Dec 12, 2010

Ought To Be Held Sacrosanct

From the Associated Press:

Social Security taxes "ought to be held sacrosanct," said Rep. Earl Pomeroy, D-N.D., chairman of the House Ways and Means subcommittee on Social Security.

"When you start to signal that the (Social Security) tax levels are negotiable, you end up in long-term trouble, I think, in terms of making absolutely certain that the entitlement funding streams are secure," Pomeroy said. ...

"This 2 percent payroll tax cut is the beginning of the end of Social Security as we know it," said the National Committee to Preserve Social Security and Medicare, which is led by former Rep. Barbara B. Kennelly, D-Conn. "Worker contributions have successfully funded the program for 75 years and that critical linkage between contributions and benefits is what keeps Social Security a self-funded program."


Don Levit said...

What critical linkage between contributions and benefits?
From a paper entitled "Federal Debt and the Commitments of Federal Trust Funds," published by the CBO:
"The securities (of the trust fund) do not represent the amount of future benefits that people are entitled to, nor are they the resources the government will need to pay beneficiaries . While a trust fund's balance may set a limit in what can be spent the balance is not earmarked for specific recipients. The inidividual paymenys of benefits are derived through separate rules or from annual appropriation acts. THE BENEFITS OF FUTURE SOCIAL SECURITY RECIPIENTS IS FOUND FROM A FORMULA SET IN LAW, NOT THE TAXES PEOPLE PAID."
The government either owes something or owns something, not both."
Don Levit

Anonymous said...

Sorry Don. You keep saying that but we just don't buy it! Reducing the FICA tax payments will signal movement towards ending the Social Security programs--whether it technically should or not. It would be a big mistake.

Anonymous said...

Tiresome, is the word that applies to you, Don. Give it and us a rest.

Don Levit said...

I contend that the trust fund is merely an accounting mechanism whose balance stipulates the amount of draw on the Treasury without the need for an appropriation. So, if the balance is $2 trillion, that's the amount of the draw.
If the amount is $2, that's the amount of the draw.
When the draw is executed, it is the same process as paying any other federal expenditure - the actual dollars will either come from surplus or from borrowing from the public.
Why are you, then, so concerned about the trust fund's balance dwindling? It's no easier to pay benefits, whatever the balance is, due to the trust fund's existence.
I can again provide third party cites to verify my statements.
Can you (anyone out there) do so to similarly refute them?
By the way, I am in favor of maintaining Social Security. It is too important a part of people's retirement money to abolish or even significantly reduce. But as serious as the people take Social Security, shouldn't the government have been a better steward of the money, and actually set it aside versus spending it on current government expenses, and (artificially) reducing the deficit to boot?
Don Levit