Social Security Skim-Scam a 'Holiday' from Hell
Would you give up a piece of your pension for a signing bonus? That’s just what President Obama’s proposed “payroll tax holiday” is like (such a jolly name—and just in time for the holidays, too).
The deal Obama reached with Republicans this week would reduce the amount of Social Security taxes workers pay from 6.2 percent to 4.2 percent, for one year. If you make $40,000 a year, you’d take home $800 extra, $15.38 a week.
But it’s a bargain with the devil, because the long-term effect is to beggar Social Security, and eventually cut benefits. That $15-a-week bonus now may end up costing you far more in the future.
Conservatives like the co-chairs of Obama’s Fiscal Commission and billionaire Peter Peterson are already baying after Social Security; they’d planned to cut benefits in three different ways (changing the COLA, changing the benefits formula, and raising the retirement age). But first they have to convince Congress, and the voters, that the Social Security trust fund is in such terrible trouble that it needs to cut benefits.
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It’s not in trouble now: it has a $2.3 trillion surplus, projected to grow to $4.2 trillion by 2024. Up till now, the fund wasn’t going to be in trouble until 2037. But if this “holiday” goes through, Social Security will be in trouble. The government will have to shore it up with $120 billion out of general revenues every year, according to Eric Kingson, co-director of Social Security Works. That or cut benefits. Which do you think the current crop of deficit-fearing congress members would rather do?
This doomsday scenario assumes that the “holiday” becomes a permanent vacation. Which seems likely. Can you imagine Congress, nearing an election year, voting to restore the 2 percent deduction? They’ll call it a “tax hike” and vote no. And people will get used to that extra $10 or $15 a week, and blame Democrats if they suggest doing the smart thing and restoring Social Security’s full funding.
All along, the defenders of Social Security have been able to say, truthfully, that Social Security doesn't contribute a dime to the deficit, so deficit hawks should shut up about it. If Social Security starts needing money out of general funds, it’ll be just as inviting a target for the deficit hawks as any other government program. Hmm, which should we cut, Grandpa’s retirement fund or money for another fighter jet? For too many congressmen, the answer is obvious.
If Obama gets his way, I know what I’m doing with my extra $13.35 a week—I’m saving it for retirement.