Can anyone answer this question?

[kentuck]

Why did they not pay the tax breaks out of the general fund without using the SS fund at all? Some are saying that they are going to cut the FICA taxes and then borrow the money from the general fund to put back into the SS fund? Does that sound foolish and convoluted to anyone else?? It doesn't make sense to me. Can someone explain why they want to take money out of the SS fund and then put the money back into the same fund by borrowing from the general fund? It sounds like a three-card monte game?

[obxhead]

1. It will justify them saying SS is a burden and allow for the open

destruction of the program.

This is the opening salvo on the destruction of SS. The fun part is the Republicans will get to correctly blame a Democrat for doing it.

[QC]

7. This is the answer. n/t

[sabrina 1]

2. Excellent question. I think the obsession with SS

is pretty transparent. They want to get their hands on it and it's almost funny the way they drag it into every discussion about totally unrelated topics. They think we are stupid. The President even said so himself. He said that the American people do not understand the complexities of economics. I think he underestimates what people understand when it directly affects them.

But your question is very valid.

Another question is, since this has been in effect for almost a year, how many jobs has it created so far?

[Drew Richards]

3. exactly it is a way to DECONSTRUCT the security of the Social Security Fund.

[sabrina 1]

4. Rec'd, to zero for some reason.

Guess we are not supposed to question these things.

[hfojvt]

5. Because a family of four making $36,000 a year pays no income taxes

So they would get nothing, unless a refundable credit (like the making work pay credit) was used. Further a person with $100,000 in capital gains or dividend or interest or rent income would get a tax break wherease the FICA tax break is restricted to workers and than first family of four would get $1,116.

However, this tax break also gives bigger breaks to people with bigger paychecks. A FICA tax holiday on the first $10,000 would not be tilted upwards like this one is. It would give most working people the same $520 instead of giving rich people $2,000 - $6,000 while giving poorer people less than $500.

[kentuck]

8. Why would they not get a 3.5% tax break like everyone else?

If they are paying FICA taxes? Don't they have records of this with the IRS? Don't individuals all get the same break, but not businesses? It doesn't seem as complicated as you portray it?

[Curmudgeoness]

9. The idea is supposedly to get additional cash

into the pockets of working people immediately. They don't want to wait for next year to give an income tax refund. The tax break, when someone has no income tax withheld, will not be available to them to spend today. So I am told.

I agree with you that using FICA seems to be a way to bring that program down, but I am told that this is not going to happen (or at least, not because of this tax holiday). Time will tell.

[kentuck]

11. Another question?

If we borrow $175 billion dollars from the general fund to put into the SS fund, do we have to pay that $175 billion back to the general fund also? In other words, if we borrow $175 billion to put back into the SS fund, do we have to borrow another $175 billion to put back into the general revenue fund? It seems to me we are borrowing the money twice??

[Curmudgeoness]

16. I think that you are making it more complicated than it is.

The money will come from the general fund and be paid into the SS fund. The SS fund is not borrowing the money from the general fund. That is all there is to it if you want a simple answer.

You want more complicated---the country is borrowing already for the general fund, so that money paid into the SS fund is probably borrowed. And since the SS fund is already owed billions of dollars from the general fund before this started, and the general fund has no money so is borrowing, you have to wonder if there is just another IOU to the SS fund for this tax holiday. They are really fucking this whole thing up, huh?

[Luminous Animal]

10. No, that family may not be paying income tax, but they are still paying payroll tax.

Income tax is your federal withholding.

Payroll tax is your SS & Medicare FICA.

[kentuck]

13. Wouldn't a simple tax refund be a better stimulus than $25 per week?

Which is about what the average FICA tax break would be? So far, the other FICA tax break doesn't seem to have helped a whole lot?

[Luminous Animal]

19. I agree with that.

[Warpy]

6. They actually thought that's what they'd do, then it blew up in their piggy faces

and ballooned the deficit during the next year and a half, completely the opposite of what that nitwit Laffer and that other nitwit Friedman said would happen but which every reasonable economist knew would happen.

Since Republicans are incapable of ever admitting they've made a mistake on anything, they got their admen busy scaring old folks that the boomers (then in their 30s) were going to bankrupt the system if they didn't DO SOMETHING FAST! Reagan then raised FICA 6 times, socking working people and businesses with a back door tax for which there are no deductions and hid the disaster his tax cuts to plutocrats had been causing.

It merely shifted the burden from the rich to the working class and to labor intensive businesses, meaning small businesses.

THIS is why the tax RATE needs to be rolled back, to undo Reaganomics. In order to fund Social Security payments going out, the ridiculously low CAP has got to be raised, instead.

Does it all make sense now? Obama's reasoning is sound. Republicanism, shifting the tax burdens, has failed miserably and spectacularly. Any of it that is rolled back is a victory.

And yes, if SS taxes are cut in half to where they should have been all along, perhaps the odd business will add a new worker instead of insisting on mandatory overtime from exhausted workers they already have.

[Luminous Animal]

12. The entire payroll for all workers at the place that I work is $300,000 annually.

The tax cut would allow us 15% of a worker.

Not helpful at all.

[Warpy]

17. Think about labor intensive places

like hospitals and big retail stores. They'd cash in and the employees would get about a 3% raise without their having to do anything, while they'd get a 3% cut in per employee expenses.

Rolling back Reaganism is a good thing, even if you won't be able to buy that Porsche off it this year.

[Luminous Animal]

18. I'm pretty sure most businesses will pocket the extra money. Corporations are already sitting

on mountains of cash and they've grown accustomed to working to death the employees they already have.

[Warpy]

23. They will until that 3% across the board pay hike

gives them a rise in business. That's when they hire.

[Herlong]

14. Has any bill been passes so far?

Sounds like Obama's trying to put them on their heels first.

[kentuck]

15. Well....

He has put some Democrats on their heels. Nobody knows what the hell he is doing.

[bahrbearian]

20. Put them on their heels by pushing their own agenda,, defund and kill SS

[ThomWV]

21. Kentuck, its because they always take it all, its 'first money in'

Kentuck, what you have to understand is that everything that Social Security takes in goes directly into the General fund. Social Security doesn't hold any of the money that is collected in its name.

In fact its actually worse that even that implies. Let's say next year's budget is 1 trillion dollars. So Ways and Means looks at that number and says to themselves, where will the money come from. Here' is how they do it. First they go to Social Security, they say well, we've got $300 Billion coming in from Social Security, so that goes in the pot first. Now they have 700,000 to come up with. So they look to Income taxes next. Here they say well, we've got $400,000 billion in income taxes coming in, so that goes into the pot. Now they have $300,000 to come up with. That's the part they borrow.

So at no time was the Social Security money ever segregated from the General Fund monies used to pay for everything else, and in fact when the checks come out its the same fund that pays them. While we tend to think if it as if "the Government" comes a begging and Social Security helps them out by lending them the surplus. Every dime was taken in the first place and its Social Security that has come a beggin' and all those IOUs they've been collecting aren't worth the special paper they're printed on.

Its a crying shame, but that's how it goes.

[kentuck]

22. Then the question arises...

What percentage of the total budget does the SS fund include? Are the working people paying a half of the total budget with FICA taxes? A third? And as you say, income taxes make up a big portion of the revenues collected.

When the SS fund was taking in more than was needed to pay out the benefits, the rest went into the general fund to be spent as the politicians pleased? They never thought they would have to pay it back. There was always more than enough. Except that now, there isn't. Now they say we are running a "deficit". We will need to cut Social Security because we don't want to pay back what was borrowed during the good times. We don't want the wealthy to pay more so we will have to give the poor SS beneficiaries less.

Yes, I know how they play the game. But the people that have put their money into SS funds should not accept it. After all, it is only a matter of who should feel the pain more. And we know how that story ends, don't we? End the wars. End the Bush tax cuts. Stop the jobs from going off shore. Stop giving tax breaks for taking jobs off shore. Then we can discuss whether SS should be used to balance the budget...