Editorial: Obama plan hastens the end of Social Security

brentspeak

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Thu Sep-08-11 09:35 AM
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Editorial: Obama plan hastens the end of Social Security

http://www.sunjournal.com/our-view/story/1084640

By Editorial Board
Published on Thursday, Sep 8, 2011 at 12:12 am | Last updated on Thursday, Sep 8, 2011 at 12:12 am

Tonight, President Barack Obama will almost certainly propose extending this year's payroll tax cut for employees.

While everyone likes paying lower taxes, working Americans should hold the applause. This is not a government "savings." It merely hastens the day that Social Security benefits will become unavailable to those same workers.

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It is now long forgotten that 42 percent of the $783 billion Obama stimulus program wasn't spending at all, but tax breaks for individuals and businesses over the next 10 years. That, apparently, was not enough to stimulate the economy so, in 2010, Obama proposed a one-year 2 percent cut in Social Security withholding taxes for employees to further stimulate the economy. We can now see how well that is working. The national unemployment rate is stuck at 9 percent, employers are no longer hiring, the stock market is in retreat and the economy is slowing. So tonight Obama will almost certainly propose renewing that tax cut, which diverts about $200 billion a year into the pockets of wage earners but out of the Social Security system. There is even a rumor afoot that he will match that tax cut with a 2 percent reduction of the employer side of the Social Security withholding tax.

Does anyone seriously believe that such temporary tax cuts will ever expire? Perhaps Obama has secretly come around to the position held by many Republicans, that Social Security is unsustainable and should be drastically curtailed or eliminated... Politicians say they are committed to preserving Social Security, then they turn around and vote to deprive the program of funding. It is the classic Washington switcheroo: claiming to giving a tax break with one hand while taking it away with the other. Some economists say the payroll tax cut does little to stimulate the economy and will actually have the opposite effect.

The payroll tax cut certainly hasn't done jack-squat to stimulate the economy since it was enacted. And more importantly, as the editorial above points out and the following article details, the payroll tax cut leaves Social Security itself clearly vulnerable to significant cuts in benefits and even future privatization and dismantlement:

http://thehill.com/homenews/house/133883-liberals-warn-payroll-tax-cut-threatens-social-security

Behind Rep. Lloyd Doggett (D-Texas), the Democrats maintain the one-year payroll-tax holiday will likely be extended in future years, leaving Social Security to compete with other programs for funding — and threatening seniors' benefits over the long haul.

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"There is a real danger … that it will be changed into a permanent deduction," said Max Richtman, executive vice president of the National Committee to Preserve Social Security and Medicare, an advocacy group.

The Congressional Budget Office (CBO) estimates the cut will reduce federal revenues by $112 billion over the next two years. Because the tax package is not offset by changes elsewhere in the budget, the government will have to borrow to fill that hole in the Social Security trust fund.

With the country's newfound focus on deficit reduction, the liberals said, backfilling the trust fund with borrowed money will leave Social Security vying for funds against other discretionary programs, like public television and national parks.

FDR in his worst nightmares never imagined that it would be a (nominal) Democratic president who would be the "damn politician" he warned us against:

http://mobile.salon.com/politics/war_room/2010/12/10/zelizer_social_security_tax/index.html

A key reason for the program's strength has been the sanctity of the Social Security tax, which has been treated as a special tax, distinct from income and corporate taxes, on the grounds that it is linked to a specific government benefit. Every year, Congress uses the funds collected from payroll tax contributions of workers to pay for the benefits of current retirees. "With those damn taxes in there," Franklin Roosevelt once declared, "no damn politician will ever scrap my Social Security program."