Obama Payroll Tax Cuts Seen Undermining Social Security

[Cali_Democrat]

This is interesting. I didn't realize the payroll tax cut had this kind of a negative impact on Social Security, but it makes sense.

Obama Payroll Tax Cuts Seen Undermining Social Security
Brian Faler
Monday, December 5, 2011

Dec. 5 (Bloomberg) -- Some Democratic lawmakers say that, while President Barack Obama's plan to cut payroll taxes may strengthen the U.S. economy, it may have some unintended fallout: weakening Social Security.

The lawmakers and advocacy groups say they are concerned the tax cuts may undermine political support for the retirement program, which provides benefits to almost 55 million Americans and is funded by the payroll levies.

"I don't object to putting more money in people's pockets, and there are lots of ways to do that, but not with Social Security," said Representative Rush Holt of New Jersey, who said he will have a hard time supporting the White House plan.

<...>

Still, Obama's proposal comes amid growing concern about Social Security's finances. The program has begun spending more on benefits each year than it receives in payroll tax revenue and, starting in 2036, won't be able to pay full scheduled benefits, according to the trustees' latest report.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/12/05/bloomberg_articlesLVR12J0YHQ0X.DTL

I don't think this means the payroll tax cuts shouldn't be passed, but if the payroll tax cuts are passed, revenue enhancement through something like a millionaire surtax becomes imperative. The additional revenue should probably be used to makeup the Social Security shortfall. Forcing the government to tap into general revenue for Social Security will likely lead to budget fights where Social Security could ultimately be sacrificed.

[ProSense]

1. This

"I don't think this means the payroll tax cuts shouldn't be passed, but if the payroll tax cuts are passed, revenue enhancement through something like a millionaire surtax becomes imperative. The additional revenue should probably be used to makeup the Social Security shortfall. Forcing the government to tap into general revenue for Social Security will likely lead to budget fights where Social Security could ultimately be sacrificed."

...is nonsense. It's basically stating that Republicans are going to argue something and conceding that they have a point.

After years of claiming that the government is raiding the trust fund, why is this initiative suddenly being portrayed as damaging? Unlike raiding the trust fund, this is a much-needed relief program that does not impact Social Security funds.

What's the point of hyping speculation about what Republicans might do in the future by misrepresenting an initiative that preserves Social Security?

Dean Baker, September: The Payroll Tax Cut Did Not Cost Security Revenue

The NYT wrongly told readers that the payroll tax cut cost Social Security, "resulted in $67.2 billion of lost revenue for Social Security in 2011." This is not true. The tax cut was fully offset by money from general revenue so that the trust fund was unaffected by the tax cut.

The fund is "unaffected." The nature of Social Security does not change. Stop pushing the lie!

[Name removed]

7. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ProSense]

10. You

The 'raiding the trust fund' - which for some reason you find innocuous in the first place - is borrowing against existing funds.

The payroll tax cut prevents the funds from being there in the fist place.

The first, bad as it is, has a clear-cut IOU attached to it - borrowed funds must be repaid, preferably with interest.

In the second case, how do you 'pay back' something that does not exist?

This is the deliberate defunding of Social Security, not as suggested an unanticipated byproduct.

Only a moron would believe otherwise.

...should probably refrain from calling anyone else a "moron."

[TheWraith]

13. You're completely and totally wrong. There is no "defunding."

Social Security is taking in just as much money as if there had been no payroll tax break.

[RaleighNCDUer]

21. How? It has had its income reduced, and NO funds, that is ZERO funds

have been authorized to date to make up the shortfall - and IF it ever comes to a vote to authorize those funds, who will be voting to RAISE taxes so it can be paid from the general revenue?

As I said...

[Cali_Democrat]

24. "ZERO funds have been authorized to date to make up the shortfall"

Exactly right

[brentspeak]

33. Dean Baker: "The Payroll Tax Cut: A Stimulus That Progressives Should Oppose"

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/the-payroll-tax-cut-a-stimulus-that-progressives-should-oppose

The Payroll Tax Cut: A Stimulus That Progressives Should Oppose

Dean Baker
Truthout, July 25, 2011

President Obama is proud of the fact that he was willing to bargain away the core of the country’s social safety net to reach an agreement with the Republicans on the debt ceiling. According to accounts of the negotiations, he had agreed to raise the eligibility age for Medicare to 67. He had also agreed to a change in the cost-of-living adjustment formula for Social Security that would reduce benefits by an average of more than 3 percent. This is in addition to the cuts in Medicaid and other programs that would also have been part of the deal.

snip

This raises the possibility that Republicans will try to keep the lower Social Security tax rate in place indefinitely. If there was a commitment to permanently replace the program’s shortfall with general revenue, the loss of the payroll tax revenue would not matter. However, there is no such commitment.

Obviously the Republicans want to reduce Social Security’s revenues so that they can turn the fictional Social Security crisis into a reality. If the program were to permanently lose the revenue from 2 percentage points of the payroll tax then Social Security would first face a shortfall in a bit more than a decade, rather than the quarter century of full solvency currently projected by the Trustees. And the size of the projected shortfall would be instantly doubled.

This scenario would not be a problem if President Obama had demonstrated a firm commitment to Social Security and indicated his willingness to go to the mat to protect the program. But he has done just the opposite. He has told the world that he is such a reasonable guy he is prepared to make major cuts to Social Security.

[woo me with science]

2. K&R

[TheWraith]

3. You didn't realize it, because it doesn't.

The revenue not taken in by payroll taxes is supplied to Social security by the general fund instead. There is ZERO weakening of Social Security.

[madfloridian]

6. Turning funding over to the general revenue fund IS weakening it.

I swear we are letting Obama do Republican things and excusing it.

[TheWraith]

9. No, it's not, nor will it be no matter how many times it's repeated.

You can call a cat a fish, but that won't make it swim.

[madfloridian]

16. Denial.

It's easy now.

[TheWraith]

18. Acknowledging your problem is the first step to fixing it. :) nt

[RC]

20. Absolutely. Tying Social Security to the general fund is weakening S/S

Social Security was set up to be separately funded for a reason. That reason is now getting blurred.
Why are so many people deifying Obama? He has shown by example after example he does not deserve it.

[newblewtoo]

22. BINGO

FDR designed the system with a buy in precisely so that it could not be demagogued as a WELFARE SYSTEM. This allows the pubicons to paint it as WELFARE.

Anyone thinking they will not use this argument later is guilty of wishful thinking at best. They will demagogue the shit out of this.

The difference between borrowing from and de-funding is huge. And with Newtie Tootie waiting in the winds salivating over Social Security withering on the vine I cannot believe this is getting support from Democrats. :wtf:

[woo me with science]

35. Absolutely, and you will note that the only ones defending it

are the same people who had no problem with Obama's using SS and Medicare as hostages during the debt negotiations in the first place.

:eyes:

[Avalux]

4. It doesn't. Anyone who says so is lying. n/t

[madfloridian]

12. Then call me a liar, my friend. Do you believe AARP is lying?

http://www.aarp.org/work/social-security/info-12-2010/social_security_what_the_payroll_tax_cut_means.html

[Moosepoop]

40. Does AARP hold the same position now?

Your link is from a year ago.

The current article in the OP states that AARP supports the payroll tax cut, provided it's temporary.

Do you believe that AARP is lying now, or do you believe that the article is lying?

[Tarheel_Dem]

41. Good luck with that.

;)

[JoePhilly]

5. Obama clearly hates Seniors!!!

And he also kicks puppies for distance!!

This one traveled about 75 yards!!!

[Cali_Democrat]

25. Thank you for your contribution to the topic of the payroll tax cuts

and its impact on Social Security.

Your input has been invaluable.

[JoePhilly]

29. Happy to help.

[xchrom]

8. The Liars are the people saying attaching it to the

General Fund isn't a problem.

Reject neo-liberal solutions.

[tabatha]

11. Yeah, just let more people suffer.

Why does a solution have to be "neo-liberal"? Cannot it just be pragmatic to help people in need?

[madfloridian]

14. So you would take a chance on losing SS benefits in the future for a FICA cut now?

Short term vs long term.

If Obama does it it is okay apparently, even dismantling public education.

[TheWraith]

17. You keep asserting that, but there is no such "risk." nt

[madfloridian]

23. Would you please post proof of that instead of just saying it over and over?

Thanks.

[bornskeptic]

26. How many people do you know who would give up Social Security benefits

because part of them came from income taxes? How many people are willing to give up their Medicare benefits because part of them come from the geneal fund? I don't know any. I don't think you do either. I bet you're not even willing to take a cut in your benefits either. This tinfoil hat nonsense is just manufactured by people who spend all their spare time dreaming up ways to bash President Obama.

[madfloridian]

30. It seems any of us who question policies of Obama are tinfoil hat conspiracists.

I guess you realize there is inherent harm in that.

[bornskeptic]

34. That it qualifies as a conspiracy theory should be obvious.

That the payroll tax cut has no effect on Social Security is a fact. Why are you pushing a theory with absolutely no factual basis?

[madfloridian]

36. It is really called FICA....look it up. It IS the funding for SS.

[RaleighNCDUer]

32. It is not the recipients who will be making the decision.

It will be the wall street billionaires and their congressioinal cronies who want to the the program converted to a for-profit insurance, with THEM making the profits.

Underfund the program enough, and they will HAVE to reduce benefits to all in order to keep paying to all. The ONLY solution to the reduced benefits will be for people (who are lucky engough to have the money for it) to buy for-profit supplemental plans from the commercial insurance industry. That will leave those at the bottom end, who can least afford it, with nothing but a reduced benefit.

It's a return to the good old pre-Roosevelt days of Social Insecurity.

[TheWraith]

15. Attaching "neo-" to something makes it sound scarier.

After all, we can't call it what it is, which is a cut that benefits primarily poor and middle class Americans while not harming long-term Social Security viability.

[CakeGrrl]

19. Exactly.

"Neo" = BAD

And it's rooted in a misunderstanding that's willfully repeated.

[RaleighNCDUer]

31. Where is the pragmatism in getting a small benefit now

and losing the entire program in the long run?

[blkmusclmachine]

27. It's intended to blow up SS. Good ol' fashioned "bi-partisanship" in action!

11-Dimensional Chess you can believe in!

[Autumn]

28. yeah, but who cares

it's a win for him. yay team.

[AtomicKitten]

37. David Sirota said on Cenk's show today that the payroll tax cut is a good idea in the short term.

People need the help immediately, it will stimulate the economy, and it's temporary. I agree.

[Enrique]

39. yeah, Cenk was the only one who was against it

I'm with the majority, I think it's good in the short term, but I wonder, when the time comes to restore the payroll tax, will anyone have the will to restore it, or is this becoming a permanent tax cut?

[Enrique]

38. recced to zero

perfectly good article, about an important subject, presented reasonably, getting unrecced to protect Obama. :eyes:

[Tarheel_Dem]

42. Unrec

:hi: