Like this:
Sixty members of the Senate are unwilling to raise taxes by 3 percent on the $250,000 and first dollar (and all those dollars earned above $250.001) of those making over $250,000 and by 1.6 percent more (for a total of 4.6 percent) on the $384,860 and first dollar {and all those dollars earned above $384,861) of those making over $384,860.
They are even unwilling to spare everyone making less that one million dollars any increased taxes and simply raise taxes by 4.6 percent on the $1 million and first dollar (and all those dollars earned above $1,000,001 of the nation’s multimillionaires and billionaires. (I say multimillionaires because anyone with a net worth of a few million dollars is not making an annual income of over one million dollars.)
Given that unwillingness to raise taxes by less than a nickel on every dollar earned over $1 million, I find it unfathomable that a more conservative Congress, in two years, in an election year, will increase the payroll tax by 2 percent on the very first dollar, and every other dollar up to the cap, earned by virtually every single worker in the country.
Consequently, I think we have to assume that the payroll tax holiday will be extended beyond the two years the president is proposing and quite likely could become permanent.
That means that the federal government will have to continue to transfer $120 billion to the Social Security trust funds each and every year even as it has to transfer more and more interest payments as the trust funds continue to grow and as interest rates return to more normal levels.
Unless Congress acts to restore Social Security to solvency, the Treasury bonds held in trust will have to be redeemed, again on top of that new $120 billion transfer from the general fund, starting fifteen years from now, assuming Congress even continues to make the $120 billion every year before that point.
These dollars will be competing with dollars for defense, environmental protection, education, school lunches, Food Stamps, Medicare, Medicaid, SSI, Pell grants for low income college students, and every other good and service financed by the federal government.
Real simple. By the Republican Trojan Horse of decoupling Social Security from payroll taxes and shifting it over to the general fund, it’s the beginning of the end for Social Security. This is as clear as air.
Those taxes were deliberately made into a payroll tax insurance fund by FDR so that no one could ever mess with the fund and kill them off. By putting up a wall around SS Trust funds and the rest of the budget, the program was allowed to survive for 75 years. Decoupling it will begin the slow murder of Social Security. Which is precisely what the Republicans who wrote this payroll tax holiday want. See:
Reducing a person’s responsibility to contribute to Social Security also deprives the program of the political and moral capital that has kept the program intact despite fierce opposition from a determined investor class. Altman notes that such responsibility was put into place by FDR for just that purpose.
“We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics,” FDR told a Treasury official in 1941.
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