Comments on: Protecting the Trust Fund: A Key Component of the Payroll Tax Cut

By: urban legend

urban legend — Fri, 09 Dec 2011 01:51:13 +0000

What pjr and Jim Z said. Jared doesn’t seem to get it. Social Security needs political ammunition against the relentless and permanent assault from the right wing. The legal separation of the Trust Fund from the general fund — Social Security revenues and Trust Fund holdings and earnings not usable for anything except Social Security benefits, no use of general funds for Social Security — has been an important point for that support. It’s the basis for being able to say that Social Security has nothing to do with the deficit. Now the defense must be qualified by, “Well, except that right now. . . .” It is not going to be politically easy to restore the proper funding (“tax increases”) without some substitute cuts that Republicans will not allow. Besides, it is not a particularly progressive form of tax cut.

In any case, the defenders (who prefer the euphemism “payroll tax holiday”) have not addressed the concerns of those opposed to or concerned about this form of tax cut. That the general fund is making up the difference is the problem, not an answer.

By: Jim Z.

Jim Z. — Thu, 08 Dec 2011 22:28:10 +0000

Jared, I think you misunderstand the context of those who, then and now, are very concerned about this FICA tax holiday. The GOP is salivating over their new talking point that SS is after all entangled in the General Fund. Most Americans are already confused about the relationship between the Trust Fund and the GF, believing that SS contributes to the nation’s deficits. Now they’ll have a new piece of pseudo evidence to that effect. This is war (against SS), and we are losing, cut by cut.

By: Tom

Tom — Thu, 08 Dec 2011 15:08:41 +0000

If they don’t like that, they could restore the Making Work Pay tax credit, wasn’t the Payroll Tax Holiday a substitute for MWP? Does anyone here have a wayback machine, who exactly didn’t want to extend MWP?

By: pjr

pjr — Thu, 08 Dec 2011 13:50:26 +0000

Defenders of social security object to making the system dependent on transfers from the general fund, thereby turning the system into a type of welfare program. They are correct that this bad idea is based on a left-wing concept of the system and must cease. I am hopeful that it will end as the left-wing trades its tax cut in exchange for the right-wing’s Bush tax cut on income over $250,000 (which is just beyond the maximum taxable earnings for social security, for a two-earner couple). Sounds fair. And Obama gets what he’s wanted, chess-style. But I’m not confident that the GOP will agree and not have the votes to block such a deal.