Firedoglake (FDL) has an excellent piece on the danger posed to Social Security by the "temporary" reduction in FICA. His conclusion is that this "will lead inexorably to killing Social Security" because Congress will never allow FICA to go back up. This doubles the 75 year projected shortfall in the Social Security trust funds which will lead to pressure to cut benefits, probably by means-testing benefits. According to FDL we can say "Good bye, Social Security. You did a great job for 75 years. Apparently, the President is ready to pull the plug on you, if not on Grandma herself."
Update: It will be interesting to see how major advocacy organizations react to this. I will be paying attention.
Further update: I should note that the FDL piece was by Nancy Altman, co-director of Social Security Works so we have heard from one important group. As far as I can tell, the others are silent so far. AARP, I'm looking at you. National Committee to Preserve Social Security and Medicare, I'm looking at you.
I think it's unfair to lay fault at mr obama. What else is he supposed to do considering the new republican masters?
ReplyDeleteI don't agree with tax cuts for the wealthy but mr obama,in my opinion,is doing the best he can.
The trust fund is merely an accounting mechanism which indicates the "draw" it has on the Treasury without an appropriation.
ReplyDeleteIt makes it no easier to pay beneficiaries than if the trust fund didn't exist.
I will be happy to provide reputable governmental links for those who are interested, to support my statements.
Don Levit
It is counterintuitive, but prevailing economic theory since the Great Depression says that you spend more than you have in a recession. Let us hope that we remember that if we ever get out of the ditch we are in.
ReplyDeleteMr. Obama can just say no. Worked for Nancy Reagan and she wasn't even the President. Altman is right. Nancy Ortiz
ReplyDeleteHere is the full NCPSSM Response: http://www.ncpssm.org/news/archive/cutting_contributions_to_social_security/
ReplyDeleteExcerpt:
“Even though Social Security contributed nothing to the current economic crisis, it has been bartered in a deal that provides deficit busting tax cuts for the wealthy. Diverting $120 billion in Social Security contributions for a so-called ‘tax holiday’ may sound like a good deal for workers now but it’s bad business for the program that a majority of middle-class seniors will rely upon in the future.”… Barbara B. Kennelly, President/CEO
Conservatives have long dreamed of a payroll tax holiday because it fulfills two ideological goals, lower taxes and weakening Social Security’s finances. The White House claims the 2% payroll tax cut won’t impact Social Security; however, we disagree...
From the trust fund perspective, the numbers in the fund will certainly be reduced.
ReplyDeleteBut having a trust fund is not a requirement to pay benefits.
Even FICA taxes are not required to pay benefits.
According to the Supreme Court of the U.S. Nos. 724, 797, 1936.
Carmichael v. Southern Coal & Coke Company:
"The taxation of employees is not a prerequisite to the enjoyment of Social Security benefits. We find nothing in the language of the statute or its application to suggest that the tax on employees is so essential to the operation of the statute."
"But if the tax be good, and the purpose specified be one which would sustain a subsequent and separate appropriation from the General Funds of the Treasury, neither is made invalid by being bound to the other in the same act of legislation."
"A tax is not an assessment of benefits. It is a means of distributing the burden of the cost of government."
http://www.ssa.gov/history/supreme3.html.
Don Levit