The crime of the century
By Richard Lamm
I have just participated in the greatest embezzlement in all of history. In my seventy-plus
years, I have never seen such a perfect crime. Like most other master
criminals, I am heady with success and feel a need to brag. I kid you not—never
before has one group appropriated as much money that belonged to another group
in the history of crime. The victims, while they are increasingly suspicious,
still do not know they have been had. It was literally and figuratively as easy
as taking candy out of the mouths of babies.
Here is how we did it. The first rule of embezzlement is to find some naive patsy. We sensed 40
years ago the younger generation was not paying enough attention to public
policy, so we quietly found ways to maintain our lifestyle and charge it to the
next generation. While those of you under 45 were preoccupied with other
things, my generation dumped the largest load of debt on you that history has
ever seen — and found ways to maintain our lifestyles on your credit cards.
A good scam needs a compassionate come-on. In our case, we developed a new word: "poor elderly." To
this day, most Americans do not understand that this is actually two words, and
that "poor" no longer adequately describes the elderly as a class. There are,
of course, poor elderly, many of them; but as a class the elderly have the most
discretionary income of any group in America (except those in the age bracket
Next, we devised a number of systems that allowed us to charge our retirement to the next
generation of Americans, who will wake up to find they are on the losing side
of a Ponzi scheme. Like all good con artists, we relied on "trust." We told them
there was a "trust" fund for both Social Security and Medicare. Of course, this
was a lie. There is no "trust" fund, in the normal sense of the word, because
we take this month's Social Security taxes from today's workers and pay them to
Then, we tell today's workers not to worry—the money is being held "in trust." In actual fact
(as Sen. Ernest Hollings of South Carolina has observed), they would be no
better off if the fund was invested in Confederate war bonds. The trust fund is
a sham because it only contains IOU's that tomorrow's generation of workers
will have to (mostly) pay off themselves. They will have to pay for both our
retirement and a good part of their own. Not bad. We succeeded in taking money
from poor workers in St. Paul and sent it to wealthy retirees in St.
Petersburg—and no one was the wiser. But, I have hardly begun.
The perfect embezzlement maximizes its take. We soon found there was money left over after
paying the Social Security funds to today's elderly, and we did not want to
stop halfway. What self-respecting crook would leave money lying in the bank
vault after a robbery? Hell no. We completed the job by something called the
"consolidated budget." This allowed us to quietly take the Social Security
funds left over to reduce our taxes by spending the money on current government
services. Under the "consolidated budget," we could legally "borrow" the money
in the "trust fund" left over every year and spend it on current government
services, thereby reducing our yearly taxes.
Virtually every year for the last 40 years we understated the yearly deficit and understated
the total federal debt. Even though the official federal debt is approximately
$9.5 trillion, the amount actually passed on to the next generation is closer
to $50 trillion. My generation are master embezzlers. The entire scheme was
done with clever accounting gimmicks, which allowed us to minimize our taxes
and maximize our spending while we passed the bill on to the next generation.
Like many victims of a crime, by the time they figure it out I will be long
I have completely and totally spent the Social Security Trust Fund and left nothing in trust,
absolutely nothing, for today's workers to pay future obligations. They will
have to either raise their taxes substantially or dramatically reduce their
benefits under the system. They have no other practical alternatives. They may,
of course, try to do the same thing that my generation did and try to
perpetrate the Ponzi scheme, but I doubt it will work. Young people catch on at
some point. The true perfect crime only works once.
Every dime of the war in Iraq we put on our kid's credit cards. Every dime of Katrina and Rita
hurricane recovery we put "off-budget" and thus left it to our children to pay.
Then we voted ourselves a substantial tax cut, the only tax cut during a war in
our national history. If anyone quoted Milton Friedman—"If you cut taxes
without cutting spending, you are not cutting taxes, you are deferring them to
your children"—we would quickly say we were "stimulating the economy" and
change the subject.
The next generation will wake up to the magnitude of the fraud. They will recognize they are
working long hours (or two jobs) and make less working than I make in
retirement. Yet every month they transfer money to me to pay for my health
benefits. I have plans for that, also. When they start to blow the whistle, I
will say with shock and horror, "You can't start an intergenerational war." I
will tell them about how hard I fought for this country (six months in active
service, most of it at the officer's club bar). I will shame them by accusing
them of breaking the "generational compact," neatly covering the fact that it
was really my generation who broke the compact by leaving them an unsustainable
and insolvent system. Like any successful crook, I cover all my bases.
When health-care costs became a larger factor in our budgets, we found a system to subsidize our
health-care costs at the expense of following generations. We called it Medicare.
The average senior who turned 65 in 2000 got back $4 from today's workers for
every $1 that he or she paid into the system. Today's retiree receives on the
average a $100,000 subsidy toward his health care costs—from a system that is
slated to go broke not far into this century. I am looking forward to playing
golf and living high and sending much of the bill to today's workers, who make
less working full time than I make in retirement. Après moi, le deluge.
The story does not end there. My generation screwed up the savings and loan industry. What did we
do to get out of it? We issued 30-year bonds! Why should I pay for my mistakes
when there is a gullible generation right behind me? Will I be here in 30
years? No. Will you? I leave it to my kids to pay off.
My wife and I bought our first house in 1963 for $11,900. Our first mortgage payments were
$49 a month because we had a VA loan subsidized by the federal government.
Everyone in my generation could buy his or her own home. It is estimated that
30 percent of the current workers below age 30 will never be able to own their
own houses. It does not end there. I, to this day, get more money in housing
allowance every year from the federal government than the poorest American. It
is simple. I get to deduct my mortgage interest and real estate taxes, which is
worth more to someone in my income bracket than the cash equivalent that any
poor person in my state receives for housing. Ditto health benefits. By not
taxing my health insurance paid for by my employer, I also receive more health
benefits from the federal government than most poor children on Medicaid. I
have recently passed Medicare Part D to help pay for my prescriptions. I have
never seen a benefit that couldn't be enriched.
Do I feel guilty? Well, occasionally. The other night I was standing in line for the movies,
getting a senior citizen discount. There was a struggling young couple in front
of me who were wondering how they were going to pay the babysitter. My wife and
I had driven to the theater in our fancy foreign car from our debt-free
house—but we got a $6 discount from the price the young couple paid.
I try not to spend too much time thinking about it. I keep busy. Right now, I have to go down to
the state legislature to lobby for free fishing licenses for seniors. Why not?
We already get free state park admission. See you around.