If water is squirting out of the pin hole when you lower the flagpole down, then you have a drainage issue. Lower the flagpole down, pull it up out of the ground sleeve, and look down in the ground sleeve to ensure proper drainage. If you recall installing the flagpole, you will remember there is crushed rock/gravel down under the installation sleeve so that the water is pulled away from the Flagpole after heavy rains. Take a small pipe/rebar/broom handle, and pound down in the ground sleeve to make sure that nothing is preventing water from draining away from the Flagpole. (You could even use a shop-vac and clean out the installation sleeve.)
Proper drainage is especially important if you are in a climate that freezes. If you have water in the pole or ground sleeve, it can turn to ice, and can expand and shift some of the internal parts.