Obama Payroll Tax Cuts Seen Undermining Social Security

[Cali_Democrat]

This is interesting. I didn't realize the payroll tax cut had this kind of a negative impact on Social Security, but it makes sense.

Obama Payroll Tax Cuts Seen Undermining Social Security
Brian Faler
Monday, December 5, 2011

Dec. 5 (Bloomberg) -- Some Democratic lawmakers say that, while President Barack Obama's plan to cut payroll taxes may strengthen the U.S. economy, it may have some unintended fallout: weakening Social Security.

The lawmakers and advocacy groups say they are concerned the tax cuts may undermine political support for the retirement program, which provides benefits to almost 55 million Americans and is funded by the payroll levies.

"I don't object to putting more money in people's pockets, and there are lots of ways to do that, but not with Social Security," said Representative Rush Holt of New Jersey, who said he will have a hard time supporting the White House plan.

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Still, Obama's proposal comes amid growing concern about Social Security's finances. The program has begun spending more on benefits each year than it receives in payroll tax revenue and, starting in 2036, won't be able to pay full scheduled benefits, according to the trustees' latest report.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/12/05/bloomberg_articlesLVR12J0YHQ0X.DTL

I don't think this means the payroll tax cuts shouldn't be passed, but if the payroll tax cuts are passed, revenue enhancement through something like a millionaire surtax becomes imperative. The additional revenue should probably be used to makeup the Social Security shortfall. Forcing the government to tap into general revenue for Social Security will likely lead to budget fights where Social Security could ultimately be sacrificed.