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Liberals wake up to the Obama threat to social security as we know it

Liberals wake up to the Obama threat to social security as we know it

I’ve been spitting into the wind on this issue since days before the 2008 election.

Rather than strengthening social security as a pay-in retirement protection program, Obama consistently has sought to destroy social security as we know it by treating FICA payments as just another tax (the so-called “payroll tax”) to be played with as political circumstances dictate, and to create a disconnect between pay-ins and benefits, thereby making social security just a welfare program:

Meanwhile, Democratic Party leaders supported by The NY Times have developed a strategy to demonize conservatives who refuse to go along with plans to extend again the “payroll tax” holiday, For Some in G.O.P., a Tax Cut Not Worth Embracing:

It is hard to find a tax cut that Congressional Republicans dislike. Unless it is a tax cut pushed by President Obama.

In a turning of the tax policy tables, Democrats are increasingly hammering on Republicans who oppose the president’s proposal to extend for a year a payroll tax cut passed last year with bipartisan support….

“One way or another, there will be a vote on extending these tax cuts,” said Senator Charles E. Schumer of New York, the third-ranking Senate Democrat, “and Republicans will have to stand up to the fact if they oppose it they are for tax cuts for the rich but not for the middle class.”

I have wondered why liberals were not screaming at the tops of their lungs against these Democratic Party policies, and it now appears that many liberal Democrats have woken up, as reported by The Hill:

With bipartisan support in December, Congress approved a one-year reduction in the employee share of the payroll tax, to 4.2 percent from 6.2 percent. Obama proposed in his speech to Congress that the tax be lowered to 3.1 percent for both employers and employees through 2012.

While the moves add to the deficit, the administration has said the trust fund would not be affected because the money would be shifted from the general fund and because the change is temporary.

Liberal Democrats were not convinced, and they began campaigning against extending the tax break when it was first broached earlier this year.

“We remain gravely concerned that yet another, unacceptable cut to Social Security’s revenue stream appears to be on the table,” a group of 62 House Democrats wrote in a July letter to the president. “As alternative measures would have the same net effect on deficits and the economy, there is simply no need to negotiate cuts to Social Security taxes.”

It’s probably too late for liberal Democrats.  They are so invested in Obama that even when he plays political games with one of their highest priorities, they are almost helpless to do anything more than I’ve been doing, spitting into the wind.

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Comments

There should be a threat to Social Security, and the threat should be elimination. Strengthening Social Security? There is no conservative stance on Social Security that allows for the program to be reformed in order to continue its existence. There is no universe in which conservatism supports and embraces Social Security.

But FICA payments are just another tax, and social security is just a welfare program. There has never been a real connection between pay-ins and benefits; the Supreme Court confirmed that before I was born. If “paying in” does not entitle one to a payout at all, then a fortiori it doesn’t entitle one to a payout that’s related to ones “pay-in”, and any correspondence between the two that Congress may from time to time declare is purely coincidental. That’s the way it’s always been, and if 0bama is pulling away the curtain then he’s doing good and we should support him. Who knew, 0bama would turn out to be a stealth conservative on this, just as he did on the war?

There is no conservative stance on Social Security that allows for the program to be reformed in order to continue its existence.

Now that’s not true. SocSec should never have been established, but it was, and it’s too entrenched to abolish. Reforming it so it can survive in some form is the only conservative position, i.e. one that deals with the world as it is, not as we would like it to be. And the first step to reforming it is to pull back the curtains and stop pretending it is something it isn’t and has never been. If 0bama is doing that, then great.

In this 1960 Supreme Court decision [Flemming vs. Nestor] Nestor’s denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor’s benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not contractual right.

    retire05 in reply to Neo. | September 12, 2011 at 4:01 pm

    Nice point. But the argument that Social Security is unsound, and cannot be put on the path to solvency has been made for 73 years.

    Henry Hazlitt, an Austian economist, and economist for the New York Times (no it was not then like it is now) said in 1937: “What is happening to the proceeds of the social security taxes substantiates the predications of the harshest critics of the reserve fund provisions of the Social Security Act.” The money was being used to cover other government expenditures even back in 1937. Hazlitt went on to conclude ” All this is an elaborate hocus-pocus by which the Goverment issues IOU’s payable to itself.”

Ive been saying for a while now that Obama is the worst thing that has happened to the Democratic party in a generation. This is just another example. He is giving the Republicans all the ammunition in the world to reform SS for younger workers by proving the program isnt going to collapse when less money is taxed to pay for it. So, the next Republican President can come in and propose to keep the rates at 3-4% while allowing younger workers to invest the rest in some type of treasury based annuity (or whatever). The Democrats should be screaming bloody murder. But, theyve so backed themselves into a corner with their own racism card that they now cannot oppose anything Obama proposes.

    Aarradin in reply to Jaydee77. | September 12, 2011 at 4:25 pm

    Considering that, on average, people only get back 76 cents of every dollar they pay in to Social Security I’d have to agree that privatizing it would be beneficial for just about everyone. They don’t invest a dime of it. Money paid in now gets paid out now to retirees.

    Keep the requirement that everyone has to pay in a % of their income, but have the money go into something like a 401k. You’d have control of it, ivest it as you like, and get back YOUR OWN money after you retire.

    You could even take care of people that are unable to work with the same program: tax these accounts at 50% when the owner of it dies. Half would go to your heirs, the other half to fund a program for the severely disabled that can’t work to fund their own retirement.

    There’s 2 main obstacles to this:
    1) The transition off of Social Security would require current workers to fund both current retirees and their own retirement fund. You can’t just make a clean break from SS to a privatized retirement program because current retirees dependent on SS would get screwed. If the federal government weren’t so massively in debt and so overwhelmed with trillions in unfunded liabilities it could soften the blow.

    2) Democrats will be against anything that smells like privatization for a variety of reasons. Ideology will be the biggest. The D’s, at the national level, are fully controlled by hardcore socialists for whom the government is seen as the answer to all problems and the free market as pure evil. The next biggest reason will be their constituents. The D’s represent government workers (some of whom will be out of work once SS is gone) and people that don’t work at all (who would have to get off the couch if they want any income after retirement).

I’m surprised there are any D’s against this. Its basically another form of redistribution of wealth. Much of the 49% of those that file tax returns but have a zero income tax liability actually do pay the payroll tax.

If O’s payroll tax cut goes into effect, the result will be Social Security having a bigger deficit this year than in otherwise would have (it was short about 50 Billion short this year). So, they’ll cash in some more of those IOU’s in the trust fund to make up the difference. Treasury won’t be able to cash them in, of course, without floating more new debt. That debt will eventually be paid for by income and corporate taxes – not payroll taxes.

Therefore:
1) Every dollar of payroll tax cut this year will result in a dollar of new debt this year. No telling when this will ever get paid down, but we’ll be paying interest on it all along.

2) Everyone earning income will see a tax cut as soon as this goes into effect.

3) Low income workers will NOT be called on to pay it off. Most of the money to pay it off will come from the middle class and small businesses (most of the top tax bracket is actually small businesses filing as individuals).

KM from Detroit | September 12, 2011 at 4:33 pm

I got to watch some talking heads on CNN at lunch today trying to be all “Oh noes, Perry said SS is a Ponzi scheme and needs to be , the guy’s unhinged and a loony!”

I don’t remember the guy’s name, but they had some official Democratic party strategist versus a spokesman for the Tea Party…and in the final point, the TP spokesman mentioned that, on top of our budget deficit, SS was also in the hole for a trillion-and-change dollars (a STAGGERING amount of money)…so where was that two-and-a-half trillion going to come from, to pay for it all?

The talking-head had no real counter, other than to smugly insist that there were tweaks and ways to fix SS.

I love the “Na-na-na-boo-boo” attitude these guys have when losing an argument.

    KM from Detroit in reply to KM from Detroit. | September 12, 2011 at 4:34 pm

    *needs to be [somethinged] * up there. Silly strange characters!

    Social Security unfunded liability is currently pegged at $18 Trillion. Last year it ran a deficit of about $50 Billion.

    Democrats pretend its solvent until 2037 because there’s $2.7 Trillion in the Social Security ‘trust fund’. This is, of course, a bogus talking point because every dollar of the trust fund that gets cashed in at Treasury results in a dollar or new debt floated to raise the cash to pay SS.

Great article on Perry NOT being the first one to call Social Security a Ponzi scheme. It seems liberals at one time used the term to JUSTIFY how it was funded.

http://www.nationalreview.com/articles/276859/perry-and-ponzis-stanley-kurtz?page=1

I would call that a big oopsies!

I have denounced the theft of Social Security funds for years when liberals called them social investments.

But FICA payments are just another tax, and social security is just a welfare program. There has never been a real connection between pay-ins and benefits…

Thank you. Correct. It’s time to stop the charade, the pretense that there is any kind of real relationship between paying into this “system” and the benefits someone actually receives back. There is only a rough correlation between having a certain amount of both work time and payments in, which measures are used to establish the bare entitlement and the arbitrary monthly check amount — but even that correlation doesn’t always hold (e.g. spousal benefits). It’s welfare, albeit (other than SS disability, a burgeoning problem), a welfare that isn’t based on a needs test, but instead on arbitrary age, family relationship, and past employment criteria. And moreover, it’s a regressive tax on the lowest wage earners of younger generations. It was established this way to further the make-believe that it was in some way like a pension. It’s an ideological and financial mess.

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