Editorial: Deal formalizes backdoor to SS
The tax deal is not all it has been portrayed to be. That is our message to Congress, concerning President Barack Obama's plan to cut payroll taxes for a year.
Would it provide big savings for workers? Sure, people making $50,000 in wages would get a $1,000 tax cut; those making $100,000 would get a $2,000 tax cut, according to The Associated Press.
The downside is the Social Security "tax holiday" that is part of the tax package is an end-run that will take apart the firewall that separates Social Security's coffers from the government's general revenue fund.
Historically, the government's raids of Social Security - in the form of IOUs - have already done this. And, many people believe the retirement system will die someday anyway. However, if anything could jeopardize the retirement program's finances it is the tax holiday.
The plan would cut workers' share of Social Security taxes by nearly one-third for 2011. The catch is the government would borrow about $112 billion to make Social Security whole, the AP said.
Ironically, Rep. Earl Pomeroy, D-N.D., chairman of the House Ways and Means subcommittee on Social Security, stated, "When you start to signal that the (Social Security) tax levels are negotiable, you end up in long-term trouble, I think, in terms of making absolutely certain that the entitlement funding streams are secure."
Yet, that is the problem: Social Security has not been "secure" for more than 25 years. A national referendum website put the tab at $2.2 trillion. It states that "Congress has 'borrowed' (stolen) $2.2 trillion from the Social Security Trust Fund. Not one penny has ever been repaid."
An urban myth? We don't think so.
The federal government must stop raiding the cookie jar. This time it is the Obama administration seeing the payroll tax cut as a way to stimulate the economy.
At least two problems exist. The cut favors people making more than $20,000. For those making less, it offers little help. Secondly, these changes to Social Security amount to further "messin' with the recipe" that in the end will produce nothing good.
Remember the report from this past year that said in 2010, for the first time since the 1980s, Social Security will pay out more in benefits than it collects in payroll taxes and will run out of money by 2037.
To save money, the leaders of a bipartisan deficit commission recently proposed a gradual increase in the full retirement age, from 67 to 69.
Give here, take there. It will not end.