Opinion: Hurting our young americans' futures
Millions of Americans in states like California, Illinois and Kentucky are already in peril because of the horrendous government mismanagement of teacher's and state worker's retirement money.
Americans are in further peril because we will face severe hardship in this country if the long-term path of our Social Security program continues. Our government leaders must take steps to resolve the road Social Security is on. We must pay back what has been borrowed from the fund and stop buying trillions of dollars in Treasury securities that we cannot pay back to ourselves.
We are the biggest owners of our National Debt.
America owes 20 trillion dollars.
Our Social Security Trust Fund or our retirement money owns a big chunk of the national debt.
Our U.S. Treasury manages the U.S. debt through its Bureau of Public Debt. The debt falls into two categories: Debt Held by the Public and Intra-governmental holdings. The Intra-governmental is the portion of the federal debt owed to 230 other federal agencies. It totals about 5.6 trillion dollars. Why would the government owe money to itself? Some agencies like the Social Security Trust Fund, take in more revenue from taxes than they want to set aside and invest. Rather than saving the money, these agencies buy U.S. Treasurys with it. They do this because our federal government is so strapped for cash for the general fund. Someone will say our country is investing our Social Security money. It's not an investment to loan money to someone who already owes 20 Trillion dollars.
By owning Treasurys, they transfer their excess cash to the general fund, where it is spent. One day they will redeem their treasury notes for cash - it is hoped. The federal government at that time will either need to raise taxes or issue more debt to give the agencies the money they will need and the agency will be desperate for it because it owns Treasurys. It's sort of like robbing Peter to pay Paul. The day will come when the financial crisis is so great that it will be very difficult to raise the payroll tax more and more to cover the demand to pay retirees.
Which agencies own the most treasurys? Social Security.
- Social Security Trust Fund and Federal Disability Insurance Trust Fund $2.8 Trillion
- Office of Personnel Management Retirement - $888 Billion
- Military Retirement Fund - $670 Billion
- Medicare - $294 Billion
- Cash on hand to fund federal government operations $580 Billion
Here are the holders of public debt as of December 2016.
- Foreign $6.004 Trillion
- Federal Reserve $2.465 Trillion
- Mutual Funds $1.671 Trillion
- State and local government including their pension funds $553 Billion
- Banks $663 Billion
- Insurance Companies $347 Billion
- U.S. Savings Bonds $166 Billion
- Other (brokers, bank personal trusts, individuals, government sponsored enterprises, corporate and non-corporate investors and other enterprises $1.662 Trillion
If you add up the debt held by Social Security and all the retirement and pension funds nearly half of the U.S. Treasury debt is held in trust for your retirement.
If the United States defaults on it's debt, China, Japan and Ireland would be very upset, but current and future American retirees would be hurt the most.
In October 2017 China owned 1.2 trillion dollars of U.S. debt. Japan owned 1.1 trillion. Ireland is third holding $312 billion. Brazil holds $270 billion. The Cayman Islands owns $269 billion. Luxembourg is $218 billion and Belgium $116 billion. Switzerland, The UK, Hong Kong, Taiwan, Saudi Arabia and India hold between $141 billion and $254 billion. (Sources: Treasury Bulletin, Monthly Treasury Statement, and Table 6. Schedule D Investments of Federal Government Accounts in Federal Securities, U.S. Department of the Treasury, December 2016. "Treasury Bulletin, Table OFS-2 Ownership of Federal Securities" U.S. Department of the Treasury, December 2016.)
The numbers are always changing of course when it comes to our national debt. The numbers above don't add up to exactly what our current debt is because the numbers are always changing.
We have to reduce the size of government.
We must reduce spending money we do not have.
We must stop spending trillions of dollars on Iraq, Afghanistan and other foreign countries.
Reducing our financial support of the United Nations is a good move. Reducing our financial support to other countries is imperative. Especially the countries who now for years have burned our flag and demonstrated hate toward America.
We have to get our own house in order.
At the current trend a lot of our young Americans are going to be very hurt down the road.
By Dr. Glenn Mollette
Dr. Glenn Mollette is President of Newburgh Theological Seminary, Newburgh, Indiana. Read his new book - 'Uncommon Sense'. Contact him at GMollette@aol.com. Learn more at www.glennmollette.com Like his facebook page at www.facebook.com/glennmollette
Sources: Treasury Bulletin, Monthly Treasury Statement. Kimberly Amadeo