Mr. Obama’s tax increase would not take effect until 2018 — yes, after both terms of an Obama presidency. One argument for this delay is that raising Social Security taxes now would just allow lawmakers to spend more of the existing surplus on other things; it’s not until 2018 that the income from payroll taxes would fall short of paying promised benefits. But surely President Obama could find some way to bring in money sooner without letting Congress fritter it away on other needs.
I know that the Federal government has seen its total Federal debt rise relative to GDP and has a rather large general fund deficit but how on earth does this place the Social Security Trust Fund on the edge of bankruptcy. Let’s turn the microphone over to Dean Baker:
The Post is complaining yet again that politicians are unwilling to deal with a Social Security shortfall that is first projected to hit in 2049, when John McCain will be 113 years old. To try to makes it case sound more compelling it refers to the date 2018 when the Social Security trustees project that tax revenues will first be inadequate to meet benefit payments. Of course 2018 is completely irrelevant to the finances of the program. At that point the program is projected to have accumulated more than $5 trillion in government bonds. But the Post wants to scare readers to advance their Social Security agenda so they trot out 2018 as though it is a date that anyone needs to worry about.
Gee – the Trust Fund will have $5 trillion in bonds earning interest. If the interest rate is 5 percent – then the fund will have $250 billion in interest income so the fund will likely continue to accumulate assets even in 2018 or 2019 as the difference between payouts and payroll contributions will be less than its interest income. That the Trust Fund is in crisis is almost as stupid as this:
Are the Denver Dems downing the stock market today? The Dow is off 230 points, starting right from the get-go.
Stock market prices fell during the day while those speeches were at night. Not only is Larry preaching Pre Hoc Ergo Propter Hoc nonsense, there was no real news in any of those speeches last night. Steve Benen has more on Kudlow the Klown.