From the non-partisan Center on Budget and Policy Priorities:
The Social Security trustees’ report issued this week estimates that Social Security faces a total shortfall over the next 75 years of 0.56 percent of Gross Domestic Product (GDP). This is slightly less than the estimated cost over that same period of extending the 2001 and 2003 tax cuts just for the top 1 percent of households: 0.6 percent of GDP.[i] (Currently, households in the top 1 percent make more than $450,000 per year.)
This striking fact should serve as a much-needed “reality check” in discussions over entitlement programs and the nation’s long-term fiscal future. Too often, such discussions assume that Social Security faces a titanic shortfall that will require radical restructuring of the program, while paying little or no attention to the enormous fiscal damage that would result from extending the tax cuts without paying for them.
Wow, all this time I've been thinking taxes cost me my money when all along, it was really the government's money, right?!?
ReplyDeleteA little perspective might be good here!
And let's not forget that 0.56% of GDP is still $77 billion.
Did I miss the executive or legislative decision that reduced FICA and Medicare taxes? Or am I missing the point? Income tax cuts also create a shortfall in Social Security payments because there is no "Trust Fund", just IOUs? Or is this flawed logic?
ReplyDeleteTo say that the trust funds are just IOUs is simplistic. Where would you suggest investing the money? Money invested is always a gamble or an IOU! Government securities are widely considered the least risky investments.
ReplyDeleteNon partisan?
ReplyDeleteRobert Greenstein Executive Director, in 1994, he was appointed by President Clinton to serve on the Bipartisan Commission on Entitlement and Tax Reform.
Iris J. Lav, her work on federal and state budget and tax issues often is cited by the press, including The Washington Post The New York Times... She has been interviewed on a number of radio and television programs, including NBC "Nightly News," ABC "World News Tonight," CBS "Sunday Morning," National Public Radio...
Jim Horney is the Director of Federal Fiscal Policy, he was a Deputy Democratic Staff Director at the Senate Budget Committee from 2001 through 2004.
Chad Stone is Chief Economist at the Center, economic Committee of the Congress in 2007 and before that staff director and chief economist for the Democratic staff of the committee from 2002 to 2006.
"To say that the trust funds are just IOUs is simplistic. Where would you suggest investing the money? Money invested is always a gamble or an IOU! Government securities are widely considered the least risky investments."
ReplyDeleteThe problem is the money "invested in Government securities" is not setting in some vault. To redeem those securities the U.S. government has to borrow money from the Chinese and other countries.
Most investments are IOU's of a sort. Someone has promised to give you the cash you gave them when you ask for it back and you hope the company/bank/government has the money when you ask for it and want to exchange it for goods or services. Works very well most of the time in the US.
ReplyDeleteI am back to my original question. What tax cuts will create "enormous fiscal damage" to the Social Security program? FICA hasn't gone down.
I assume you have tongue in cheek, but just in case you don't... They point is perhaps too simple; namely, the size of the SS shortfall is a good deal less than people think. The Bush tax cuts for the top 1% of earners, if redirected to SS, would fix the problem.
ReplyDelete