Obama's proposal to cut Social Security taxes worries defenders of Social Security

[Better Believe It]

Obama tax proposal worries Social Security allies
By ALAN FRAM
Associated Press
September 13, 2011

Some Social Security advocates fear that President Barack Obama's desire to cut taxes supporting the program will undermine its vaunted stature as a self-financing pension system that provides checks to retirees based on contributions they made while working.

The payroll tax cut - an enlargement of one already in effect this year - would take a $240 billion bite out of Social Security revenues in 2012. Obama would replenish the lost FICA (Federal Insurance Contribution Act) taxes with money from the overall federal budget - keeping Social Security whole but forcing the government to borrow more and further swelling the federal debt..

The problem with Obama's proposal, critics say, is that propping up Social Security with general funds from the Treasury erodes its revered status as a self-funded insurance program in which payroll taxes collected from workers pay benefits for retirees, the disabled and their survivors. The proposal would put Social Security into competition for scarce federal dollars with other programs, leaving it more exposed to budget-cutters.

"As long as we could say it's self-funded, we have the high ground" in defending the program from efforts to trim benefits, said Max Richtman, president of the nonprofit National Committee to Preserve Social Security and Medicare. "This will make it much harder to make this case."

Read the full article at:

http://www.kansascity.com/2011/09/12/3137702/obama-tax-proposal-worries-social.html

[Safetykitten]

1. Kind of a subtle, "let them die" kinda thing.

[MineralMan]

4. Your message, however, is not so subtle.

It is, however, pretty disgusting. Equating President Obama with those morons at the debate last night is reprehensible. That is my opinion.

[Safetykitten]

5. It is what it is. People depend on programs that exist today. Sorry that it upsets you.

[ThomCat]

24. Obama is the one cooperating in putting SS and Medicare

funding out there for other programs, making SS and Medicare vulnerable.

Republicans didn't tell him to do that. They aren't forcing him to do that. His own advisers and the lobbyists he listens to are the only ones telling him to do this, and he's choosing to do what these corporate people want.

Obama is the one deciding that seniors and people with disabilities are going to have to pay to create jobs for everyone else.

[dpbrown]

53. +1

Why not just raise the cap? Why not ask the rich to pay more in taxes? Why not just let the Bush tax cuts expire?

No, the choice Obama made is to attack Social Security.

That's equal to saying to someone that they can have a little more spending power now at the cost of their future security. That's a devil's bargain.

[vi5]

2. "make it hard to make this case"

That sums up the number one problem I have with Obama and his administration (from the only one, but the top one). They actively make it harder for the rest of us to make the case for liberalism and progressive ideals and progressive success stories. Even if I were to be gullible and believe as some seem to that he really, sincerely loves liberalism and progressive ideas but goshdarnit he just can't get anything past these obstructionist republicans and blue dog dems, and that it really is more the job of those of us on the ground doing the legwork, the fact is that his words and actions work against our efforts to do so.

[xchrom]

3. recommend

[HereSince1628]

6. Obama is scraping the sides of the proverbial peanut butter jar

Obama doesn't have a lot of options on how to push money into consumers' hands. No doubt he perfectly understands that consumer spending can increase demand (a requisite to hiring), and that tax cutting is the easiest way to get money from House republicans to put money into consumers hands.

It's a bad situation. Hobbs choice if you will. It DOES undermine SS's status as being self-funding, and that WILL hurt down the road. But we want a knife's blade worth of peanut butter, now.

[ThomCat]

25. That's bull. There are a lot of options for taxing wealthy people.

He's just not up for the fight to end tax cuts for the wealthy, or implement any new taxes upon the wealthy.

It is always easier to make defenseless poor people pay. Seniors and people with disabilities are poor. People with disabilities are much weaker than wealthy people. Everyone is politically weaker than wealthy people.

But seniors have some political clout. Let's see what they have to say about this.

[HereSince1628]

34. Unfortunately thats an option that the r's will not make available.

Obama, a recipient of one of the great popular expressions in American politics doesn't seem to be a populist.

The people would love to tax the wealthy, some of the wealthy wouldn't object, but this administration won't make a fight on that.

[ThomCat]

49. I agree with everything you just said.

:(

[ProSense]

7. "Many analysts say

From the OP:

<...>

Many analysts say that technically it makes little difference whether money going into Social Security's trust fund comes from the payroll tax or from other government revenue. Either way, the cash purchases special bonds that are banked in the trust fund.

"It will in no way weaken the Social Security fund," Robert Reischauer, former head of the nonpartisan Congressional Budget Office and one of six trustees who oversees Social Security, said of partially financing the program with general revenues.

White House spokeswoman Amy Brundage said that, under Obama's proposal, "Social Security will still receive every dollar it would have gotten otherwise."

<...>

Many economists support the payroll tax holiday. The fact is that replenishing Social Security is irrelevant to the program's structure in term of contributing to the deficit.

Social Security does not contribute to the deficit. How is insisting that a payroll tax holiday changes the structure of SS a counter to Republicans' efforts to dismantle the program?

The MSM is going to milk the fear mongering, but a hypothetical is not a fact.

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

[Safetykitten]

8. Many supporters post...whatever they can

[ProSense]

9. Great post!

Excellent demonstration of a keen intellect!

[Safetykitten]

10. You are no slouch yourself.

[girl gone mad]

32. That's the pot calling the kettle black.

[mfcorey1]

22. There are so few of us but you are right we must fight the constant braindrain.

[Selatius]

11. Dean Baker said the deal should be opposed for two reasons.

First, the deal to cover shortfalls in SS as a result of the tax holiday are short-term. They do not cover issues several years down the road. Second, Republicans would probably fight to extend the tax holiday indefinitely.

With no permanent commitment to covering shortfalls combined with a strategy of indefinite extension of the holiday given Republican attitudes towards raising any taxes, Social Security would run out of money a lot sooner than projected if the holiday were to expire next year.

As it stands the only deal to cover shortfalls only covers about a year, the length of the original tax holiday. There is no indication Republicans will make a permanent commitment to cover those shortfalls, but we likely can expect Republicans to oppose allowing the tax holiday to expire at all.

[ProSense]

12. Why

"They do not cover issues several years down the road. Second, Republicans would probably fight to extend the tax holiday indefinitely...As it stands the only deal to cover shortfalls only covers about a year, the length of the original tax holiday. There is no indication Republicans will make a permanent commitment to cover those shortfalls, but we likely can expect Republicans to oppose allowing the tax holiday to expire at all."

...would the deal cover a shortfall that doesn't exist?

Again, this is fear mongering base on what Republicans will likely do.

Republicans are going to attack Medicare and Social Security in the future anyway. Bush tried to privatize it (before the payroll tax holiday). House Republicans passed the Ryan plan and "Cut, Cap and Balance," and they're likely going to continue to push these plans.

The extension is for one year. Extending it would require a new bill. If Republicans have the power and the numbers to dismantle Social Security, they will likely go the route of Bush's scheme or Ryan's plan.

Why is there such concern about what Republicans might do...and in the future? Does anyone believe that if this payroll tax holiday isn't passed Republicans will leave Medicare and Social Security alone in the future?

Maybe it's time to stop hyping the flawed notion that Social Security is being jeopardize when it's not.

[Selatius]

13. I respectfully disagree.

From Dean Baker:

...

However, there is a serious political problem with tying the tax cut to Social Security. While the deal is that the trust fund will be unaffected by the tax cut, the question is what happens when the extension ends. Several Republicans in Congress have already publicly said that they would oppose restoring the payroll tax to its former level, since that would be a tax increase. And increasing taxes is the most deadly sin for many Republicans.

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.

...

http://yubanet.com/opinions/Dean-Baker-The-Payroll-Tax-Cut-A-Stimulus-That-Progressives-Should-Oppose.php

[ProSense]

16. More from the link:

<...>

In principle, this would be a reasonable form of stimulus. The distribution of the tax cut is relatively progressive, albeit not as progressive as the Making Work Pay tax credit that it replaced. It gives workers a tax break equal to 2 percent of their wages up to the payroll cap of roughly $108,000.

<...>

Since most of the money will go to middle-income and low-income people, it is likely that a large portion will be spent. This makes it much better stimulus on a per-dollar basis than the extension of the Bush tax cuts.

However, there is a serious political problem with tying the tax cut to Social Security. While the deal is that the trust fund will be unaffected by the tax cut, the question is what happens when the extension ends. Several Republicans in Congress have already publicly said that they would oppose restoring the payroll tax to its former level, since that would be a tax increase. And increasing taxes is the most deadly sin for many Republicans.

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.

<...>

Baker saw a "serious political problem," a hypothetical about what the Republicans might try to do.

Again, after Bush's attempts to privatize Social Security, Ryan's plan and "Cut, Cap and Balance," it's evident Republicans will try to dismantle Social Security. They are going to try to do it any way.

While Baker is concerned about a "political" consequence, he admits the payroll tax cut is "stimulus," its distribution "relatively progressive," and that it benefits mostly middle-income and low-income Americans.

[Selatius]

21. That it is a stimulus isn't the issue being debated.

There is no disagreement there. Baker said dollar for dollar it is more productive than the Bush tax cuts in terms of putting money into people's pockets who will spend money, but the issue is whether Republicans will try to extend the tax holiday indefinitely while not giving a permanent commitment on covering the shortfalls generated from a tax holiday being extended indefinitely. I would say there is a strong chance Republicans will try this route, since their goal is either destroying or privatizing Social Security anyway.

[kenny blankenship]

18. "Temporary" tax cuts that always become permanent: is *that* what they mean by "incrementalism"?

Don't let the turd polishers get you down.

[jtown1123]

14. This is the second year extending it after sworn promises it would only be one year. This isn't the

end for this payroll tax holiday, not by a long shot. Are concerns are playing out just as we predicted.

[woo me with science]

42. +1

[ThomCat]

26. if money can come from anywhere without consequence

then why couldn't they take that money from the general fund to pay for the jobs program?

Why do they have to do this 1-2 shuffle to take from Social Security and Medicare, to pay for jobs, and then claim that they promise to take from the general fund later to pay for Social Security and Medicare?

That looks like really blatant political game-playing. It doesn't pass the smell test.

That means it's something that only enamored supporters will like, because they made up their mind in advance to rationalize reasons to like anything Obama proposes. :eyes:

[sabrina 1]

37. How many jobs have been created by this tax holidy over the past nine months?

It's not as though this hasn't been tried already, it has. So, since you have so many links, can you provide some to show how this has worked to stimulate the economy and to create jobs?

And why is the fact that this has been in effect for nine months left out of all these discussions?

[dpbrown]

54. +1

It's already been tried and hasn't created any new jobs.

[jtown1123]

15. K&R. Not only is this bad for SS, it;s not effective stimulus. It hasn't work the past year. n/t

[mfcorey1]

17. Enough of the lie that he is cutting ss.

[jtown1123]

19. No one said he was cutting. Just severely undermining the program and putting it in shaky

financial footing. SS should not have to compete for LIMITED federal funding.

[ThomCat]

27. It's not a lie that he's undermining the funding for SS and Medicare.

You're certainly not showing any facts to show otherwise.

It's not a lie that this is a set-up to allow him, or others, to cut SS and medicare later because of the funding hole.

[NorthCarolina]

20. Conservatives have lonng sought ways to tie Social Security to the general fund. Now they can sit

back and let a democratic President do it for them. The Social Security falsehood that it is broke being forced on the public should be a major clue for everyone as to where this is headed. The SS funds have been drained for wars and other conservative agenda items and replaced by T bonds. Conservatives have an absolute aversion to the ever redeeming those bonds because it would be used to pay folks that they consider undesirable government leeches. Of course they can't outright default on a T bond as it would send shockwaves through the world markets that also hold major investments in these bonds. Best way to accomplish the goal is through a back door approach where you cut spending to levels where the bonds will never require repayment. If you think the Obama administration is a defender of the social safety net, you better think again.

[ThomCat]

28. Democrats "moderates" keep doing republican dirty work.

Democrat corporatists keep implementing plans that have long been Republican dreams. Obama keeps implementing Republican policies, and his supporters keep rationalizing why it's all wonderful. :(

[kctim]

29. Rationalizing or supporting?

[ThomCat]

30. The Obama supporters are doing both.

They rationalize to convince themselves that anything Obama does is wonderful, even if they hated the exact same policies under Bush. Then they support those policies as loudly as they can because it is Obama now implementing them.

[Dragonfli]

33. I agree, they are not helping, the PEOPLE need a party, not just more RW policies, please read

this:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1927118&mesg_id=1928823

I would have posted much of this here anyway, but since it has already been posted elsewhere

[kctim]

36. What if

the PEOPLE do not agree with you on what party they need?

[Dragonfli]

38. Well there are the extremely wealthy, they adore right wing policies. There are also those that vote

against themselves due to weakness, misinformation, or gullibility (the last being the case with me in '08).

I believe what you are referring to may be those that vote for their own poverty because they fall into the misinformed class.

[Claudia Jones]

51. no alternative

We cannot discuss why people vote Republican without acknowledging the fact that people hear no clear alternative.

[Dragonfli]

57. Very good point, we once had an alternative before the Democratic party went all in on Reaganomics.

I have to tell you that after perusing the "third way" and PPI sites, I am seeing a great deal of the 1987 Republican platform.

That is hardly an alternative to Republicanism, perhaps an alternative to tea bag insanity, but at heart they share many of the same conservative ideals, so there is no Democratic or progressive alternatives out there, only a few individuals, but no more party of the working class and poor.

I wonder if the younger people who have never seen an "old school" Democratic party think that this right wing version is all it ever was. It would explain some of the confusion I see in people that don't know that Democrats used to be different.

[kctim]

55. Being misinformed

is not the same as holding a different belief or value. Not all Democrats agree on the level of government involvement for each and every issue, and it is not because they are misinformed.

Then you have the fact that some people do not place money ahead of their rights, which is why people who say they know what is in anothers best interest, are full of it.

[Dragonfli]

58. Oh no, they are misinformed, trickle down has never worked, neither has perpetual war. /nt

[Claudia Jones]

50. backward

You may as well say "what if people don't desperately need what they desperately need?"

This is the chronic excuse that Democratic party politicians have been using for years. "We would do something to help the working people, don't get us wrong we are on your side, but what can we do? Our hands are tied because the people keep voting for Republicans."

This stands reality on its head and turns the question backward. It is not the case that the Democrats can do nothing because the people do not support them, rather it is that the people will not support Democrats when the Democrats don't do anything for them.

[kctim]

56. That makes no sense

If people keep voting for Republicans, it is not because they wanted Democrats to go even further to the left. It is because Democrats went to far left. The recent HCR bill is proof of that.

So, how does Democratic leadership work around the fact that what progressive Dems want is not always what Dems in general want?

[Claudia Jones]

62. that is what the right wingers claim

The right wing propaganda machine pounds on this imaginary "too far left" drum and it is all over cable TV 24/7. It would seem obvious to me that this is a ploy to frighten people into accepting the Dem politicians moving to the right.

Everything you say here can seem true and make sense if and only if you accept the MSM framing of the political environment. That leads you, and many others, into a trap. That is the intention of the people who run MSM.

People here are arguing that everyone should have access to housing, healthcare, income, education, communications infrastructure and food. How can that be contrary to what most people want? It cannot. If some Dems oppose those who are calling for that, then the logical conclusion is that some Dems oppose the idea that everyone should have access to housing, healthcare, income, education, communications infrastructure and food. To turn that around backward and claim that those who are advocating for the needs of the many "want" things that most people do not want is illogical in the extreme.

Yes, there is a split in the Democratic party. It is between those who want to address the needs of the general public, and those who wittingly or unwittingly want to take care of the wealthy.

[kctim]

35. So there is no way they actually support the policies themselves?

[Dragonfli]

40. Reagan Democrats I suppose. Or "Republicans in denial" as I like to call them. /nt

[ThomCat]

47. Not if they're smart enough to know what those policies are,

and what those policies will do. :eyes:

Of course, a hell of a lot of people support Obama no matter what he does. They routinely support his policies, even when they are policies they attacked under Bush. What does that tell you?

[Claudia Jones]

52. correct

There is no way they support the policies themselves. The only way that can happen is when those policies are seriously misrepresented and when the supposed opposition party will not or cannot offer a serious and comprehensive alternative.

[Autumn]

23. Recommended.

Pushing the enemies values and hopes is a stupid policy. And let there be no mistake, the GOP are the enemies.

[madfloridian]

31. This is an outrage.

He should not be doing this.

[JoePhilly]

39. Obama kicks puppies competitively for distance!!!

[Dragonfli]

61. No he doesn't but he is pushing a policy that helps defund SS. Sorry if the two are confused in your

mind.

I do not think anybody would say he kicks puppies until he proposes to do so as he did with proposing defunding SS and placing the debt where SS can be attacked as just another program paid for by Government rather than the self funding entity it was intended to be.

Do you also confuse drowning kittens with promoting free trade? (hint, they are not synonomous either)

[sabrina 1]

63. Really?

I doubt it, he seems to love his puppy and in general he appears to be a very nice man.

But what has that got to do with the topic of weakening SS which the tax holiday will do if it doesn't end as quickly as possible?

People can be wonderful human beings and still be wrong about certain things.

And btw, I am having a problem getting an answer to this questions.

Since this police has been in effect for 9 months, how many jobs has it created and how has it stimulated the economy?

[JoePhilly]

65. Have we been gaining jobs or losing jobs over the last 8 months

Most of the stimulus ran out at the end of last year. With a GOP House, no stimulative actions have passed since.

You wonder if this payroll tax holiday is stimulative. Try these.

Do you think raising the minimum wage would be stimulative? What about increasing wages for workers?

Both of those actions would put more money into the pocket of average Americans, and they would spend it, providing some energy to the economy. I don't think anyone on the left disagrees with this position.

The problem is, with a GOP House, there is NOTHING the government can do to get those 2 things passed. This tax holiday for working people is one of the only WORKABLE paths to putting money into the pockets of average Americans. In its effect, it is no different than the other two approaches I described. And yet here on DU, this is used as an example of how evil Obama must be ... part of his secret plan to kill Social Security.

The panic on DU about this tax holiday "weakening SS" is silly, and his been debunked in any number of threads. The GOP will scream that SS is bankrupt endlessly anyway, they already make that false claim.

[ProSense]

41. Keith Ellison:

"I am worried that it could set up a long term problem for Social Security," said Ellison, "As a strictly temporary measure, I could live with it for a little while."

Also: Jobs Plan Unveiled By House Progressive Caucus

[Cool Logic]

43. "worries defenders of Social Security..." Where were the worriers when...

Congress was looting $2.7 trillion from the SSTF?

[jtown1123]

44. Not looting, they're borrowing. As we do with all treasury bonds.

If you say they are "looting" then you imply that the money is somehow "gone" and they can get away with not paying us back.

[Cool Logic]

46. ..."they can get away with not paying us back."

Actually, it will be the American workers paying themselves back as they ante up another $2.7 t service those bonds.

You make the mistake of believing that Social Security has $2.7 trillion of assets without examining and realizing that these assets predominately consist of receivables from the general fund (Tbonds). Furthermore, these receivables aren't collectible unless more taxes are collected from the People who anted up the missing $2.7 trillion in the first place.

All to often I read or hear news of someone being swindled. Most of the schemes employed are so simplistic and obvious in nature, that it is beyond my realm of comprehension how someone could have fallen for it.

American workers have been swindled out $2.7 trillion and many of will not realize it until its too late.

[Dragonfli]

59. No you are wrong, that money was borrowed from the peoples fund to keep taxes low, the taxes need to

be raised to pay for them now.
Is it somehow different when we borrow from China?

[blindpig]

45. Stealth defunding, by a Democratic president...

only Nixon could go to China....

[bvar22]

48. There is NO rational way to argue that the Payroll Tax Holiday "strengthens" Social Security.

...No "rational" way.
Spurious Blue Link

The Payroll Tax Holiday WEAKENS Social Security by tying its funding to the General Fund.
That IS a Step Backwards.
Period.

Even the term "Payroll Tax Holiday" is well chosen by those Marketing Wordsmiths who would would destroy it.
"Holiday" suggests a happy escape from a burden,
like a Snowday Holiday from School.
It marginalizes and diminishes a cornerstone of the Democratic party.

Obama should NOT be promoting something that weakens Social security.
He should be pushing for Raising Taxes on the RICH by eliminating the cap on "FICA Contributions".


You will know them by their WORKS,
not by their excuses.

Solidarity!
The problem I have with "Centrists" is that they agree with Republicans on Policy.
--------------------------------------------------------------------------------------------------------------------------------

[hifiguy]

60. The first of a death by a thousand cuts.

Take it to the bank. No previous Democratic president since SocSec came into being would have done such a thing.

[kentuck]

64. Who do you think is advising the President on this matter?

I wish he was getting more or better advice.