There was another salvo in the shock and awe campaign to cure the deficit by cutting Social Security in the New York Times on Monday. The article claims that even before his inauguration President Obama wanted to “signal seriousness” on Social Security, by making the hard decisions on his watch. That’s easy to translate now: the President hasn’t alienated a huge section of the people who voted for him, and this is a great way to do it.
Another salvo came Thursday. The Congressional Budget Office told the NYT that revenues from FICA will not be sufficient to pay the entire cost of Social Security this year. No matter that the amount is small, and covered by interest on the securities held by the Social Security Trust Fund. Something must be done. Steny Hoyer shows the path:
… the moderate Democrat who is the House majority leader, gave a speech this month in which he called for the two parties to compromise on a mix of tax increases and benefit reductions to avert fiscal chaos. Among his options were proposals to gradually raise the retirement age for future Social Security recipients and to reduce benefits for those with high incomes.
That is just ludicrous. Why should average workers pay?
Alan Greenspan and others engineered a revision to the Social Security system in the mid-80s to meet the shortfall between revenues and payouts. The idea was that all of us would pay increased FICA and the money would be saved in a trust fund for this very day, when it is needed to fund the system. That created an immediate influx of money to the general fund of the Treasury. It was used to buy a special form of treasury bonds. The Trust Fund now holds something like $2.5 trillion of this unmarketable security.
The money was not invested into productive business or research and development or infrastructure. Those were left to languish into the current state of decrepitude. Instead, the money was used to hide the size of the deficits created by the Reagan and Bush tax cuts for the wealthy. Under the guise of protecting Social Security, Reagan and Bush and the complicit Congress raised taxes on average Americans and reduced taxes on the richest Americans.
Tags: Alan Greenspan, FICA, Social Security, taxes, trickle down, trust fund