In debating the filibuster, Senator Harry Reid (search) couldn't resist taking a jab at proposals to invest Social Security funds in the market. But in West Virginia (search), Democrats are trying to bail out a state pension fund by doing exactly that. According to the Associated Press, the West Virginia teacher's retirement fund is "considered the worst-funded [retirement] program of its kind in the country."
So Democrats, who control the state, want to sell $5.5 billion worth of retirement bonds and invest the interest from the bonds in the market.
Now, our federal, Social Security retirement plan (search) is not yet bankrupt, because it takes in more tax money than it doles out in benefits…for now. But none of the surplus cash is being invested in the market, or even kept in a lock box.
So where does all that money go? Here's what economist Larry Hunter (search) told the House Ways and Means Committee last week:
"The federal government takes the Social Security surplus each year and uses that money to help finance all of its other programs, from foreign aid to welfare."
Political raids of our Social Security surplus have turned our trust fund into a slush fund, according to Dr. Hunter. It's this kind of phony accounting that busted the West Virginia retirement fund, leading Democrats there to turn to the market for help.
It'll be interesting to see if Democrats inside the Beltway are eventually forced to do the same as their fellow Democrats in West Virginia.
And that's the Observer. I'll see you on Forbes on Fox this Saturday at 11 a.m. Eastern time...
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