Tax Cut? No, Just Another Raid On Social Security Posted 07:04 PM ET
Politics: Lost in Beltway wrangling over a payroll tax cut, an ugly reality lurks: Our politicians are plotting yet another raid on the Social Security "trust fund," which is already near insolvency. When will this madness stop?
President Obama and his congressional Democrats know well how bad their spendthrift reputation is among voters as election day approaches. With Obama at sub-50% approval numbers and Gallup reporting Congress clocking in at a record-low 11%, they expect a bloodbath at the polls in November — and maybe another slashed debt rating, too.
What then could be better for Democrats than to be able to claim that deep down, they're tax cutters, too? Just like Republicans — whose corporate tax cuts in 1982 led to an unparalleled decade of economic growth.
But Obama and his Democrats don't want to direct any tax cuts toward investment for long term growth — as corporate tax cuts do — but to hand them out to taxpayers like party favors in the hopes it'll pay off come November. It's a political game, but they have few other options aside from cutting spending.
But there's a big catch: The payroll tax cut they seek is nothing more than taking cash from the back pockets of taxpayers and handing it to them up front.
The supposed payroll tax cut, as blogger Don Surber has noted, is a Social Security tax cut that comes through the Federal Insurance Contributions Act.
That means the tax cut will be achieved by taking $120 billion from the Social Security "trust fund."
Instead of getting rid of a bureaucrat or a thousand, the idea is to simply raid the Social Security trust fund one more time, hastening the day it goes bust.
As if it's not in bad shape already.
Sure as the sun comes up in the morning, the Social Security trust is already bankrupt, as demographic decline means less payroll taxes coming in for ever more retirees. By 2036, there won't be a dime in it, and the only money to pay a growing field of retirees from a shrinking pool of workers will be from those workers' contributions. The payroll tax cut proposed by the Democrats will only make that day come sooner.
So let's call it what it is: A tax hike on the young to pay those already working, with the added kicker of an empty pot at the end of the Democrat rainbow.
The iron law of economics remains: With this proposed payroll tax cut, Democrats will cut spending not by getting rid of useless regulators and bureaucrats, but on future retirees who've contributed 12.4% of their income to Social Security trust fund all their lives and expected some sort of return.
Obviously, they think voters will forget about it once it's done and they've reaped the political spoils. After all, they've done this countless times before.
But it comes against growing worries from workers near retirement that maybe they really will get stiffed when it comes time to draw Social Security.
According to an Allstate-National Journal poll released last week, America's near-retirees above age 50 expect to retire six years later than those retiring now. More than half expect to work because they have to, compared to 11% of retirees today.
"They're alarmed, but when you look at the numbers for projected savings at retirement and consider the prospects for Social Security and Medicare, you have to wonder whether they are alarmed enough," wrote Clive Crooks on his Atlantic blog page.
Barbara Hannah Grufferman, writing in the Huffington Post last May, reported that her own survey of women revealed "the fear of not having enough money as they get older."
Yet instead of stopping this coming implosion of Social Security — and talking seriously about setting up a system of private accounts, which was wildly successful in places like Chile — Obama and his allies are opting to make the Social Security Ponzi scheme even more insolvent than it already is.
Kick the can down the road and leave the inevitable bankruptcy to the next guy. The only people who lose are the taxpayers.
How ironic that only Democrats can take a tax cut and find a way to stick it to the taxpayers |
