Would Obama’s payroll tax cut hurt Social Security?

[kentuck]

http://blogs.reuters.com/reuters-money/2011/09/09/would-obamas-payroll-tax-cut-hurt-social-security/

<snip>
These cuts in the Federal Insurance Contributions Act tax (FICA) may be one of the best available stimulus options in the current political climate, and they will have a positive economic impact. An analysis by The Center for Budget and Policy Priorities notes that the cuts already in place make a substantial difference in the spending power of middle class families, and that allowing them to expire at this time would be very negative for growth:

Failure by Congress to extend the temporary payroll tax cut enacted last December would reduce all paychecks starting on January 1, withdrawing needed support from the still-weak economy. The measure, part of the tax cut-unemployment insurance deal between President Obama and Republican leaders, reduces the employee share of the Social Security payroll tax,<1> boosting workers’ take-home pay by an estimated $120 billion in 2011. The tax cut is worth $934 to the average worker.

<snip>
But Social Security advocates worry that these temporary payroll tax cuts will never be restored. “The problem is, it is very easy in our current political climate to cut revenue and very hard to increase it,” says Nancy Altman, co-director of the Strengthen Social Security coalition and author of The Battle for Social Security, an excellent history of the program and its politics.

“Look at the controversy over ending the Bush tax cuts, which would only affect a small portion of taxpayers,” Altman says. “In this case, if you propose restoring the payroll tax down the road, you’d have to double the rates on workers making minimum wage. This is being sold as temporary, but it’s not likely to work out that way.”

..more

[OHdem10]

1. The President said the Treasury is taking money from the general

tax fund and putting it in SS Fund to make up for
the tax cut. In other words SS is being replenished
as we go.

[kentuck]

2. Why take it out of both?

Why not just take it out of the general fund and leave the SS fund alone?

[newfie11]

3. This is the government. You expect common sense?

:shrug:

[MadHound]

4. Because later, after making this paryroll tax holiday permanent,

It would be easier to indirectly kill SS by attacking the funds coming out of the general revenue rather than attacking SS itself. So easy that even a Democratic president could do it.

[tblue]

11. Bingo!!!

I would never have voted for this.

[tblue]

10. I fear for future seniors.

That would be all of us.

[OHdem10]

5. Simple. When they cut the fica tax, this means the money stays

with the person and never comes to the SS Fund. Therefore
in order to keep SS Solvent they take money from General Fund.

[ipaint]

6. Oh good, social security and the deficit are now bedfellows.

Mission Accomplished.

[Yupster]

7. Isn't it time to say that the Social Security Trust Fund

is nothing more than an accounting gimmick?

It has no practical importance.

Whether the money is taken from the trust fund or the general fund makes no difference.

The trust fund is meaningless.

The congress will pay out whatever it decides to payout whether it comes from the trust fund or the general fund - whether there is money in the trust fund or whether there is no money at all in the trust fund.

The trust fund is meaningless.

[PSPS]

8. No, that's a right wing talking point

It's no "accounting gimmick." And the ss trust fund isn't "meaningless" at all. But these are the catch phrases that will get uttered in the future as they dismantle the program because "we can't afford it," thanks to Obama's shenanigans.

[inna]

9. an absolutely classic RW talking point. beyond the pale.

[Yupster]

12. It's just true

It doesn't matter if there's anything in the trust fund or not.

Congress will payout whatever the bendpoint formula says to payout. If they don't like the formula they'll change it.

The trust fund doensn't even enter into the calculation.

If it mattered we'd all be panicked now because we've been underfunding it for the last year and now will double the amount of underfunding.

But no one cares because the trust fund is meaningless.