Lies, Damn Lies, And Social Security.
To understand the mechanics of this attempted swindle, you have to roll back twenty-five years, to the time the game of bait and switch began, under Ronald Reagan.
The Gipper’s … massive tax cuts for corporations and upper-income ranks … launched the era of swollen federal budget deficits. But their economic impact was offset by the huge tax increase … imposed on working people in 1983: the payroll tax rate supporting Social Security… A blue-ribbon commission chaired by Alan Greenspan worked out the terms, then both parties signed on. …
Ever since, working Americans have paid higher taxes on their labor wages–12.4 percent, split between employees and employers. As a result, the Social Security system has accumulated a vast surplus–now around $2.5 trillion and growing. This is the money pot the establishment wants to grab, claiming the government can no longer afford to keep the promise it made to workers twenty-five years ago. …
Follow the bouncing ball: Washington first cuts taxes on the well-to-do, then offsets the revenue loss by raising taxes on the working class and tells folks it is saving their money for future retirement. But Washington spends the money on other stuff, so when workers need it for their retirement, they are told, Sorry, we can’t afford it. …
But here’s what you can’t legitimately do: you can’t switch views in midstream. You can’t say that Social Security is just part of the federal budget, so the trust fund is meaningless — then say that because there’s no real trust fund, Social Security is in crisis when payroll receipts fall short of benefits. Either you adopt the integrated-budget view, in which payroll taxes and retirement benefits have nothing to do with each other, or you focus on dedicated financing, in which case the trust fund has to count too.
Or to put it a bit differently: there’s no valid approach under which Social Security surpluses don’t count but Social Security deficits do.
TPM Jan. 3, 2011
As many have noted, one key issue is that the nation’s longterm debt problems—which are very real—don’t really have much to do with Social Security. Social Security is currently subsidizing the rest of the budget. And further out into the future, it’s just not the problem. The real and explosive problem is with health care and relatedly the political drive for tax cuts without any significant cuts on the spending side. But those are policy points. And the political calculus for a Democratic president just doesn’t add up either.
