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The Time For Social Security Reform Is Now


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the_time_for_social_security_reform_is_now.htmlAmerican Thinker:

With the payroll tax holiday set to expire in March, there seems to be little doubt on either side of the aisle that the forthcoming negotiations will result in an extension of the 2% payroll tax cut through the end of the year.

Of course, Republicans should have good reason to oppose this extension. The payroll taxes in question (FICA) are in place to supply the Social Security trust funds with revenue, and cutting these taxes without securing spending cuts drives a massive amount of debt, currently estimated at $120 billion annually. But since the payroll tax holiday has been presented to Americans as a benefit to help the struggling poor and middle classes, fiscal responsibility doesn't matter -- Republicans would appear merciless to oppose it. And Democrats have no reason to reinstitute the 2% that has been cut from payroll taxes in an election year, regardless of whether a new push for the "millionaire surtax" fails and the shortfall goes unfunded.

 

This reckless defunding of the trust funds has some advocates of Social Security frightened about the increasing prospect of reform. According to Eric Kingson of Social Security Works, this political scenario is a witch's brew that "will result in the unraveling of Social Security."

 

He notes that "t's very easy to enact tax-cuts. It's very hard to get rid of them... If these tax cuts became permanent and if a future Congress chose not to reimburse the Social Security Trust Funds for the lost revenue, today's manageable shortfall would double, making it much less manageable."

 

Of course, this shortfall is currently about $6 trillion, so I suspect that Mr. Kingson applies a different meaning to the word "manageable" from what the rest of us are used to. But it cannot be argued that the now-likely continuation of payroll tax cuts will make the problem "much less manageable." This will increase the already mounting pressure on conservative lawmakers, he says, to make the system more cost-efficient, including spending cuts and the restructuring of benefit guidelines.

 

But perhaps the most significant implication of these payroll tax cuts becomes apparent as Kingson laments that the "payroll tax holiday will also promote Social Security privatization. Once people get the 2% in their pocket, they will be more susceptible to appeals that they should be able to put the funds into a private account." Ironically, the figure for payroll tax cuts is tailor-made for the personal investment component of Paul Ryan's "Roadmap for America's Future." In order to "allow a smooth transition," workers under this Republican plan will be allowed to divert from their payroll taxes "2 percent of their first $10,000 of annual payroll into personal accounts, and 1 percent of annual payroll above that to the Social Security earnings limit."Scissors-32x32.png

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