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Political Hay
The Payroll Tax Trap
Republicans know there is no “trust fund.” So why play footsie with the left instead of arguing for permanent cuts?
The Hill is reporting that “President Obama’s push to extend a payroll tax cut has united a rare combination of conservative Republicans and liberal Democrats in opposition.” In particular, Pete Sessions (R-TX), chairman of the NRCC, suggests that a payroll tax cut risks the solvency of Social Security.
This is the wrong argument and Republicans are falling into a trap by accepting it.
The case against extending the tax break due to impact on the “trust fund” is misleading at best. There is no trust fund, at least not in a way that anyone other than a politician would understand one, because Congress has spent 100% of the prior decades’ Social Security surpluses rather than actually saving the money.
In other words, the Social Security system’s operating deficit, which occurred in 2010 for the first time since 1983 and is likely to occur every year in perpetuity, will require the gap to be filled in by any tax revenue the government collects, such as federal income tax, corporate income tax, estate tax, etc. The so-called “trust fund” simply holds government bonds which the government will have to tax citizens (again) to convert into actual cash. (This is why you should disagree vociferously when a Democrat tells you that a government bond is the same as cash.)
If we had a public education system that actually taught American history, people might not be surprised to learn of the few major cases related to the constitutionality of Social Security, particularly the 1937 case of Helvering v. Davis in which the Supreme Court ruled that the program is not a contract, not insurance, and not investment; payroll taxes are general revenue like any other income tax and it is only political realities which make Social Security seem like an “entitlement” in the literal sense of that word. In theory, government could end Social Security without citizens having a legal leg to stand on to save it. In practice, it’s been government’s piggy bank, masking what would have been even larger federal deficits.
Therefore, a cut in the payroll tax is no different than the same cut in the income tax rate except for issues of caps on how much income is subject to which parts of the payroll tax. It may look different on the government books with a cut in the payroll tax reducing the income to the Social Security system and increasing its apparent deficit, but if the choice is reducing the payroll tax or the income tax, then you’re just choosing which deficit you want to increase because the government’s total revenue and total liabilities are the same. If there were an actual Social Security Trust Fund, the situation might be different. But today what we’re dealing with is nothing more than shady accounting practices for which a public company CEO would go to jail.
Republicans should make this point very clear, even though they have culpability as well: There is no trust fund, and government cannot be trusted to maintain one. This is why Social Security must be reformed into personal accounts with property rights.
The choice of implementing a payroll tax cut rather than an income tax cut is a political choice, not an economic one. It simply “plays better in Peoria.” Or it used to, until Peorians awoke to the devastating reality of short-term Keynesian thinking. Yes, this tax cut is Keynesian, not supply-side, because it is temporary.
The argument should be, must be, about temporary versus permanent tax reform. Short-term tax breaks do not change people’s behavior, and it’s only today’s Keynesians who believe they do…because they, like other Progressives, believe people are stupid.
Milton Friedman understood, as he described in his 1957 paper “A Theory of the Consumptive Function,” that people don’t make important economic decisions based on temporary changes in their income. His theory, called the Permanent Income Hypothesis, says that “Men do not adapt their cash expenditures on consumption to their cash receipts…” In other words, despite the fondest hopes of Keynesians, people realize that our lives are longer than a temporary tax cut. We weight the value of that tax cut over a longer time period than the policy itself lasts and simply save some of that money, or pay off debt, leading to much lower aggregate demand than Barack Obama and other economic naifs expect. (It takes a particular sort of mind and ego to continue to expect what they expect after episode after episode of Keynesian policies proving that their ideas simply don’t work, thus what Hayek termed “The Fatal Conceit.”)
Therefore, the economic benefit of any short-term policy, whether tax cut or cash-for-clunkers, will be muted at best, though the latter is much worse than the former because it incentivizes the public to spend money in less efficient ways than they otherwise would in pursuit of a free lunch, or at least a free appetizer. This means that short-term policies will have a minuscule “multiplier,” the effective economic value of $1 of policy change because of the follow-on effects of the policy. Indeed there are good reasons to believe that cash-for-clunkers sorts of policies have a multiplier that is not only less than one, but perhaps even less than zero over a slightly longer term.
In order to get people to change their economic behavior, policy changes must be permanent, and permanently in the direction of lower taxes and regulation, now and later. (More deficit spending now means more taxes later.) Yes, Americans realize that one Congress cannot bind the next, and that there’s no such thing as “permanent” in American politics. But we know that a tax cut with an expiration date will either expire or lead to political turmoil, the prospect of either causing us to be less aggressive in our investing and business start-ups than we otherwise would be.
If a tax is like a ball and chain on an ankle, a temporary tax cut is like removing the ball but not the chain: we’re less restricted than we were before but constantly reminded of what’s likely to be coming soon. And we behave accordingly.
Perhaps, with the right outcome in the 2012, we can even prove wrong the aphorism that “there is nothing so permanent as a temporary government program.” This was, of course, also stated by the late great Milton Friedman; being proven wrong in this case would probably make him smile.
Republicans must get away from the argument that a payroll tax cut harms the Social Security system. It’s an argument that plays directly into the left’s hands, making further cases for reform much more difficult. Instead, they should argue that temporary policies of all sorts are much less beneficial than their proponents predict, and they should point to every single week of the Obama Administration as evidence.
About the Author
Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver’s NewsRadio 850 KOA at 11 AM on most Sundays. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.
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Michael Tomlinson| 9.12.11 @ 6:35AM
As the one honest politician running for the GOP nomination said, "Social Security is a Ponzi scheme." I know Mitt and Michelle (old time pandering politicians) plan to attack Rick for his honesty, but hopefully GOP voters will see through their desperation and stay with the one leader who will actually take on the New Deal and Great Society and reverse or reform them.
Since it is unlikely we will abolish SS anytime soon (pandering politicians like Michelle Bachmann won't allow it) we should reform the tax structure that funds it. A flat 5% FICA tax on all income should be instituted and mean's testing should be adopted that boots rich Democrats (Soros, Buffett, Obama, Clinton, Pelosi, Reid, Kerry, Boxer, etc.) out of the system. The advantages of a flat tax are (1) it is fair and (2) reverses Reagan's punitive tax on the self-employed. The retirement age should only be raised for those under 40 (I’d go younger since they voted overwhelmingly for Obama, but thanks to his policies they don’t have jobs).
Who should "pay it?" While it is convenient for employers to write the check to the government it would be more beneficial for the American people to feel the actual pain of giving money to the Federal government. Again being a realist and knowing that Democrats (rich & poor) are inveterate tax cheats I’d allow the system of employers collecting the tax for the government to continue to insure Democrats who want to raise taxes don’t cheat.
How about reforming Social Security? Great idea and Paul Ryan’s plan is one of many that should be investigated. While candidates can suggest ideas for reforming the system this is a legislative issue that should be carefully worked out in Congress under the watchful eye of the American public – not like the passage of Obamacare or other Democrat schemes to defraud the American taxpayer.
Jack in Wi.| 9.12.11 @ 8:42AM
Gettting rid of the Social Security tax for a short time is the best way to get money into the hands of the working people who need it. It will jump start the economy. For a permanent solution we must fulfill all our promises to the people over 40. For those under 40 Social Security should be abolished. The money already paid into it should by these under 40 people should be given back to them in the form of 5% goverment bonds. all this can be financed by getting rid of the foreign bases, ending the wars, bringing the troops home and cutting the defense budget 50%, ending all foreign aid, and slashing domestic Departments and agencies. The money is there for all the necessary progams for Americans.
Why should the USA pay for the defense of Israel, Saudi Arabia, Egypt, Jordan, Europe, Japan, Korea and 150 other countries? All we are doing is funding socialism in those places. It is time to spend american resourses here not around the world. The world can defend and take care of itself without any help from us. In fact most of the world would rather we stayed here and minded our own business.
Michael Tomlinson| 9.12.11 @ 9:29AM
I agree Jack Wi we should dump all funding to Muslim socialist countries. Then we should look thoughtfully at the need for NATO. As for South Korea and Israel they're capitalist countries and solid American allies. In fact, none stronger than Israel.
Jack in Wi.| 9.12.11 @ 9:48AM
With allies like Israel we don't need any enemies. South Korea and Israel are rich countries and have modern and up to date armed forces. The Israeli's have hundreds of atomic weapons. They can defend themselves without any more money from us. All we are doing by defending these countries is allowing them to spend what they would spend on defense on their own social programs. They all can defend themselves and we don't need any permanent, entangling alliances. See George Washington, Thomas Jefferson, and John Quincey Adams.
Oldefarte| 9.12.11 @ 2:57PM
Jack in Wi:While I partially agree with you and MT, I suggest you councel your sister/neighbor state concerning their need for governmental bailouts and to their polled political choices of DEMOCRATS before moving on to the subject of SS perhaps [ '.....Michigan voters in EPIC-MRA’s mock 2012 ballot preferred former Massachusetts Gov. Mitt Romney, who opposed the bailout, over Obama 45 percent to 43 percent. The president won Michigan’s 17 electoral votes in 2008, capturing more than 57 percent of the popular vote. The state has voted Democratic in every presidential election since 1992......']. As to SS, remember that it was instituted because the typical moronic American does not have the knowledge/desire/fortitude to financially plan for his own retirement, and that therefore SS was established in order to force same into doing thus. W/O the meager benefits of SS, most elderly would be starving to death on the streets while begging for food, shelter and clothing. In essence, most people are financially stupid, and while some of these morons make $75000/year doing dumbars repetitive assembly line work in Michigan/Wisconsin's factories, they're spending $100000/year buying too expensive homes, three-four unneeded expensive venicles, yearly vacations etc. As with the DA's now being bailed out of their bankrupt mortgages for their overly expensive homes, they end up at 65 with only several nickles in the bank and need the SS and GM to provide for their retirements. The SS funding that [whether its a trust fund or not] was STOLEN by liberal politicians [mostly Democrats] in order to pay for their governmental welfare of choice [they'd rather fund aid to dependent children, food stamps, affordable housing, etc than they would insure the SS fund stay solvent]. The simply solution for SS is [1] to legally force the government to repay every dime of borrowed [ie stolen] SS funds and[2] eliminate entirely the present salary cap on SS taxiation, thereby forcing someone earning $300000 etc to pay SS tax on the entire amount. The SS fund does not need to be privatized, but simply professionally managed by the typically inept government administrators!!!!!!
YeloStalyn| 9.12.11 @ 4:57PM
Before you get too far down your reform road for SS... what part of the Constitution do you cite as giving the federal government the authority to fund private citizens' retirements? I don't recall the Constitution setting up the federal government as a retirement fun manager.
Once you get past that point, then we'll talk about reforming it.
Oldefarte| 9.12.11 @ 5:13PM
It's already instituted/established law, and if/until a legal challange to same is initiated/ruled upon, I don't see that you have a debatable point to stand upon. 'What if' are inconsequential when dealing with 'reality'!!!!!!!
YeloStalyn| 9.13.11 @ 9:25AM
Slavery was already law, ruled upon, established. So were a lot of things. Glad you're wrong about "established" being the same as "unchangeable." Existance does not equate legitamacy.
Oldefarte| 9.13.11 @ 1:10PM
Until it CHANGED BY LEGISLATION, it therefore is [and forever will be] ESTABLISHED [by inference]. EXISTENCE equates LEGALITY until ruled/legislated/ajudicated otherwise, DA!!!!!!!!
Oldefarte| 9.13.11 @ 1:29PM
PS: Slavery was ESTABLISHED [and therefore UNCHANGEABLE] as law/EXISTENCE u-n-t-i-l it was CHANGED BY LEGISLATION/LAW also FYI ['....In 1863 Lincoln issued the Emancipation Proclamation, which freed slaves held in the Confederate States; the 13th Amendment to the U.S. Constitution (1865) prohibited slavery throughout the country.....']!!!!!!!!!
Oldefarte| 9.13.11 @ 1:35PM
PSII: Practically everything that government does is NOT of the "....I don't recall the Constitution setting up the federal government as a retirement fun manager....." category. What does the Constitution say about EARMARKS the Paul takes full advantage of, about Medicare/Medicaid that he obviously takes financial/revenue advantage of for his own personal profit/income benefit, etc???????
YeloStalyn| 9.13.11 @ 2:16PM
I'm not a Paulite, just fyi.
But you proved my point... just because slavery existed and was law didn't mean it was right or legitimate. It was maintained via force of government. But that doesn't mean it's right. The rule book, the Constitution, does not grant the fed the power to become a retirement fund. It's not there. Just like it's not a health insurer. Yet, all these things it does. However, that doesn't mean it's supposed to. We have allowed the fed to do a number of things and gave our consent, passively by not doing anything about it. However, we can not grant it consent and that substitute a change in the Constitution by fiat. Just because most people like and want the government to povide cradle to grave doesn't mean the government has the legitimate authority, under its founding rules, to do that. It's like if we sit down and play Monopoly. If you and I agree to ignore the rules about paying the income tax square, we can do that. But... anyone else who wishes to join the game (just assume they can join mid session) has every right to demand that we adhere to the rules provided to all players (the Constitution). Those rules state that you must pay the income tax when you land on that square. Just because we have ignored the rule doesn't mean the rule doesn't exists. And if there is some arbitrator of rules, they can say that because we haven't been paying the tax, that the new player doesn't either doesn't change the rules... that you MUST pay the tax. At that point, there are no rules to the game and I might as well just steal from the bank to win.
carnot| 9.12.11 @ 3:37PM
thank goodness all those people in the Armed Forces don't pay taxes! and thank our lucky stars that Jack in WI will be there to defend the rest of us when the inevitable attacks come. brilliant! no "insurance" component to overseas alliances whatsoever! it gets harder and harder to separate the domestic from foreign enemies.
Michael Tomlinson| 9.13.11 @ 2:33AM
Military personnel pay taxes just like everyone else. They only get a break when deployed to Afghanistan and Iraq. They shouldn't pay taxes, because they're the only group we ask to sacrifice twice.
Doctor Right| 9.12.11 @ 3:28PM
http://www.ynetnews.com/articl.....85,00.html
Here's what Israel will do to any Arab-Muslim country that uses WMD on them.
Meet "The Dolphin" fleet - Israel's super-secret submarines.
Why do we defend Israel, Jack the anti-Semite?
Because they help to defend us, too.
Israel is our staunchest, best ally.
Jack in Wi.| 9.12.11 @ 4:52PM
There we go with the antisemite charges again, when we can't make a rational argument. Israel is not my country. The people who live there choose to move to the neighborhood. Why did they do so if they didn't like the neighbors? It is not the business of the USA to get involved in Middle Eastern real estate disputes between neighbors. If the Israeli's don't like the neighbors move somewhere else. Over a million have already, and most of the rest of them have another passport.
Oldefarte| 9.12.11 @ 5:18PM
The Israelies have already/previously been in dispute with their neighbors and thereafter moved, since they formerly lived in Germany, Poland, Russia etc. Oh, and also, their former neighbors stole their assets, put them in prison camps and exterminated some of their fellow Israeli family/friends in human sized ovens!!!!!
JohnC| 9.12.11 @ 6:49AM
So because we now have a SS operating deficit we should make it worse by cutting SS taxes -- this makes absolutely no sense. This is just more thievery towards seniors by corrupt politicians who have no problems bailing out the corrupt bankers with TARPs.
And the GOP presidential hopefuls and Boehner and company should turn the tables on Obama and the Dems. by shouting from the rooftops that it is they who are gutting Social Security. But no, most of the GOP is for continuing this thievery.
The real SS answer is for the next president to demand that the politicians gradually stop raiding the taxes collected for Social Security and to start to make it whole by cracking down on those who game the system -- reforming SS disability would be a good start. Somebody needs to tell Rick Perry this before he loses us both the House and the Senate in 2012 by starting an unnecessary war between the young and seniors.
Jack in Wi.| 9.12.11 @ 8:52AM
Perry was a total incompetent on explaining every issue he touched in the debate. He will be destroyed on this issue, as will be the Republican Party. There is a way to do this but it is found in my ideas above. The only man who could get such a program before the American people and win is Ron Paul. Romney and any other of the seven intellectual dwarfs is incapable of doing so.
In my discussion above I forgot to add clearly that all payroll taxes would be abolished for those under 40. That would be a huge pay raise for the poorest Americans. They would have money to buy houses, pay back debts, get married, have children, and most of all save for their retirements. It would be the final end to the New Deal program of wars, taxes, and the welfare state.
Michael Tomlinson| 9.12.11 @ 9:33AM
No man that blames the US for 9/11 will be elected President.
"Ron Paul says U.S. intervention motivated 9/11 attacks," by Josh Hafner for the Des Moines Register, August 27:
WINTERSET, Ia. – Two weeks away from the tenth anniversary of the 9/11 attacks, presidential candidate and Texas Rep. Ron Paul says that U.S. intervention in the Middle East is a main motivation behind terrorist hostilities toward America, and that Islam is not a threat to the nation.
At a campaign stop on Saturday in Winterset, one man asked Paul how terrorist groups would react if the U.S. removed its military presence in Middle Eastern nations, a move the candidate advocates.
“Which enemy are you worried that will attack our national security?” Paul asked.
“If you’re looking for specifics, I’m talking about Islam. Radical Islam,” the man answered.
“I don’t see Islam as our enemy,” Paul said. “I see that motivation is occupation and those who hate us and would like to kill us, they are motivated by our invasion of their land, the support of their dictators that they hate.”
Paul is totally clueless. They attacked us because we were propping up a "Sharia government" and "the fundamentalists hated us for it"? Since when do Islamic "fundamentalists" disapprove of Sharia governments? They attacked us, according to Osama bin Laden, because, among other reasons, we were in his view "prevent[ing] our people from establishing the Islamic Shariah," not propping up a Sharia state.
Jack in Wi.| 9.12.11 @ 9:58AM
They came over here because we are over there. The terrorists all came from countries allied with us. 15 were Saudi's, the rest came from Jordan and Egypt. 5 Mossad agents were caught jumping for joy and high fiving as the World Trade Center collapsed. That story was a four day report on Fox News. Go google five dancing Israeli's on 9/11. With allies like this who needs enemies. Ron Paul spoke the truth. Most of the people are sick of these lies and wormongering you guys are pushing. To nominate another pro war Texas dimwitt will be the death of the Party. That is especially true of someone as dumb and incompetent as Perry, who wants to scare many millions of the elderly.
Drunken Sailor| 9.12.11 @ 10:30AM
Gee Jack, seems your and Clint's predictions about Paul winning in Iowa are going up in a smoke clould. No one is listening to you there.
Only 29% of GOP voters in Iowa would describe Paul’s views as mainstream, while a majority (52%) sees his views as extreme. Another 20% are undecide
Texas Governor Rick Perry and Minnesota Congresswoman Michele Bachmann are both viewed as being generally mainstream by 50% of likely Caucus voters. But only 27% describe Perry’s views as extreme, while 34% say that of Bachmann’s. While 23% of voters are not sure about Perry, who more recently entered the race, just 15% are undecided about Bachmann.
Perry has moved into first place among Republican voters in Iowa, host state to the first-in-the-nation caucus early next year. Essentially tied for second are Bachmann at 18% and former Romney at 17%. Paul picks up 14% of the vote, and nobody else currently reaches the five percent (5%) mark.
http://www.rasmussenreports.co.....st_extreme
Clint | 9.12.11 @ 11:47AM
The Texas Tea Party & New Hampshire Tea Party Coalition are filtering word out about The Plastic Rhoney RINO-CINO Perry.
" Rick Perry supported Lance Armstrong's 3 billion dollar Texas taxpayer funded medical research center. That’s like ObamaCare. That’s not free market.
Rick Perry, secured a 300 million dollar business handout slush fund for him and just the two leaders of the legislature to dole out to whomever he felt like being friendly to. That’s corporate welfare, a recipe for corruption, and as bad as the TARP bailouts that caused the Tea Parties to explode all across America. In fact, Perry gave 20 million dollars to Countrywide Financial which later went bankrupt.
He supported a new state business tax. He set up toll road tax collection booths all over Texas highways. The Austin Tea Party and the Austin Toll Party booed him on the steps of the state Capitol for that.
Rick Perry, signed an executive order mandating young Texas schoolgirls to get the HPV vaccine, while his former chief of staff was a lobbyist for Merck. Perry's judgment was so bad the Texas legislature revolted against him and overturned his decision,"
The Tea Party Rebellion Is Here.
Carpe Diem.
Drunken Sailor| 9.12.11 @ 12:54PM
You got me Clint. Your two tea party groups against all the others are going to pull off a coup. Seems most of the Tea Party are backing Perry.
http://www.gallup.com/poll/149.....ation.aspx
Doctor Right| 9.12.11 @ 1:05PM
Oh.
I was wondering where the Paul-bot nit-wits were hanging out today...
...Here.
Jack in Wi.| 9.12.11 @ 5:04PM
I say right now, and have said it many other times, that Ron Paul will win or come close in both Iowa and New Hampshire. Both states have a long tradition of supporting the underdog. Need I mention Jimmy Carter, John McCain, Pat Buchanan, Gene McCarthy, Mike Huckabee. The list is long. Most people in both states are sane and see our foreign and domestic policy for what it is a disaster. In New Hampshire independents can vote in the Republican Party primary. They will come out in droves for Ron Paul and his program for peace and prosperity. Rick Guradisill Perry and Willard Romney are both plasitc men with no souls or honesty about them. In the end that will sink them. They are just too phoney.
Drunken Sailor| 9.12.11 @ 6:30PM
"I say right now, and have said it many other times, that Ron Paul will win or come close in both Iowa and New Hampshire"
No Jack, you stated Ron Paul WILL WIN. There was no "or come close" ever mentioned by you. I know it's hard but your guy isn't going to make it very much farther.
I will at least give him credit for making people talk about the important issues but the population at large just isn't far enough right yet to elect a libertarian.
Michael Tomlinson| 9.13.11 @ 2:35AM
Drunken looks like Michelle Bachmann who called SS a fraud has sold out and is now a firm supporter of the New Deal and Great Society without criticism or flaw like Romney.
carnot| 9.12.11 @ 3:41PM
the only thing I get out of this is that you need to be added to the list of enemies. you sound EXACTLY like a playback of 1960s radicals. got it Clint?
Oldefarte| 9.13.11 @ 1:42PM
“I don’t see Islam as our enemy,” Paul said. “I see that motivation is occupation and those who hate us and would like to kill us, they are motivated by our invasion of their land, the support of their dictators that they hate.” What about Europe that has never occupied militarily the ME, yet has been repeatedly attack/bombed by Muslim terrorists? No, the only HATE I'm aware of is primarily directed at Jews, and secondarily at the US for supporting Jews in WWII and Israelies in the ME currently. Could Paul and his supporters be so adament politically for this hatred also perhaps????????
Oldefarte| 9.12.11 @ 3:05PM
Jack, you need to councel your DA neighbors up there into NOT VOTING FOR DEMOCRATS and to forget about that loser Paul ['.........Michigan voters in EPIC-MRA’s mock 2012 ballot preferred former Massachusetts Gov. Mitt Romney, who opposed the bailout, over Obama 45 percent to 43 percent. The president won Michigan’s 17 electoral votes in 2008, capturing more than 57 percent of the popular vote. The state has voted Democratic in every presidential election since 1992.....']; and to instead start supporting your governor Scott Walker and those brave Republicans who are fighting the labor unions up there. Your Wisconsin problem isn't SS etc, its the GD Democratic Party and its labor union thuggist hacks!!!!!!!!
Paul from SA| 9.12.11 @ 6:07PM
He can be destroyed only if Republicans stop lying about it and people are stupid enough to believe it. Romney and Dick Morris are saying Perry wants to end Social Security -- just like liberals.
David C| 9.12.11 @ 12:04PM
The "Trust Fund" is held in US Treasuries. To convert these T-bills to cash let's print (Fed) with QE-SS as needed and keep the system intact. If workers no longer have to pay the regressive SS tax then they have a retirement that many public employees enjoy. Although states as of yet cannot print their own currency.
The current national debt which includes SS cannot be repaid, ever, in current dollars. But we can print the money to reduce the debt and move to more fiscal restraint with a different cast of characters at the helm. What is the downside of a weakened dollar with trillion dollar trade deficits?
George S| 9.12.11 @ 1:14PM
Then why even pay social security (or any) taxes for that matter? Just print the money the treasury needs to pay beneficiaries!
David C| 9.12.11 @ 1:46PM
Right, isn't that what they did when they spent the surplus instead of saving it? The SS receipts were put in the general fund and spent. Money is gone.
It is the only solution (printing) and what they will eventually do. They all (gov) know it but the average citizen does not. Not sure why.
Taxing and devaluing are alike and have the same result. They spend whatever they want and give to whomever they like. Health care, entitlements, defense spending you name it. The damage is done. Inflation is better than deflation if I am asked.
RWinks| 9.12.11 @ 3:40PM
"What is the downside to a weakened dollar" indeed. Anyone unaware of the negatives of inflation is in no position to comment on or engage in adult conversation.
Bill Hussein O'Stalin| 9.12.11 @ 7:15AM
Social Security is a publicly financed mass welfare system where everyone loses. At least in a Ponzi scheme a few people win.
The people who lose the most are the ones at the bottom of the pile as usual.
The bottom wage earners watch about 15% of their income pass into the slippery hands of the federal government. After a lifetime of contributing so much many get back so little and many others get back nothing at all.
The average citizen would do better to buy life insurance for their families. It's a lot cheaper than Social Security and any imagined benefits.
Several studies have shown that if the contributors to Social Security has been allowed to invest their 15% they would have all been millionaires. Instead, they receive poverty level payments from the federal government and are told how great it is by the same federal government.
One generation has gotten back much more then they contributed but now only 2.94 workers contribute for each person taking something out. And those are the workers who live to actually get a check.
The CBO refers to Social Security as a progressive system because it takes income from higher earners and lower earners and gives the lower earner higher supplement incomes when the lower earners receive their checks. The higher earners are penalized with lower checks.
In reality, that's not very progressive because it's simply the redistribution of wealth.
In fact, most Americans would be shocked to find out that only 63% of recipients are retirees.
Currently about 14% of recipients are disabled workers, 13% are survivors of deceased spouses and 10% were spouses or children of retired or disabled workers.
Incredibly, 60% of payments go to women. Where are those equal rights advocates?
The amount of payments relative to GDP has been around 4% but very soon will rise to above 6% of GDP further placing more financial strain on America's overall financial system.
The fact that the federal government "borrowed" all the money and left worthless IOU's is just another indicator of how the system has been subject to "pick pocketing" by the politically elite.
This has allowed members of both parties to pass tax increases without actually voting on it. How is that a tax increase? All money borrowed will come back at some point as an increase in taxes or further borrowing from other sources which will also become a tax increase at some point.
The same point is true for the 2% reduction since it is simply another way of borrowing from the future.
In essence, the system is broken and wrought with fraudulent financial concepts.
Here's a great paper from CATO which explains it better than I can.
http://www.cato.org/pubs/books/itsyourmoney.pdf
Jeff Perren | 9.12.11 @ 7:53AM
If other Republican politicians had the courage of Rick Perry (and perhaps a little more) they would really challenge the Democrats' basic premise.
Social Security is immoral. It is wrong to coerce Peter to pay Paul but it is equally wrong - even using the Democrats' premise - to coerce Peter now to pay Peter later.
It's doubly wrong at the Federal level.
It's triply wrong because the rationalizations for SS are all lies. ("SS is an insurance policy for old age." "SS helps those in need." "Need justifies government coercion against law abiding citizens." "We will otherwise have old people dying/eating cat food/fill-in-the-blank." etc.
No one owes me (or anyone else) a social safety net if I'm too short sighted (or unlucky) to save enough to survive.
Government altruism - whether sincere or (more usually) a rationalization for control - is morally wrong, always (not to mention unconstitutional).
That's all apart from a truth that used to be widely known: private charity always works better.
Clint | 9.12.11 @ 8:01AM
Dr.Ron Paul : November 11,2010:
"We should understand that Social Security was intended primarily to prevent old widows from becoming destitute. Life expectancy in 1935 was only about 65, when there were several workers for each Social Security recipient. The program was never intended to be a general transfer payment from young workers to older retirees, regardless of those retirees’ financial need. Yet today Social Security faces an unfunded liability of approximately $18 trillion.
First, Congress needs to stop using payroll taxes for purposes not related to Social Security, which was a trick the Clinton administration used to claim balanced budgets. Second, Congress should eliminate unconstitutional spending – including unnecessary overseas commitments – and use the saved funds to help transition to a Social Security system that is completely voluntary. At some point in the near future Congress must allow taxpayers to opt out of federal payroll taxes in exchange for never receiving Social Security benefits."
Dick Nome| 9.12.11 @ 8:08AM
Rube Paul has a firm grasp of the obvious. Why didn't I think of that. He's retiring next year, BTW. Enjoy your self inflating optimism now as you'll need another kook in '16. Run yourself, if you are so damned smart.
Michael Tomlinson| 9.12.11 @ 8:13AM
Rand is in the wings Dick and RINO neo-liberal Paul has another son ready to lead the cult.
Clint | 9.12.11 @ 8:28AM
Dr.Ron Paul,
" When it comes to Social Security, we must understand that the system does not represent an old age pension, an “insurance” program, or even a forced savings program. It simply represents an enormous transfer payment, with younger workers paying taxes to fund benefits. There is no Social Security trust fund, and you don’t have an “account.” Whether you win or lose the Social Security lottery is a function of when you happened to be born and how long you live to collect benefits. Of course young people today have every reason to believe they will never collect those benefits."
The Tea Party Rebellion Is Here.
Jack in Wi.| 9.12.11 @ 8:56AM
Keep up your fine work Clint. It may even sink into the dull brains of these dimwits that their hero's Perry and Romney have the intellectual capasity of mosquitos.
Clint | 9.12.11 @ 8:37AM
That's why you're a Dick.
Dick Nome| 9.12.11 @ 10:05AM
You don't know what a dick I can be. Better than being an anus. You Paulbots do tend to get rude and insulting when you get called out enough. ROn Paulbots are kooks and crackpots. A 77 year old (next year) fringe Libertarian is not going to be the Republican nominee. He is not a conservative and not a Tea PArty guy. Suck it up Rube.
Clint | 9.12.11 @ 11:38AM
Associated Press-GfK poll: Ron Paul the most favorable GOP candidate
A new national poll of the general population has revealed that top tier candidate Ron Paul is the most favorable choice in the Republican Presidential nomination race.
Ron Paul 37% favorable vs 36% unfavorable = +1
Mitt Romney 39% favorable vs 41% unfavorable = -2
Rick Perry 33% favorable vs 36% unfavorable = -3
Michele Bachmann 35% favorable vs 43% unfavorable = -8
The Tea Party Rebellion Is Here.
Box of Tissues Crybaby RINO-CINO Dick ?
Drunken Sailor| 9.12.11 @ 12:56PM
Still using old Polls Clint?
The dates on that one are: July 29 – August 10, 2011.
And it only polls in Texas.
My you got a bunch of cherries to pick from don't you?
Doctor Right| 9.12.11 @ 1:06PM
Clint wants to know dick...
Clint| 9.12.11 @ 7:49PM
More Queer Talk From The Ricky p[erry Cheerleader, Doctor Reich.
Oldefarte| 9.12.11 @ 3:10PM
The DA Paul's idea of opting out of SS would leave the very destitute seniors out on the street begging for crumbs. The only solution is to permanently fix it by [1] restoring the governmental funds stolen from it previously and [2] eliminate the current slsary caps for taxiation placed upon same [if the wealthy income earners wish to then opt out, so be it for them only]!!!!
2Anglico| 9.12.11 @ 8:29AM
Actually, the so-called "Trust" fund does not even own Bonds. The Congress has filled the Fund with "Non-Marketable Securities", IOU's to us peons.
JohnC| 9.12.11 @ 8:31AM
SS (and Medicare) is not welfare – Medicaid is and the GOP is making a huge political blunder by not distinguishing the two. The GOP should push for a cut in the income tax and making it flatter instead of a cut in the SS payroll tax.
Then fix SS in a prudent manner and the first thing is to gradually stop raiding it and then scrub the system for fraud. After that (and the 2012 election), if necessary, they can talk about very gradually privatizing it but only in iron-clad safe investments (not the stock market) for this sacred money.
We are going to lose seats in 2012 because RINO & globalist Rick Perry has opened up a can of worms and will scare seniors (many of them tea partiers) not to vote Republican. But now Obama has given the GOP a rare opportunity to turn the SS tables by opposing the SS payroll tax reduction and making it abundantly clear to seniors that this tax cut is further gutting SS.
YeloStalyn| 9.12.11 @ 10:15AM
Why is one dollar I earn and pay to the government sacred while another I earn and put in my pocket isnt'? Shouldn't it all be sacred in the fact that it is MINE and NOT the governments in the first place? Let me choose who safe or risky I want to be.
Oldefarte| 9.13.11 @ 1:51PM
No one would have a problem with you keeping your dollar and not contributing to SS/Medicare, as long as you signed a legal/non-revocable waiver to never attempt to draw SS or to make a Medicare claim at 65 +. You'd no doubt simply alternatively deed your assets to your family and thereafter claim indigent status and file a medical claim under Medicaid or to apply for extended unemployment insurance benefits etc [since you would have previously spent your dollar on a $500000 house, several brand new SUV's, a yearly vacation to Ron Paul's estate in Texas, etc]!!!!!!!!!!
YeloStalyn| 9.13.11 @ 2:19PM
No... I shouldn't sign a damned thing. The dollar should be mine to give, or not give, as I see fit (save for legit purposes of taxation and spending as outlined in the Constitution).
If I blow my money... the government should tell me to go pound sand. If I blow my money and ask my church to help, then they, morally, should be obligated to help me (but not legally). But that's a different matter.
Clint | 9.12.11 @ 9:14AM
Dr.Ron Paul,
"My hope is that at least some members of the new Congress will cut through the distortions and see Social Security as it really is. The best way to fix the impending Social Security crisis is also the simplest: allow younger individuals to opt out of the program and use their tax savings to invest privately as they see fit. This is the true private solution. Your money has never been safe in the government’s hands, and it never will be."
The Tea Party Rebellion Is Here.
Ron Paul| 9.12.11 @ 9:53AM
I really do appreiciate the support but I am worried that you could lose your job, telemarketing sex toys is a cut-throat business.
BTW, how did you make out with the Amway stuff and tai-bo tapes I sent ?
Ron Paul| 9.12.11 @ 9:53AM
I really do appreiciate the support but I am worried that you could lose your job, telemarketing sex toys is a cut-throat business.
BTW, how did you make out with the Amway stuff and tai-bo tapes I sent ?
Clint | 9.12.11 @ 10:12AM
" With regard to entitlements, the 2010 Social Security and Medicare Trustees report tells it all. It paints a stark picture of two entitlement programs that cannot be sustained under even the rosiest scenarios of economic growth. No one, regardless of political stripe, can deny the fundamental problem of unfunded future liabilities in both programs."
Oldefarte| 9.13.11 @ 1:56PM
Both are easily fixable by [1] defeating Democrats [2] forcing government's repayment of the SS funds previously stolen from its retirement fund [3] uncapping the income level of SS taxiation and [4] institute the general health insurance improvements recommended by Republicans!!!!!!!!
JohnC| 9.12.11 @ 12:49PM
Obama now says SS and Medicare cuts have to happen and he also wants to cleverly and stealthy steal from the SS trust fund by extending the payroll tax reductions.
The GOP ought to resist both these ideas, calling them an outrage -- let him and the DEMs own the gutting of SS & Medicare for the 2012 elections; turn the tables on them and get the senior vote across the political spectrum and keep the House and win the Senate.
martin j smith| 9.12.11 @ 1:24PM
First of all 'LETS SEE THE SO CALLED BILL" that our "Dear Leader" talks so much about.
On the topic of Obama and the proposal of a temporary payroll tax--the real issue is that Obama
is on the road to Defeat along with the Socialists.
And, who do we want to lead us --Some one who shows signs of honesty or some one who is a defender of
Obama Care ? The American People want to be talked to honestly as if they are intelligent adults not stupid little children. That is how I feel and I will judge who I support the person who meets this criteria among others. Tim Pawlenty dropped out because I could not take the heat.
He was unwilling to criticize Romney on Romney Care--that is cowardly. That we do not need. Now the same Pawlenty supports Romney. That to me is the "kiss of death" for me. Then I hear that Romney attacks Perry as if he were a Socialists ( Seniors will lose their Social Security).
That we o not need. If Republicans pass anything like Obama's bill that party will be toast. The American People do not want a deal with Obama.
They want a new vision. Anything in Obama's so called bill is a trap and Republican Leadershit better act accordingly. Voters will not take their
nonsense.
WhiteBikerTrash| 9.12.11 @ 2:34PM
Social Security needs to be deconstructed!!
I was born back in 1957, I knew in the early 70s that there would be no Social Security for people my age.
It has been a Pozi scheme from the start and like any other Ponzi, it must collapse under it's own weight of promise!
My suggestion, Freeze all admission to SS. Freeze all benefits. Make an offer to all people born between Jan 1 1945 through Dec 31 1960 you receive all of your "contribution" plus 2% per year interest in one lump sum, or collect SS at the frozen level after you reach eligibility age.
You must sign up for one or the other.
Stop collecting SS Taxes.
Return all SS contributions to anyone born between Jan 1 1961 to Dec 31 1970.
66% to Jan 1 1971 to Dec 31 1980.
33% Jan 1 1981 to Dec 31 1990.
none returned to Jan 1 1990 and later. The Government is now out of the retirement business! The returned monies will be spent or invested. People will take responsibility for their own retirement, or not!
My napkin scribbling, with the information I have tells me that the final cost of this plan will be about 33 Trillion Dollars as opposed to the 100 to 200 Trillion dollar obligation that SS currently carries.
Dave| 9.12.11 @ 3:08PM
Social Security should be fixed - not obliterated.
Nuff said.
WhiteBikerTrash| 9.12.11 @ 4:28PM
Dave,
How?
Nuff said.
Oldefarte| 9.13.11 @ 1:57PM
WBT: see my suggestions above!!!!!!
YeloStalyn| 9.12.11 @ 5:03PM
Before we can have that conversation, can you please cite the Constitutional authority for the federal government even setting up SS in the first place?
George S| 9.12.11 @ 5:19PM
The General Welfare clause. Congress set up a retirement fund which working people, instead of everybody, make contributions and receive benefits. Hence, it is not a tax and is targeted towards a specific group. That's why there was a salary cap on the taxes and why only people of retirement age were eligible for benefits. That was then; today it is blatantly unconstitutional as it evolved into a disability slash retirement transfer of wealth.
Moe Blotz| 9.13.11 @ 4:34AM
Incorrectly used the General Welfare clause. Our elected officials are obliged to promote the general welfare among the states,not provide for same.
YeloStalyn| 9.13.11 @ 9:35AM
"Promote" is not the same as "Provide". Even if it was "more Constitutional" then versus today, it still doesn't pass muster except for men in power ignoring the rules (remember, just because a court says it's OK doesn't mean the Constitution does... it is over the courts, not the other way around). You can read the Federalist Papers yourself if you don't believe me, but the "General Welfare clause" is not a clause of legal function, but rather a statement of purpose for a limited and defined set of powers and areas of jurisdiction. Even under broad understandings of "General Welfare" such as Hamilton's, it does not cover setting up a retirement fund. Instead, it is only a justificaton of taxing and spending (not collecting and redistributing) on functions such as agriculture or education but then only in ways that are general, not specific to any loci, group, or other specific way. It had to still be spending that was designed to facilitate a broad function of life for all Americans. Simply handing out money doesn't meet even this larger (and I still argue wrong becaue it essentially removes any hard, fast limits on government power... look at what we have today for example) understanding of General Welfare.
Oldefarte| 9.13.11 @ 1:59PM
YS: You also previously asked that very same question of me, and I answered same. Please read my earliar reply, and quit repeating yourself!!!
YeloStalyn| 9.13.11 @ 4:49PM
No... you didn't cite any place in the Constitution that grants the fed the authority to act as a retirement fund manager. You simply cited precedence of the program's existance. I pointed out that that does not constitute, well, Constitutionality.
George S| 9.12.11 @ 5:14PM
There is no money in the system. Getting "your" money back is impossible. Reforming the system without hurting some of those who've already contributed most of their lives is mathematically impossible. A true Ponzi scheme rewards the early participants while ripping off the last. Hence Perry (and others) will ultimately be proven correct.
shipley130| 9.12.11 @ 5:25PM
As I understand it, none of us have a legal right to social security payments. We have let the federal government get completely out of control. I urge my fellow Americans that serve in the military and law enforcement ranks to seriously think about who they will stand with. A federal government that steals from you or your family members that raised you and supported you and your friends that show up in times of good and bad. You wouldn't stand with a friend that steals from you, so why would you support a federal government that does the same?
Dan Mathewson| 9.12.11 @ 6:01PM
Paulicans: yap-yap-yap-yap-yap-yap-yap-yap.
Paul from SA| 9.12.11 @ 6:09PM
I want to know the total amount of SS funds that have been misspent and diverted by Congress over the years.
YeloStalyn| 9.13.11 @ 10:06AM
That's easy... 100%.
It's all mis-spent money that should have stayed in the earner's pocket from day one.
Oldefarte| 9.13.11 @ 2:03PM
No/wrong, since it was instituted because there will always be financially inept idiots who can't /won't save for their own personal retirement without the government forcing them to do so [and thereafter will become even more wards of the state than exists today]. The morons of society will pis* away every nickel that they earn [mostly at Mickey D's] on too expensive houses/cars/vacations/women, etc and at 65 begin screaming bloody murder, racism, whatever in order to get financial support from the government in their old age!!!!!
YeloStalyn| 9.13.11 @ 2:21PM
So... because they will blow their money, and because we've instituted a program that isn't found in the Constitution and let it exist, we therefore should continue to support things like SS?
Those morons who waist their money made their bed... they can sleep in it or ask for help. They do not have the right to use the force of violence, via teh government in a final ultimatum, to compel me to pay for them.
Paul from SA| 9.12.11 @ 7:17PM
Romney, Dick Morris and now Tim Pawlenty said Perry wants to abolish social security -- an absolute lie. What is going with the GOP?
Linda| 9.12.11 @ 11:32PM
SS could be fixed by eliminating the payroll tax portion of it and extending it to all wage income. A flat contribution of 6%. With employers paying nothing. Younger workers would be issued gov. bonds with the full faith and credit of USA = to their contribution. With maturity dates = to their retirement age. Disability or death benefit would be cash in their bonds. For older Americans retirement age would be raised.
Proach| 9.16.11 @ 9:34AM
Employers don't pay any part of it as it is. Employees do. The whole "employer pays" thing is just sleight of hand that the government supports to hide the true cost to each worker. A dose of honesty where workers saw the total that they "earned" with all deductions would do a great deal of good to the whole system.
Proach| 9.16.11 @ 9:35AM
Employers don't pay any part of it as it is. Employees do. The whole "employer pays" thing is just sleight of hand that the government supports to hide the true cost to each worker. A dose of honesty where workers saw the total that they "earned" with all deductions would do a great deal of good to the whole system.
Proach| 9.16.11 @ 9:36AM
Wow, clearly this website thinks my contributions are important enough to post them twice.
Sorry about that, it's the Internet's fault. The tubes are broken, or something.
POST American| 9.13.11 @ 1:23AM
--------------------BOTTOM LINE----------------------
-TTT-Rick Perry and SUB-Mitt Rome-KNEE were BOTH for the 'Banker Bailout',
and BOTH support carbon taxes and VAT.
BOTH also are virtual NO shows on the
disintegrating borders and illegal aliens
situation.
Perry, just weeks ago, sided with the ILLEGAL,
groping TSA against the good people of Texas.
His Logan Act violating attendance of the
Bilderberg meeting is already well known.
Likewise, his push for mandating the deadly
gardasil injections for girls.
We have NO more time for these David Rockefeller cardboard cutouts----a la
the RED China sellout Bushes and Clintons and, of course, Obamas.
Surely the VAST majority of sitting Congress
are probably being cyber blackmailed.
Just take a good look at those faces, those
demeanors.
-------FORGET 'Tea Parties'
----------RE-DISCOVER your very own FREEMAN'S party ----for the first time
-----RIGHT NOW.
---------------------------GOTTA' MOVE
YeloStalyn| 9.13.11 @ 9:59AM
A questions for everyone...
Why are we so scared of actually getting rid of SS? Are we really so incompentant as a nation that we can't function without it? We spend so much time sounding like bleeding heart liberals ("they'll eat dog food without it!!!") or greedy sob's ("I know my grandchildren have to go in debt to pay me... but it's MY money!!!!").
We have all the plans to "fix" it... bonds, raise retirement age, reduced benifits by age groups, etc.
Let's make it easy. You're recieving it? You keep getting it. You're paying for it? You keep paying for it. It's gonna suck to be an American, but maybe we learn from our mistakes. We stop adding people to the rolls. Anyone under the age of 40... sorry. We're having to do what our elders were too unwilling to do... pay THEIR debts for the bad decisions they made with their votes. Under 40 you aren't going to recieve anything (is this a change in current policy? No... it's already broke so people have no reason to get all huffy over this point). Now the program dies on the vine. Taxes don't go down (or up) and (if we've done this plan, then you can assume we have the fortitude do other good things) the continued tax revenue that used to be SS now goes towards the debt. It dies on the vine. No one "loses" anything (those who won't get SS under this plane have already lost it unless they want to steal from their kids too).
Oldefarte| 9.13.11 @ 2:10PM
Simple, because SS represents [although highly flawed financially, investment-wise] a PARTIALLY PAID FOR retirement system which mostly benefits those too stupid, too lazy, too asinine etc to SAVE ON THEIR OWN DEDICATED EFFORTS. That's why it was established initially, because of the average person's STUPIDITY TO PLAN FOR THEIR OWN RETIREMENT. No one will have the stomach/fortitude to watch these people wither and die in the streets due to their own stupidity, so therefore SS has to be maintained and fixed [easily done so]. If you or anyone wishes to opt out of same, be reimbursed for your income contributions, no one should have any objection to same [as long as you legally signed an irevocable waiver to never file a claim for SS thereafter]!!!!!!!!!
YeloStalyn| 9.13.11 @ 2:25PM
I think we're on two sides of the same coin. I don't want to see stupid people suffer even from their own stupidity. HOWEVER... the government is not the vehicle to do that. To use the force of government to compel people to make choices that are "smart" or "wise" is a dangerous game. Who decides? It would me smart for baby daddies to get steralized... should the government step in to do that? No!
You are arguing points of pragmatism. To be damned with principle. That's the arguement of a liberal. If good intentions to help people who won't help themselves are the justification for doing things like SS, then we ought to provide them houses, cars, food, clothes, medicine, etc. without any regard to how or why they are in the position they are in. If that's how we're gonna do things then I'm quitting my job and I will go buy that $500,000 house you mentioned before.