By: Mary Mostert, Editor, Monthly Monitor
January 10, 1996
A strange thing happened between yesterday and today. The National Debt suddenly dropped $351,000 million. Considering the fact we have a budget impasse, and a massive deficit, how'd that happen?We called one of our contacts who spent years at the Treasury to find out how that happened. It is one of those sleight of hand tricks that only the financial experts generally detect. The only way that the National Debt could decrease is for Rubin to have raided one of the federal pension funds again. If he had sold some securities, or used some other plan to fund, it would have affected the deficit, not the National Debt. While taking money from pension funds appears to reduce the National Debt, actually, it increases it, because, now, somewhere, there is an I.O.U. in a pension fund that must be put back, with interest, when the Budget and Appropriation bills pass.
Last week, Rep. Bob Barr (R-GA) noted that Secretary Rubin had announced that he would take funds form pensions in order to keep the government going. Barr also noted that such a scheme is a clear violation of the U.S. Constitution which gives the House of Representatives, and ONLY the House of Representatives the Constitutional authority to originate money bills. Rubin "borrowing" from pension funds buys time for Clinton to continue his stonewalling on the Balanced Budget.
Walker Todd, our expert on this issue, commented that "You have to decide what kind of government you want in this situation. If you decide you want to have a big government, then money matters need to be in the hands of the executive. If you decide you want to have a small government, then money needs to be in the hands of the people." Our Founding Fathers wrote a constitution with a permanently small government in mind. By giving the money reins of the country to the people, they thought they had prevented a power central government, similar to the King in England, who would be able to totally control the people.
The budget impasse between the Republicans in Congress and the President and his liberal Democrats, is this issue. Rubin announced previously that he would "borrow" $61 billion from the pension funds to fund government during the impasse. The sudden, overnight drop in the national debt would indicate he has raided the funds by at least the amount of the drop in the national debt. What this means is that, when the appropriation bills are passed, the I.O.U. will be retrieved, and the National Debt will go up by that amount. If the national debt is not increased, or the appropriations bills are never passed, the federal pension funds will have lost the money.
While this was once legal for businesses, due to problems faced by a number of private pension funds, it is not any longer. Today a business must announce that funds will be borrowed, what they will be used for, and they must keep a reserve of 75% of their obligations. Some in Congress want to extend that law to cover government pensions.