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    Obama Opens The Door To Raid Social Security

    Obama Opens The Door To Raid Social Security

    One of the interesting aspects of the “framework” announced by Obama to prevent marginal income tax increases on anyone is that part of the quid pro quo demanded by Obama was a one-year 2% drop in the portion of social security (FICA) taxes paid by employees (the portion paid by employers remains the same).

    Prior to the 2008 election I noted that Obama’s proposal at the time to issue “refund” checks to people who pay no income taxes as a rebate of FICA payments amounted to a double-dipping, since wage earners would get a refund of their FICA payments but still would receive the benefits.  I noted again after the election:

    Equally important, Obama’s plan changes the very nature of social security. No longer will social security be a system in which workers contribute now in order to “get back” the contributions at retirement. For a large percentage of the population, there will be no real contribution to the social security system; those contributions will have been “refunded” through “income tax credits” long ago.

    The “tax deal” follows through, in a very limited and temporary way, on Obama’s goal of FICA rebates to wage earners without a corresponding change in benefits.

    We have maintained the myth for several decades that FICA payments actually exist in a social security trust fund.  I say this is a myth because in fact the money is lent to the government for general budget purposes and in return the trust fund receives promises to repay the loans.  At the end of the day, the social security trust fund is only as good as the government’s general ability to pay, which is endless because the government always can print more money.  The result of printing more money out of necessity would be inflation.

    The current tax holiday for a portion of employee FICA payments is another step in divorcing employee payments from employee benefits.  Employee payments into the system will be reduced, but benefits will not be reduced as a result.

    Richard Eskow of the left-wing Campaign for America’s Future, writing at HuffPo, picks up on this point, Obama’s “Tax Holiday”: A Poison Pill for Social Security, but few others in the Democratic base have noticed.  Perhaps they are still reeling from the beating over the head Obama delivered at his press conference yesterday.

    FICA increasingly is being treated as just another tax, and social security benefits as just another government entitlement, to be toyed with as political necessity requires.

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    Comments


    I just got done listening on CBS radio to David [?] Ross explain how cleverly Obama has trapped the Republicans and the Tea Party [which soon disappear no matter how the compromise works out — it's that powerful] with his brilliance. All I could think of was The Princess Bride:

    Westley: "Truly, you have a dizzying intellect."
    Vizzini [Obama]: "Wait 'til I get going!"

    The supreme court has already decided 40 years ago that social security is just a tax. You have to pay in, but don't have a right to get anything out of it.

    The so-called trust fund has been raided. The only way to redeem the $$ from the IOU's is naked printing. You think the Chinese will buy those treasuries?

    @JorgXMcKie:
    The next time you are going to assert evidence of Obama's putative "brilliance", please provide a link.

    Absolutely nothing I have heard … even on CBS ..supports your claim.

    If you are referring to David Mark's recent commentary on Washington Unplugged, then all I have to say is …..

    You really, really, REALLY don't understand the Tea Party.

    Y, the SS "lock box" was and is another cynical fraud perpetrated by the lying crooks we call "leaders". Many recognized back in the 90s that the money SS was "lending" to the Treasury would not be paid back; the math was just not there regardless of what the blowhards in DC said. The fiscal psychosis of a program pretending to be both insurance and welfare was bound to rip SS apart sooner or later anyway. Now that Obama is letting some more of the cat out of the bag, maybe it's time to make a clean break and declare an end to the whole charade. Terminate the stupid program. Those who have "contributed" over the years will be paid off on a sliding scale based on how much they put in and whether they need the money or not. Anybody over the retirement age who needs more financial help will be eligible for a new aid program paid for out of the general fund. SS "contributions" will no longer be extorted from the general public. The "lock box", "contract between the generations" and the rest of the SS BS mumbo-jumbo will follow their private-sector predecessors into Ponzi-scheme hell. Good riddance.

    Better to push for a law forcing employers to publish those taxes on the check stub…pbuxton

    That idea has been screamingly obvious to me for decades. But what's the point of passing a law demanding that employers be smart?


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