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WASHINGTON (AP) — Democrat Barack Obama said Sunday that if elected he will push to increase the amount of income that currently is taxed to provide monthly Social Security benefits.
Josh Marshall of TPM wrote something a few weeks ago that I hadn't thought of previously, but its an argument I find quite convincing.
Quote:
I said last night that I disagreed with the oft-stated claim that it just gets harder to 'fix' the non-existent Social Security crisis the longer you wait. In fact, as I thought about Obama's proposal to remove or retool the cap on Social Security taxes I got to thinking that it's not just not necessary to do right now but that it actually might be a bad idea altogether.
Many have argued that having this debate at all buys into the right-wing argument that there's a 'crisis' that needs to be solved and thus that the politics are all wrong. But put that aside, let's talk about whether it makes sense even on substance.
When it comes to the policy and number-crunching nitty-gritty of Social Security I'm definitely an amateur. But I think I've got a decent sense of the political-economy of the question. We need to remember that now and for at least a decade into the future Social Security is actually subsidizing the rest of the federal budget. The program brings in much more than it pays out. As we all remember from the voluble debates two years ago, the surplus is being used to buy US government bonds which go into the Trust Fund. And that socked away money will keep the program solvent through the middle of this century as the baby boomers retire, and revenues in no longer cover promised payments out.
We've been doing that for about a quarter of a century.
The problem on the political side of the equation is that the enemies of Social Security have spent a couple decades arguing that the Trust Fund doesn't exist or that it is simply a bookkeeping device with no true financial meaning. If that's true, it means that American workers have spent the last twenty-five years using their payroll taxes to subsidize general revenues and make it easier to float big tax cuts for upper-income earners without getting anything in return.
If we start pumping a lot more money into Social Security coffers now it will by definition go into more government bonds, which is another way of saying that it will go toward funding our current deficit spending. In fact it will enable more deficit spending and probably more upper-income tax cuts because it will make the consequences of both easier to hide.
If we want to push the buffer of the Trust Fund further out onto the horizon, then fiddle with payroll taxes when Social Security would need to start dipping into Trust Fund. In other words, in a decade or so. I see no reason why this approach doesn't work just as nicely then as it would now.
As Paul Krugman noted in the interview I did with him a few weeks ago, the window of time we had to seriously pare down the national debt to prepare for the retirement of the baby-boomers is close to over. Still, though, our best way of ensuring the future health of Social Security is to stop running up the national debt now. So I'm very reluctant to put more payroll taxes in the pot while we're still running big deficits because of the Bush tax cuts. The money will just go to subsidizing that irresponsible fiscal policy.
If there is any sense in which the 'Trust Fund' is not 'real' it is that it must be paid back from general revenues. And that will only be harder the more other debt we're running up. So rather than solving the problem, I think we're actually enabling it.
The second problem is that we need a national agreement or consensus that the Trust Fund is real, that it will be honored, and have the debate about the future of the program on that basis. Otherwise, we're still risking getting played in the same bait-and-switch privatizers have been trying to pull for years -- using regressive payroll taxes to fund current government spending and then telling future recipients that that money has disappeared and thus Social Security has to be phased out altogether.
Lifting the payroll tax cap while Social Security is still running a big surplus not only solves a problem that doesn't exist it enables the very policies that put the program in danger. Perhaps this is all another way of saying that I'm not a fan of putting more hens in the hen house while the foxes are still at the door, or even in the house.
Same old crap from our politicians. 'Raising' things. How about we come to terms with the fact that the system is defunct, it cannot and will not be maintainable in the future. I for one am tired of putting money into something I will not see, and I don't think making someone's wages more taxable is the right solution. Ron Paul would agree.
If not for Social Security, dare I say most seniors would live in poverty. Hopefully that is worth a few bucks per paycheck. You would see it if seccessive presidents did not raid the fund, Cong. Paul agrees with that even more. There is money there if we want it to be.
The accounting is SO screwed up.. there is no such thing as saving. Here is SS accounting in basic terms
Amount the people of the US are charged for social security
- Amount that is spent for SS checks
__________________________________________________ _____
= Surplus that is spent.
WELL NO WONDER WE HAVE A PROBLEM! All they wanna do is raise the taxes, how about fixing the damn accounting.
The accounting is SO screwed up.. there is no such thing as saving. Here is SS accounting in basic terms
Amount the people of the US are charged for social security
- Amount that is spent for SS checks
__________________________________________________ _____
= Surplus that is spent.
WELL NO WONDER WE HAVE A PROBLEM! All they wanna do is raise the taxes, how about fixing the damn accounting.
Hence the lockbox that was a big joke against Gore in 2000 by our giggly Washington press corps, yet not quite as funny now. Part of the reason for the push in the balanced budget in the 90's was to prepare ourselves for the medicare/ss strain that would be placed on the system as boomers retire.
Instead, we used it to subsidize tax cuts overwhelmingly favoring the uber wealthy (percentage wise and not just in real dollars.) Hell of a choice.
"I think the best way to approach this is to adjust the cap on the payroll tax so that people like myself are paying a little bit more and people who are in need are protected," the Illinois senator said.
"That is the option that I will be pushing forward."
Fact:
Currently, only the first $97,500 of a person's annual income is taxed. The amount is scheduled to rise to $102,000 next year.
Obama's proposal could include a gap or "doughnut hole" to shield middle-income earners from paying more in taxes, he said.
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