Dec 17, 2010

FICA Tax Cut

The bill that cuts Social Security's lifeblood, the FICA tax, by 2% "temporarily" is awaiting the President's signature after both houses of Congress finished work on the bill last night. The bill calls for a transfer of funds from the Treasury to make up for the cut.

The fear among those passionate about protecting Social Security is that it will be impossible to avoid the temptation to make the cut permanent, thereby crippling the funding mechanism that has set Social Security apart from programs such as Food Stamps or Temporary Assistance to Needy Families which are perceived -- negatively -- as "welfare."


Don Levit said...

Well, you are correct that we need to get those 2 percent of FICA wages back into Social Security.
The using of general revenues to replace the foregone FICA taxes is no solution to keep Social Security self-sustaining without using general revenues.
The same can be said for "invading" the trust fund's surplus.
Until the surplus is either left intact, or invested in private accounts, the trust fund will make it no easier to pay benefits than it does for any welfare program.
I am thankful the government doesn't get its grubby little hands on the FICA contributions that don't go into the trust fund's "surplus."
Don Levit

Anonymous said...

I see that they passed a continuing resolution to avoid a shutdown of the government tonight (Saturday) but that it is only a 3 day CR so they need to pass something by Tuesday night. If we all did our jobs the way Congress does theirs, we'd be fired!

Anonymous said...

Stupid, stupid move. It was also Congress who eliminated the "retirement test" for those over age 66 - why should people have to be retired to collect retirement benefits?

Anonymous said...

This is just dumb, absolutely. I am a federal employee who will receive no COLA but will receive an increase in my pay due to the payroll tax cut. Does this make sense to anyone? It certainly will affect the the trust funds as well as the public's perception of SSA as social insurance vs. welfare. If This is a step down the road to eliminating the payroll tax and means-testing Title 2, then it all becomes one giant SSI program. Then, you will need 250 thousand to 300 thousand SSA employees to administer it. Think that will happen?