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Tue Apr 24, 2012, 04:04 PM

 

12/3/2011 - Obama pushes payroll tax cut extension; 4/24/2012 - Social Security closer to insolvency

http://news.yahoo.com/obama-pushes-payroll-tax-cut-extension-111137992.html

http://www.chicagotribune.com/business/breaking/la-na-medicare-report-20120424,0,4992334.story

One must wonder if the administration chooses to be complicit in damaging social security, or if they are completely deaf to Progressives who offer the best solutions to the countries problems - such as raising the cap on SS taxes on those making over 1 million a year which will make SS solvent for at least 75 years, as in Sen. Sanders currently proposed legislation (see http://www.sanders.senate.gov/newsroom/news/?id=f63d73c1-81df-4dfb-aac3-730092ed9406).

I hope he and his strategists realize just how much they need Progressives to win the election.

It would be nice to see him use the bully pulpit to continually push Sanders proposed legislation.






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Response to grahamhgreen (Original post)

Tue Apr 24, 2012, 04:06 PM

1. eliminating the cap, as sanders is proposing, is not a good solution. also, sanders claim that

 

"the wealthiest americans" would pay at the same payroll tax rate as others is misleading, because the "wealthiest" americans don't pay much payroll tax at all. their income typically doesn't come from wages.

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Response to HiPointDem (Reply #1)

Tue Apr 24, 2012, 04:08 PM

5. Why not?

What would be the downside? We know the upside would be that it would save Social Security.

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Response to kentuck (Reply #5)

Tue Apr 24, 2012, 05:48 PM

8. 1. It's not necessary. The projected deficit over the 75-year actuarial window = something like

 

1-2% of taxable payroll. Lifting the cap = more than 10% of taxable payroll, creating an even larger slushy slush fund going into the federal budget that can be used to fund more tax cuts to capital.


2. I won't even get into the question of accuracy of projections issued over a 75-year window.


3. It's premature.

Projected depletion of TF = 21 years in the future. Historically (pre-Reagan), the TF has only held about 1 year's surplus and its purpose wasn't to "save" for the future. It was more like how you keep a surplus in checking to avoid overdrafts.

Since Reagan, the populace has been brainwashed into thinking that the TF *is* Social Security, and that we must "save" through this mechanism, that a large TF surplus is good. It's ahistorical. SS has always been funded primarily through current payroll taxes, with the TF as a rarely-used backup, primarily during the high inflation of the Carter years.

On the other hand, we are also told that the government has "spent" the surplus & now it's just IOU's. The conflicting storylines are intended to confuse people.


4. It's politically stupid and against the original intent of the program.

SS was set up as a program where all workers could claim, with some justification, that they'd paid for their benefits, that benefits were not charity or welfare. FDR was quite explicit about this angle.

That was the reason for the cap. In an economy where income is distributed unequally, if there's no cap, the wealthiest workers wind up funding a disproportionate percent of benefits.

If the top 20% of workers takes half of wage income and there's no cap, they pay for half the benefits but only receive maybe 20%.

A worker making $220K a year currently pays about $7000 a year in SS taxes out of his check. Lifting the cap doubles that to $14K, a sharp and noticeable increase with no commensurate benefit increase. Plus, since Reagan began to *tax* SS benefits, they will also pay a disproportionate share of *those* taxes.

This is the segment of workers most likely to be able to fund their own retirements, most tax-conscious, and already hit harder by the income tax than the top 1%.

I'm talking about people who get most of their income from *wages,* not people who get most of their income from *capital* with a bit of wage income on the side.

It's necessary to be aware of the income source because the bait and switch here is that by taxing *wage* income you are hitting the "rich," but the real rich get their income from capital, not wages, and don't pay much in the way of SS taxes. People like Bill Gates and Warren Buffett and the Waltons won't be touched by uncapping SS, because they don't rely on wages for income. Bill doesn't get wage income & Buffett pays himself under the cap already.

I'm also talking about small and medium size business owners and investors, who again, can keep their salaries low and take income in other ways. Capital doesn't have to pay SS taxes if it choses not to.

So by uncapping SS you're quite noticeably raising the taxes of upper middle class *workers* primarily dependent on wages. People who, unlike capitalists, can't restructure their income sources to avoid SS taxes. You're giving these workers nothing in return, reducing their remaining support for the program.

These are the most politically active segment of the income distribution. Thus you're increasing political pressure to kill the program, reduce benefits, increase retirement age, etc.


5. You guarantee that big capital will *never* pay off their debt to the SS TF.

SS taxes were hiked under Reagan to create huge surpluses. That's why the SS TF is now at a historically unprecedented ratio (last time I checked it was something like 5 years of surplus). During the same period income taxes were reduced and the prime beneficiaries were corporations and big capitalists.

Since all surplus $$ in the TF are borrowed by the feds and used to fund general government, this amounts to a big loan from workers to capital. Increasing the slush fund by increasing taxes on the "labor elite" means capital never has to repay = theft.


6. It's fraudulent, as is most of the "information" the public gets about the SS "crisis" (not), the ratio of workers to retirees, the age issues, funding issues, etc.

More than anything, I despise the deliberate manipulation and programming of the electorate by these crooks. The PTB have subjected people to a constant propaganda barrage such that the "other side" (i.e. truth) hardly fits at all into the "frame" created by the propaganda stream.

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Response to HiPointDem (Reply #8)

Tue Apr 24, 2012, 06:41 PM

10. Since the alternative being promoted is to cut benefits, I think we needd to raise the cap.

 

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Response to grahamhgreen (Reply #10)

Tue Apr 24, 2012, 08:01 PM

11. I guess you didn't read my post, so why respond to it? If the boss tells you, "hey, we're not

 

making enough money and the competition's tough" so either I pay you $1 an hour or you're fired," do you just say "Yup, sure, whatever you say, boss?"

The people telling that story are liars. So long as we continue to accept their pronouncements uncritically, we will be screwed.



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Response to HiPointDem (Reply #11)

Wed Apr 25, 2012, 03:44 PM

12. Unfortunately, some of the people telling us we need to make the cuts are in the administration

 

so either we support Bernie's plan, or prepare for cuts, the "do nothing" option is not yet on the table, nor do i believe it is our best option.

Anything that gets more money from those that stole it is good with me.

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Response to grahamhgreen (Reply #12)

Wed Apr 25, 2012, 03:48 PM

13. your conclusion doesn't follow. and this plan won't get more money from those who stole it.

 

unless you think doctors etc. stole it.

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Response to grahamhgreen (Original post)

Tue Apr 24, 2012, 04:07 PM

2. Maybe

"12/3/2011 - Obama pushes payroll tax cut extension; 4/24/2012 - Social Security closer to insolvency"

...you could drop the RW talking point?

Social Security is Strong

A new report on Monday by Social Security trustees showed the retirement program's trust fund has $2.7 trillion in reserves and will grow to $3.06 trillion by 2021, enough to maintain the unbroken record of paying every nickel owed to every beneficiary in full for another two decades. Sen. Bernie Sanders has introduced legislation to strengthen Social Security and guarantee benefits for 75 years by extending the payroll tax that most Americans already pay to those who earn above $250,000 a year.

"The most effective way to strengthen Social Security for the next 75 years is to eliminate the cap on the payroll tax on income above $250,000. Right now, someone who earns $110,100 pays the same amount of money into Social Security as a billionaire. That makes no sense," said Sanders, the chairman of the Defending Social Security Caucus. He also chairs the Senate aging subcommittee.

- more -

http://www.sanders.senate.gov/newsroom/news/?id=f63d73c1-81df-4dfb-aac3-730092ed9406


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Response to grahamhgreen (Original post)

Tue Apr 24, 2012, 04:07 PM

3. I think it has more to do with 10 years of low

employment. Without workers paying in.....

The tax holidays have been a short time and just a percentage, whereas the low employment figures have been close to 10 years now.


As people get back to work and hopefully paychecks increase, the fund will build back up.

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Response to grahamhgreen (Original post)

Tue Apr 24, 2012, 04:08 PM

4. Payroll tax cut was a huge mistake, in my opinion.

Now everyone expects it.

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Response to grahamhgreen (Original post)

Tue Apr 24, 2012, 04:12 PM

6. The payroll tax reduction has been paid for by a variety of other

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Response to sinkingfeeling (Reply #6)

Tue Apr 24, 2012, 04:38 PM

7. Don't those cuts go into the general fund and not to SS?

 

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Response to grahamhgreen (Reply #7)

Tue Apr 24, 2012, 06:01 PM

9. As I understand it, the general fund is paying for the cuts by redeeming the equivalent amount

 

in debt to the TF. IOW, the general fund is repaying some of the money it borrowed in lieu of you paying part of your SS tax, redeeming TF bonds.

This is a good thing in one way. The TF is bloated from years of over-payment.

OTOH, it changes the actuarial picture for the TF, bringing the depletion date closer, which can be used for propaganda purposes.

And because the super-rich have thus far kept their Bush tax cuts, the wrong people are paying for the bond redemptions.

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