You are viewing an obsolete version of the DU website which is no longer supported by the Administrators. Visit The New DU.
Democratic Underground Latest Greatest Lobby Journals Search Options Help Login

Reply #11: FICA Taxes Were Increased During Reagan's Terms to Prepay Boomer's Social Security [View All]

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » General Discussion Donate to DU
Elmore Furth Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 10:51 PM
Response to Original message
11. FICA Taxes Were Increased During Reagan's Terms to Prepay Boomer's Social Security
Edited on Tue Jan-18-11 10:58 PM by Elmore Furth
Reagan raised taxes in 7 of his 8 years in the White House The social security trust fund has 2.5 trillion in t-bills that are accumulating interest . The money was spent but by law and under the constitution the money cannot be defaulted on . The FICA taxes were raised in the Reagan administration so that the Baby Boomers would prepay their Social Security.

The outsize Federal budget deficits under Reagan necessitated hiking the FICA tax substantially in order to fund Social Security. Most of you see that deduction on your paychecks. The idea was to provide for the baby boomer generation when its massive ranks began to retire.

As result of these taxes, Social Security accumulated a vast, 2.5 trillion dollar surplus. Good news for a generation of retirees, right? Well, sorta. That money has been spent. When you hear someone talking about "Social Security in Crisis," that's what they're talking about. That's the "crisis." They're talking about the fact that Uncle Sam owes back that vast amount of money it has already spent.

Cheney's "deficits don't matter" is only true if the US government is going to default on the US Treasury Bonds held by the Social Security Trust Fund.

Then, they Trust Fund was squandered on tax cuts for the wealthy and foreign adventures so that rich Republicans wouldn't have to pay their own way.

We keep hearing that Social Security is "broke," thanks to the well-funded efforts of folks like these. But the Trust Fund currently holds a $2.6 trillion surplus, and it's expected to rise to $4.2 trillion by 2025. That's a lot of money set aside for people's retirement -- money some people would rather see used for other purposes, like paying for the spending spree of the last ten years or underwriting tax breaks for the well-to-do.

The Social Security Law said that the Trust Fund could only be used for Social Security benefits. Now the wealthy want to default on these LEGALLY MANDATED DEBTS so they don't have to compensate for their tax cuts that caused the federal deficit.

So are we going to default on the Treasury Notes sold to the Chinese? Why not? They are just a binding as the Social Security Trust Fund?

In the end this was never about anyone's grandchildren paying off the national debt. It was about the wealthy paying for their fair share of the government budget. AND THEY DON'T WANT TO PAY. Sounds like low lifes trying to welsh on their debts, doesn't it?

"When Ronald Reagan was elected, the supply-siders got a chance to try out their ideas. Unfortunately, they failed." Although he credited supply-side economics for being more successful than monetarism which he claimed "left the economy in ruins", he stated that supply-side economics produced results which fell "so far short of what it promised," describing the supply-side theory as "free lunches".<29> Krugman and other critics point to increased budget deficits during the Reagan administration as proof that the Laffer Curve is wrong. Supply-side advocates claim that revenues increased, but that spending increased faster. However, they typically point to total revenues<30> even though it was only income taxes rates that were cut while other taxes, notably payroll taxes were raised.<31> That table also does not account for inflation. For example, of the increase from $600.6 billion in 1983 to $666.5 billion in 1984, $26 billion is due to inflation, $18.3 billion to corporate taxes and $21.4 billion to social insurance revenues (mostly FICA taxes).<32> Income tax revenues in constant dollars decreased by $2.77 billion in that year. Supply-siders cannot legitimately take credit for increased FICA tax revenue, because in 1983 FICA tax rates were increased from 6.7% to 7% and the ceiling was raised by $2,100. For the self employed, the FICA tax rate went from 9.35% to 14%.<33> The FICA tax rate increased throughout Reagan's term, jumping to 7.51% in 1988 and the ceiling was raised by 61% through Reagan's two terms. Those tax hikes on wage earners, along with inflation, are the source of the revenue gains of the early 1980s.<34>

Supply-side economics
Printer Friendly | Permalink |  | Top
  -"the claim that Social Security is self-financing and doesn't contribute to the deficit" is false. Better Believe It  Jan-18-11 10:21 PM   #0 
  - Just for one year.  tabatha   Jan-18-11 10:22 PM   #1 
  - HAHA. Yeah, just like the 'temporary' bush tax cuts for the rich.  PSPS   Jan-18-11 10:26 PM   #3 
  - Sunset provisions don't really carry much weight on DU. Ask anybody here about the PATRIOT Act nt.  Selatius   Jan-18-11 11:52 PM   #24 
  - Is that like kinda pregnant? nt  kelly1mm   Jan-19-11 04:01 PM   #34 
  - It is now that Obama has started its dismantling.  PSPS   Jan-18-11 10:26 PM   #2 
  - No Republican Administration could ever have gotten away with this  leftstreet   Jan-18-11 10:27 PM   #6 
     - I think you mean "only a republican administration"  PSPS   Jan-18-11 10:32 PM   #8 
     - It amazes me the level of delusion here on DU.  TheWraith   Jan-19-11 01:02 AM   #26 
     - Exactly.  mmonk   Jan-18-11 10:32 PM   #9 
  - Mission accomplished  gratuitous   Jan-18-11 10:27 PM   #4 
  - AEI  bookman   Jan-18-11 10:27 PM   #5 
  - Hush! They're getting a Hate-Obama session going!  Dogmudgeon   Jan-18-11 10:31 PM   #7 
  - DAMN  Kalun D   Jan-18-11 11:41 PM   #21 
  - +1000  Bobbie Jo   Jan-19-11 08:30 AM   #33 
  - I was wondering if anyone would notice that  Nictuku   Jan-18-11 10:49 PM   #10 
     - We know damn well who they are.  mmonk   Jan-18-11 10:52 PM   #12 
     - The article excerpt points out how the right-wing is using the"tax cut" to attack Social Security  Better Believe It   Jan-18-11 10:56 PM   #15 
        - Which Right-Wingers?  Kalun D   Jan-18-11 11:46 PM   #22 
           - Obama agreed to it.  eomer   Jan-19-11 04:12 AM   #28 
           - "Deficit hawks" in both parties and obviously right-wingers associated with the AEI.  Better Believe It   Jan-19-11 08:28 AM   #32 
  - FICA Taxes Were Increased During Reagan's Terms to Prepay Boomer's Social Security  Elmore Furth   Jan-18-11 10:51 PM   #11 
  - Right on Brother  Nictuku   Jan-18-11 10:54 PM   #14 
  - Plus Saint Ronnie raised boomers' retirement ages.  Lasher   Jan-18-11 11:01 PM   #17 
  - Not completely true. The "crisis" is that even with 100% repayment of SSA trust  Statistical   Jan-18-11 11:03 PM   #18 
  - Should probably avoid using a graph that doesn't match your prose.  jeff47   Jan-19-11 07:49 AM   #29 
     - Actually no the reverse is true. The "2037" comes from 2010 trustee report.  Statistical   Jan-19-11 07:54 AM   #31 
  - Well said. They're aiming for default, so they don't have to pay U.S. back.  DCKit   Jan-19-11 07:54 AM   #30 
  - Remind everyone: When Wall Street crashed essentially,  OHdem10   Jan-18-11 10:53 PM   #13 
  - This $100 billion will be in the form of US treasury bonds.  Lasher   Jan-18-11 10:56 PM   #16 
  - They will muddy the money placement and raid it and then claim there is none.  glinda   Jan-18-11 11:38 PM   #19 
  - Deleted message  Name removed   Jan-18-11 11:40 PM   #20 
  - The American Enterprise Institute,  Codeine   Jan-18-11 11:50 PM   #23 
  - +1  madrchsod   Jan-19-11 03:55 AM   #27 
  - k & r!  pnorman   Jan-19-11 12:19 AM   #25 

Home » Discuss » General Discussion Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC