B12 Solipsism

Spreading confusion over the internet since 1994

Social Security and the National Dept

with one comment

Forget-me-not Social Security

Matt Taibbi notes, in the midst of skewering Matt Bai:

Social Security was never the cause of the nation’s debt problems. This issue dates all the way back to the Eighties, when Ronald Reagan hired Alan Greenspan to chair the National Commission on Social Security Reform, ostensibly to deal with a looming shortfall in the fund. Greenspan’s solution was to hike Social Security tax rates (they went from 9.35% in 1981 to 15.3% in 1990) and build up a “surplus” that could be used to pay Baby Boomers their social security checks 30 years down the road.

They raised the SS taxes all right, but they didn’t save the money for any old Baby Boomers in the 2000s. Instead, Reagan blew that money paying for eight years of deficit spending and tax cuts. Three presidents after him used the same trick. They used about $1.69 trillion in extra Social Security revenue (from the Greenspan hikes) to pay for current-day goodies, with the still-being-debated Bush tax cuts being a great example. This led to the infamous moment during Bush’s presidency when Paul O’Neill announced that the Social Security Trust Fund had no assets.

Well, duh! That is what happens to a fund, when you spend 30 years robbing it to pay for tax cuts for Jamie Dimon and Lloyd Blankfein. It will tend to get empty. But of course this wasn’t presented to the public as being the consequence of too many handouts to wealthy campaign contributors: this was presented as a problem of those needy goddamned old people wanting to retire too early and being just far too greedy when it came to actually wanting their Social Security benefits paid out.

(click to continue reading Matt Bai’s Post-Partisanship | Rolling Stone Politics | Taibblog | Matt Taibbi on Politics and the Economy.)

Furthermore,

Social Security taxes are capped, which means that above a certain level (I believe it’s $106,000 this year) there are no additional taxes. Which means that Jamie Dimon pays a disproportionately small amount of Social Security tax — an arrangement that makes sense, if that money is only going to one place, i.e. back, later on, to the person who paid the taxes, in the form of Social Security benefits.

But if all that money is just going into a big pile to be stolen by a long line of presidents who are using it to pay for things like pointless wars and income tax cuts for their rich buddies, the Social Security cap means that this stealth government revenue source disproportionately comes from middle class taxpayers. Add in the fact that the proposed solution to the budget problem now is cutting Social Security benefits, and what you get is a double-screwing of middle-class taxpayers: first they see their Social Security taxes used to fund tax cuts for the wealthy, and then they see cuts to their benefits to pay for the fallout from that robbery.

Grist for the mill of your next argument with a right-winger clamoring to privatize Social Security. Of course, facts have never been very important to right-wingers.

Written by Seth Anderson

January 4th, 2011 at 4:00 pm

Posted in politics

Tagged with , ,

One Response to 'Social Security and the National Dept'

Subscribe to comments with RSS or TrackBack to 'Social Security and the National Dept'.

  1. […] mentioned this before, but it bears […]

Leave a Reply