General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsDoes anyone know how much the expiration of the payroll
tax will reduce the deficit?
s-cubed
(1,385 posts)Recursion
(56,582 posts)So, roughly half a trillion in deficit reduction over the next decade.
Zen Democrat
(5,901 posts)Without those withholdings, the social programs really would be bankrupt. We got the extra bucks on a temp basis and many Democrats were upset about stealing from SS. Now we're back to normal, or the new normal.
Harmony Blue
(3,978 posts)but the expiration of the payroll holiday will replenish Social security somewhat.
Recursion
(56,582 posts)I mean, the SS payments still come out of the treasury, and FICA levies still go into it, so even a fully funded program can reduce the total deficit by increasing revenues or cutting payouts.
Enrique
(27,461 posts)Agnosticsherbet
(11,619 posts)For a family making 50 K a year, they will see about $20.00 a week less, according to NPR.
That will be returned to Social Security Trust Fund, so to speak. The U.S. General find, from what I understand, borrows the excess money not used to pay benefits and replaces it with bonds.
But the deficit is not affected because the U.S. doesn't borrow money to pay Social Security benefits.
National Defense spending, Medicare (as I understand it), and many other programs, contribute to the deficit.
Yo_Mama
(8,303 posts)Aside from the payroll tax cut, SS is currently running a small deficit each year (benefits plus cost > payroll tax receipts plus tax on benefits).
The payroll tax cut made that small deficit a large deficit. Both the small deficit and the larger deficit have to be paid for by the general fund, so indeed we have been borrowing to cover them. Last year's SS added over 150 billion to the money we had to borrow.
The restoration of the payroll tax rate will cut the SS deficit that must be paid for by the general fund to a low level - estimated less than 50 billion a year, but that gets larger until it it's projected to be pretty high each year in a decade or two.
The reason why SS went into deficit so much earlier than planned was high unemployment and crappy wages.
doc03
(35,328 posts)and the deficit will be affected. Aside from the payroll tax cut, SS is currently running a small deficit each year (benefits plus cost>payroll tax receipts plus tax on benefits)." That is not really true the way I understand it. Yes costs are higher than receipts but the money is coming from the "SS Trust Fund". The reason it contributes to the deficit the government spent the "SS Trust Fund" and so since it is no longer there they have to borrow the money. They took our money through payroll taxes to pay for SS then spent it elsewhere, so now instead of paying back (the US Citizens) our principle plus interest like all the other creditors they want us to pay back the principle and interest ourselves by cutting SS.
PoliticAverse
(26,366 posts)ProSense
(116,464 posts)PoliticAverse
(26,366 posts)issued to the trust fund.
subterranean
(3,427 posts)That's because the general fund was used to make up the shortfall created by the payroll tax holiday.
Recursion
(56,582 posts)And that will, in fact, reduce the deficit.
Igel
(35,300 posts)It increases revenue by $110 to 120 billion. That's revenue not collected now, so it's not like there's no change to total revenues.
The increased revenue goes to the SSA, not to the general fund. If FICA runs a surprlus, then the surplus goes to the general fund in exchange for the SSA's receipt of special issue securities. That's deficit neutral--it's intragovernmental borrowing and doesn't increase the deficit or decrease the deficit. It just alters cash flow. The the SSA ran a deficit in 2012 because revenues didn't cover expenses, so the SSA pulled money out of the trust fund. If the SSA ran a surplus in 2012 it was small, so most if not all of the increased revenue in 2013 will be spent on SS benefits in 2013.
However, when the FICA tax was reduced, the reduction was "bought out" by general revenue funds. In other words, the FICA tax holiday increased the deficit by the amount of the FICA tax reduction. Now that the FICA tax is reinstated, the general fund doesn't have to pay the SSA for the amount of the FICA tax reduction. That's one less expense and the deficit will decrease in 2013 from what it would have been. By precisely the amount that the reinstated FICA tax collects.
Yo_Mama
(8,303 posts)doc03
(35,328 posts)was paid out of the general fund and since we are in deficit the money was barrowed. So this year since we are paying the full FICA
tax it does actually reduce the deficit by $115-120 billion. To read some of the posts here on DU that money just fell from a tree.
I saw some posts the last couple days that thought it should be permanent.
I thought it was abad idea from the get go because the Rs could tie SS with the deficit.
dsc
(52,160 posts)it will reduce spending by about $120 billion. The way it worked was that the $120 billion that wasn't collected in SS taxes was spent by the general fund to build up the SS fund.
Yo_Mama
(8,303 posts)It's close to double the amount raised by the higher-income bracket tax increase - but that's because it's 2% on all wages in the country up to $113,700.
doc03
(35,328 posts)cuts.
Yo_Mama
(8,303 posts)I'd call that a tax increase, but whatever floats your boat. It was always supposed to be temporary. It did add to the deficit. It won't be adding to the deficit any more.