Taxes

No-Publicity Stunts

In which our man in Washington goes where other reporters are too jaded to tread.

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Date: Fri, October 15, 1999 9:05:52 AM
From: mlynch@reasondc.org
Subj: In Search of the Social Security Trust Fund

I got a call Wednesday evening from Hank Welch at the Seniors Coalition, a conservative group known mostly for their adept direct-mail fund raising from the nation's elders. They'd just launched their Pork-Buster Patrol campaign, featuring a pink bus that will travel the country over the next three years exposing federal pork that threatens seniors' interests.

I'd met someone from the group earlier in the year and, considering my love of both buses and the intricacies of Social Security, had expressed interest in riding along if they motored out to the Bureau of the Public Debt in West Virginia to inspect the Social Security Trust Fund. Now I had my chance.

5:25 a.m. We pull out of the Springfield, Virginia, Hilton in the Porkbuster, a luxury Fleetwood RV appointed with oak paneling, two television sets, leather couches, a refrigerator, a washing machine, a shower, an oven, and, most important, a double bed. I'm bracing for a long day. The Bureau of the Public Debt is seven hours away.

Marion Hallman, a wiry woman with a great white mane, is maintaining a constant banter and exhibiting energy that no one should have at 5:00 in the morning. I make a quick escape to the bed in the rear of the bus and sack out next to a clear garbage bag bursting with individual bags of pork rinds.

8:40 a.m. The Porkbuster stops in Friendsville, Maryland, a town with not a single cup of coffee for sale. Marion, who has no apparent need for any, keeps repeating what a woman at a coffee-free corner store told her: There used to be restaurants here, but the highway moved and they were no longer making any money. "The same thing happened in Florida," she says. I step out for a walk and inspect the spectacle in which we're riding.

The pink Fleetwood RV is nearly as large as a Greyhound bus. Toward the front, a grimacing pig emerges out of the Capitol dome like a dancer from a stag party cake. It dispenses dollars to a reclining pig at the bus's rear. The reclining pig has been caught in the porkbusters' net. "Let's throw a net over pork-barrel spending," read white letters on the pink background. A sign superimposed over the pig's body reads: "Amount Stolen From Social Security Trust Fund: $840 billion." It's quite a sight.

10:35 a.m. We finally find a restaurant for breakfast, a hilltop Holiday Inn, and I start collecting background on my traveling companions. Marion is from Boca Raton, Florida, where she has long been politically active. She claims to be an accountant and former tax lawyer. "I'm like crabgrass," she says. "I pop up all over." She flew up to D.C. on Tuesday and has been on the big pink bus ever since.

John Kartch captains the Porkbuster. He hooked up with this job shortly after he came to D.C. from North Dakota, where he graduated from the state's flagship university in 1998. "I see this as really fun, something I believe in, and a great way to see the country," says Kartch of his commitment to pilot the pink beast 620,000 miles a year for three years. His goals: to identify and eliminate government waste and to stop special-interest legislation. Kartch will drive 14 hours today on a reported two hours of sleep.

11:15 a.m. The pink beast pulls out of the Holiday Inn, and I start talking to Steve Cohen, a 1999 graduate of the University of Virginia. The son of a retired UPS driver and a nurse, Cohen has been working for the Seniors Coalition all of three days. He was sent there as a temp. "I never thought I'd be a lobbyist," says Cohen, who is in charge of the day's pictures. He'll be capturing the Porkbuster with digital still and video cameras.

11:35 a.m. I interrupt Jed Richardson, the chairman of the Porkbuster campaign, as he sits on the leather love seat jotting down notes. Richardson was born and raised in Salt Lake City, where he now lives. Like Marion, Jed's retired–twice, in fact. In 1982 he retired from Brigham Young University, where he was a professor of communications and coached the debate team. In 1994, he left after a decade of work in government, which started with a job in Utah Sen. Orrin Hatch's office and included stints in the Department of Education and the Office of Refugee Resettlement. The problem of government waste, he says, comes from two factors: "People don't know. And the ones that know aren't motivated." Jed assures me that the Porkbuster will address both of these problems.

1:05 p.m. The Porkbuster pulls into an RV parking two blocks from our destination. John changes into a suit.

1:37 p.m. We enter the Bureau of the Public Debt under a green awning. Jed, who doesn't waste words, calls my attention to a barrel-sized garbage can filled with black golf umbrellas. A sign reads: "Umbrellas for use by bureau employees while attending classes, meetings, or official business." "Government-funded umbrellas," he said, as we walked past. "There's a pork barrel." A sign informs us that the building's cafeteria is not open to the public.

1:53 p.m. Matt Smargiasso, manager of the trust fund, and Howard Stevens, director of the division of special investments, escort us into a conference room. Howard starts to tell us his plans for the meeting, but before he can get a complete sentence out, the ever-energetic Marion informs him she wants to see a balance sheet, financial statements, and a note. She says that the biggest problem today is a lack of trust in government and such proof of the Social Security Trust Fund will help restore faith with the seniors back home.

To the relief of all, Matt passes down a few bundles of paper and starts his presentation, telling us that the one thing everyone at the bureau is especially proud of is the information they provide the public. He hands each of us the "Monthly Statement of the Public Debt of the United States" for September 30, 1999. Total debt: $5,656,271,000,000. Total marketable: $3,232,998,000,000. Total nonmarketable: $2,414,242,000,000. He explains that the Social Security Trust Fund is in the nonmarketable section, and then proceeds to show us where it is among the 185 non-marketable trust funds.

Marion thinks she hears Matt ask if we want coffee. "Coffee yes, coffee yes," she says to a surprised Matt. "You won't let us in the building cafeteria, but at least you could give us a cup." Matt doesn't know what to do. Howard makes an awkward face. We move on.

We have traveled more than seven hours to inquire whether the fund exists. Matt assures us it does and points to the four funds, right there on page 7, in which the money can be found.

I ask if the trust fund is real, since the bonds can't be sold to anyone but the government. Of course it's real, says Matt, pointing me to the work of Robert Reischauer, the former Congressional Budget Office director and Brookings fellow who will soon head the Urban Institute. Matt walks us through the process of how the trust fund is filled. The money from our paychecks is combined with the employer portion and sent to the government. The government makes an accounting entry and invests the money that very day in a bond that will mature on June 30 of that fiscal year, with an interest rate that equals the average of all marketable bonds that have a maturity of more than four years.

Clear on that? After June 30 of each year, any funds that haven't been paid out to beneficiaries get "reinvested in buckets of one to 15 years." Matt starts writing numbers on a presentation board, illustrating how $150 billion would be invested in $10 billion increments to mature in each of 15 years. He passes around a printout, a quarter-inch thick, documenting each bond the fund owns.

Howard pulls out a real bond. I can't wait to get my hands on it, but it seems stuck with Marion, who is sitting to my left. It is a regular piece of paper that reads: "The United States of America For Value Received and Promised to Pay to The Federal Old-Age and Survivors Insurance Fund $23,218,801,000." The interest rate is 6.25 percent. On the bottom it reads, in boldface, "Non-transferable."

Marion asks it she can take the $23 billion bond back to Florida to show her seniors. Howard has to say no. Matt asks Marion to find the bond in the ledger. She, being a former accountant, does so.

I want to get back to the issue of whether the Social Security Trust Fund is just an accounting fiction, as many noted D.C. analysts insist. I ask what happens when the bonds are sold. Matt asks what happens when I buy a security from a broker such as Merrill Lynch. I give them money, I say, and they credit me with a security. So your money is gone? he asks. I say yes. That's what happens here, he replies. The government gives us money, we credit them with a security, and the money is gone. Ergo, it's real. I'm not convinced.

I point out that in 1998, when the government supposedly ran a surplus, its debt increased. This, I say, was like putting money in a bank account and having the balance decrease. Didn't this have something to do with how the Social Security Trust Fund is credited? I propose that we follow a dollar of the Social Security surplus as it is supposedly invested in government bonds. It comes into the fund, I say; you buy one of these pieces of paper, which you consider a real good; and then the government spends the dollar again, either on a real good or to buy back another bond. So the dollar is essentially spent twice: once on a Social Security bond and again on whatever the government wants to buy.

This line of questioning goes nowhere, so I try another approach: What happens when the bonds are redeemed? Don't taxes have to increase or other spending decrease? Matt agrees, I think. But time is running short, so we decide to take a look at the actual trust fund–the safe–which is our primary objective.

3:05 p.m. I expect to take an elevator down to a basement vault, perhaps to pass through a metal detector. Even submitting to a body search isn't out of the question. But we halt outside Howard's unit: Room 309-1, Division of Special Investments. The safe is inside–a yellow, fireproof, five-drawer filing cabinet, sitting nonchalantly in front of a white pillar. The safe weighs 535 pounds, according to a sign at its base. A security log records the time it is opened each morning and closed each evening. Howard tells us that we can't take a picture of it. I ask why. After a contemplative pause, he says, "Security."

Not 10 feet away sit the Dell personal computer and Hewlett Packard laser printer that produce the bonds. This we can take a picture of, Howard says, and Steve gets to work.

3:40 p.m. We're back on the Porkbuster. The mood is upbeat–there's almost a post-coital glow, so pleased are we to be among the few who have seen the trust fund.

5:50 p.m. We pull into a Bob Evans restaurant somewhere in West Virginia for dinner. I buy a six-pack of Coors Light, a cigar, and a deck of cards from a gas station. Steve buys a six-pack of Budweiser. Back on the bus, we sit down at the table, conveniently close to the refrigerator, for five hours of cards and what would technically be considered a round of binge drinking. I keep beating him at gin. I teach him cribbage. I beat him at that too.

1:20 a.m. I climb off the Porkbuster at the Holiday Inn in Rossyln, Virginia, still unconvinced that the Social Security Trust Fund exists.

Date: Fri, November 5, 1999 2:36:01 PM
From: mlynch@reasondc.org
Subj: Doping in D.C.

"Are you stoned?" I asked a fellow I recognized from Cato's recent drug conference. I thought it a perfectly reasonable question, since we were at a pro-drug rally, his eyes were suspiciously glassy, and he thought I worked at the Institute for Humane Studies. "What difference does it make how you are dressed if you're demonized?" he demanded, referring to a request from the protest organizers to "dress conservatively." He denied any inebriation and argued, "We've been doing the respectable thing for a while and it isn't getting us anywhere."

I roamed through the crowd of around 150, mostly college students. They had gathered at the edge of Rock Creek Park for a protest and candlelight vigil aimed at the Western Hemisphere Drug Czars Conference, which was going down at a hotel not even a football field away.

A pair of Latin American indigenous people were telling their stories on stage in Spanish. "For us, coca is food," I heard the translator say. For us, I thought, it is a food substitute.

I was heartened to see that college students still smoke. But all they were smoking was cigarettes. I was looking for a communal joint, straining to smell even a bit of bud. No luck. I sauntered over to the refreshment table to see if they had any brownies. Nothing. D.C. is such a button-down town that even a pro-drug rally resembles a Midwestern meeting of the Young Republicans.

The protesters lit their candles, stood along the off-ramp, and waved signs. The most creative called for "Hookahs Not Bazookas." I asked a cop with an enormous dip of chewing tobacco in his lip if he'd confiscated any joints or smelled any marijuana smoke. Nope, he said, standing sternly while keeping an eye on a fellow who was dancing in the crosswalk while dressed in an oversized Barry McCaffrey costume. That's too bad. I bailed.

Date: Fri, November 5, 1999 2:29:38 PM
From: mlynch@reasondc.org
Subj: Giving Peace a Chance

"Paint your message on the wall," a slender, long-haired, bearded man said as he bounded toward me on the Capitol Mall, just west of the Reflecting Pool. I was there to check out the "Wall of Denial," promised in a press release to be a 200-foot replica of the Berlin Wall. A coalition of anti-nuclear groups called "Project Abolition" is using the wall as visual Viagra to pump some blood into their "Who really cares?" issue of world peace through arms control.

The theme is elementary: The Cold War is over, so we should get rid of the arms that, according to these folks, didn't help us win it. They are planning a ceremony to tear down the wall on November 9, to coincide with the 10th anniversary of the real wall's destruction. This wall is plywood, not concrete, however, so I suspect it will not chip or crumble. Perhaps they should burn it.

Although I declined to paint, I did strike up a conversation with James McGuinness, known as "Guinne" to his friends, who, like him, are mostly professional peace activists. "We're trying to tell the idiots over there," he said, pointing to the Capitol building, "to take it down. The idea of not having the [Comprehensive Test Ban Treaty] is ludicrous."

Guinne started his life of protest in the 1970s with Vietnam and has been at it full- time since 1986, when he helped found Seeds of Peace, a mobile group of multipurpose protesters. He has no mailing address, no ID, and no job. He does, however, have an e-mail address. When I asked him how he made a living, he replied, "What's a living?" If things get too tough, he'll take a job. He bartended in upstate New York for a spell and made lattes in Whitefish, Montana, where he kept busy protesting caged elk farming. He travels by bus, thumb, or friends. He spends a lot of time living at or near various protest sites, which come rattling off his tongue at too quick a pace to record.

Guinne, whose weathered face vouches for a life spent largely outdoors, offered much to agree with. He repeatedly referred to members of Congress as idiots and railed against the doubling of the president's salary. He said he doesn't pay taxes, since the money isn't spent the way he would like it to be.

He spoke of "trustafarians," trust-fund hippies who "you never see do anything but who always have money," and "media sluts," who show up to a protest only if the media are expected to cover it. He nailed D.C.'s meeting culture: "It's all they do in this town. Ten hours a day. Everybody always meets and does nothing."

Nothing was precisely what was happening at this event, billed as "most ambitious call to action we have taken in a long time." The peace movement, Guinne acknowledged, "doesn't have the cachet it used to." But he added, "There's still people working the issues."

On this brisk November morning, in front of a gray plywood wall painted with all sorts of banal slogans–"Peace Now," "Free the People," "Solar Power"–Guinne was one of those people. As I left, he approached a jogger stopped at a light. "Put your message on the wall. Be the Hundredth Monkey," he says, referring to an old peace movement legend of how one person's awareness can cause a society-wide change in consciousness. The jogger fled.