Call Vote on 2007 water bill 15 – 18

Senate Roll Call Vote on 2007 water bill 19

House Roll Call Vote on American Clean Energy and Security Act 38 – 41

Sources of Retirement Income for various income groups 53

Social Security and Medicare Contribution Rates 55

Income subject to OASDI from 1937 to present 56

Historical rates of return on CALPERS and Social Security Trust Fund 61

Sample of Interest rate assumptions used by some large corporate plans 62

Hypothetical asset growth at 90% of the CALPERS rate of return 63

Illustration 1 – Benefit Computation for Average Participant 69

Illustration 2 – Asset accumulation using historic contribution rates 71­72

Illustration 3 – Asset accumulation using current contribution rates 73­74
 
Illustration 4 – Asset accumulation using historic contribution rates at 8% 77­78
 
Illustration 5 – Asset accumulation using current contribution rates at 8% 79­80
 
Illustration 6 – Medicare with historical rates and earnings 81­82
   
Illustration 7 – Medicare with historical rates and 8% earnings assumption 83­84
   
Illustration 8 – Medicare with current contribution rates using an 8% earnings 85­86
   
Illustration 9 – Combined Soc Sec and Medicare using current rates at 8% 87­88
   
Illustration 10 – Social Security benefit computation without indexing wages 91

Computations showing that payroll tax rates are not uniform 101

Table showing estimate of potential oil royalty revenue 122

155
ALPHABETICAL INDEX
Abortion – 28, 46, 128, 140 Mandate – 95, 99, 100, 101, 103, 109, 112
Abortion – 28, 46, 128, 141 McCain, J ohn – 46
Barack Obama – 44, 113, 114, 151 Oath of Office – 2, 4, 6, 7, 8, 9, 10, 13, 20, 21, 22, 25, 29,
Black, J ustice – 117 94, 127, 129, 130, 131, 143, 146
CALPERS – 61, 63, 150 October surprise – 46
Campaign for Liberty – 129, 131 Oil – 1, 2, 32, 34, 35, 47, 49, 50, 60, 64, 118, 119, 120,
Cancer 20, 144, 145 121, 122, 123, 124, 130, 142, 143, 145, 148, 152, 153
Cardozo, J ustice – 106, 112, 114 Oil Shale – 119, 122, 123, 153
Carmichael v. Southern Coal and Coke Co. - 104, 152 Palin, Sarah – 48
China – 12, 35, 43, 120, 121, 152 Patriot or patriots – 2, 4, 5, 13, 41, 126, 128, 129, 130,
Civil Officer 8, 22, 23, 24, 25, 43 131, 143
Clinton, President – 12, 14, 25, 124 payroll taxes – 57, 62, 92, 102, 103, 104, 105, 109,
Constitution – 1, 6, 7, 8, 9, 10, 12, 20, 21, 24, 26, 27, 111, 114, 115, 118, 154
28, 29, 30, 31, 32, 33, 35, 36, 37, 45, 49, 51, 96, 97, Poe, Richard – 130, 146
98, 101, 102, 103, 104, 105, 107, 108, 109, 111, 113, Porker – 12, 128
121, 124, 126, 129, 130, 133, 134, 135 Price, Leigh – 123
136, 140, 141, 147 protective claim – 102, 103
Cult or Cultist – 9, 33, 34, 36, 37, 42, 43, 44, 148 Radicals – 4, 5, 33, 36, 41, 43, 131, 146
Customs – 46, 50 Regulation or Regulations – 9,26, 27, 29, 30, 32, 102, 147
David Horowitz – 4, 130, 146 Reserves – 62, 107, 119, 122, 123, 124, 153
defined benefit plan – 48, 58, 61, 62, 65, 67, 103, Resolution – 27, 34, 119
117, 118, 144 Resources – 1, 2, 20, 29, 31, 33, 34, 35, 116, 119, 122, 124,
Eco-terrorists – 1, 31, 34, 35, 36, 124, 125 125, 147, 153
Exception – 8, 25, 26, 27, 30, 32, 105, 113, 147 Restrictions – 7, 31, 32, 50, 106, 113, 120
Excise – 50, 95, 96, 97, 98, 99, 101, 105, 106, 107, roll call – 12, 14, 18, 37, 126, 147
108, 109, 110, 112 Romney, Mitt – 89
Extremists – 1, 4, 33, 34, 119, 126, 130, 143 Social Security Trust Fund – 1, 34, 35, 48, 49, 59, 63, 65, 119,
Fair Tax – 45 120, 121, 122
Fleming v. Nestor – 115, 152 Soros, George – 4, 146
Gerrymander – 3, 4, 129, 146 Spending – 1, 2, 11, 12, 13, 14, 20, 48, 49, 68, 74, 75, 89, 126,
Globalist – 43, 44, 45, 46, 47 129, 130, 131, 139, 140
Harlan, J ustice – 115 Steward Machine Company – 104, 105, 106, 107, 110, 112, 151
Helvering v. Davis – 52, 104, 107, 112, 113, 116, 149, Tariffs – 46, 50, 51, 93, 95, 134
151 Tea Party – 4, 127
High Crime – 22, 23, 24, 27, 30, 31, 35 Thompson, Fred – 89
imported oil – 1, 2, 31, 119, 130, 142, 143, 145, 152 Uniform – 9, 101, 105, 106, 112, 113
Incumbent – 3, 4, 8, 126, 128, 129, 130, 131, 142, 143 Veto – 4, 9, 12, 14, 17, 20, 124, 126, 147
IRS – 45, 46, 50, 54, 66, 100, 101, 102, 103, 109, 111, Water Bill – 4, 12, 14, 18, 20, 126
113, 116, 144, 151 welfare plan – 54, 65, 118
Kansas City School System – 32, 147

156