Chris's Rants

Saturday, February 12, 2005

The Amazing Disappearing Trust Fund

Dan Froomkin writes in his article The Amazing Disappearing Trust Fund (
Shouldn't Bush therefore call for an immediate cut in payroll taxes, effective immediately?

If Social Security is really pay-as-you-go, and any excess payroll tax revenue just goes into the general fund, why are American workers paying more than it costs to run the program? Why should they overpay Social Security payroll taxes for one more minute -- if in fact it doesn't do the Social Security system any good at all?

The latest numbers I've seen show that American workers this year will pay about $70 billion more in payroll taxes than will get paid out in benefits and administrative expenses. And it's a brutal tax. It's not the least bit progressive. In fact, because it's flat -- and capped at about $90,000 of annual income -- it's vastly tougher on the working poor than it is, say, on millionaires. Not to mention billionaires.

The only reason it's been socially acceptable to keep such a high, regressive tax on the books is that the system it was ostensibly keeping alive for the future returns money in a highly progressive way.

But if -- as of now -- that's not really the case, how can anyone defend it? A capped payroll tax is a pretty harsh way to raise $70 billion a year for the general fund.
Good question.

An even better question is: why hasn't the rest of the MSM picked up on this?

But the question I want an answer to is: if the Social Security system is in crisis, as our Dear Leader would have us believe, then why should we buy into his proposed "solution" of "personal accounts" (which are in fact just a loan from good ol' Uncle Sam) when that only makes the crisis conditions worse by increasing the deficit by trillions over and above the future value of the cost of redeeming the trust fund securities?

No, what the MSM should be asking the president either directly, or indirectly through his spokes model Scottie McC, is: so, does the administration plan on defaulting on the U.S. Treasury notes issued to the Social Security Trust Fund? Were the Social Security Amendments signed into law in 1983 merely a scam (disguised as "saving" Social Security for future generations) to convince working class Americans to pay a highly regressive tax rate to fund the Federal Government's crack addiction to deficit spending?


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