Dubya has been spending his elusive political capital trying to build support for some sort of social security reform program (details supposedly forthcoming). It’s too early to know with much certainty which of the many ideas that are being floated will find themselves in viable legislation, although it’s safe to say that they’re more likely than not to be the bad ones.
On the many TV news-like shows, editorial columns and opinion blogs you can follow the debates over the details of these plans, the political maneuvering behind them, and their possible effects. At The Picket Line I will be unable to avoid the topic altogether, but I am going to try to keep the discussion sharply, if eccentrically, focused.
The reason why I can’t ignore the issue here is that whatever Congress considers doing may have an effect on how the payroll tax is assessed, and how the money that gets taken through the payroll tax is spent.
Currently, the government takes about 15% of the first $90,000 of the money you earn. It claims it’s taking that money for the social security and medicare programs, but it only uses some of that money for those purposes. The rest is “loaned” to the rest of the government for it to spend on its normal ration of pork and blood.
In exchange for this loan of cash money, the government gives the folks at social security an alternative form of currency in the form of Treasury bonds.
Because the money we pay in our payroll taxes ends up getting loaned to the government for its pork & blood fund, even those tax resisters who don’t really mind the social security and medicare programs as such don’t want to pay this tax.
So while the rest of blogland is going to be looking at the upcoming social security reform legislation to see if it makes social security solvent or fair or just or whether it gives higher or lower returns than the present system, I’m going to be looking at two other issues that will be otherwise mostly overlooked but which have a more focused relevance to the tax resister:
- Would the legislation result in more or less money going from the taxpayers to the government?
- Would the legislation result in more or less money being available to the pork & blood (a.k.a. “general”) fund? In other words, will Congress be able to keep spending the surplus or using it as collateral?
On the first question, early reports say “more:”
Senate Finance Committee Chair Chuck Grassley, R-Iowa, on told reporters that GOP committee members have reached a consensus on Social Security solvency that includes an increase in revenues.…
Grassley said the revenue increase will be done in such a “roundabout” way that people won’t even notice an increase in taxes. While he wouldn’t go into detail, he said the revenue increase will be combined with adjustments to how benefits are calculated and an adjustment in the retirement age.
As for question #2, the news is mixed. Encouraging sentences like this:
Are followed by worrisome phrases like “the funds [in these accounts] would initially be put in Treasury bonds…” (The plan does eventually add other unspecified non-governmental investments to the mix.) I wouldn’t be surprised to see some sort of “it’s your money, but we’ll just keep it safe for you in our pockets” compromise that leaves things, from our perspective, worse than before.