by Dale Coberly


Liberals Destroy Social Security While Claiming Victory

Republicans Cry “Please Not the Briar Patch, Br’er ‘Bama, please, please!”

Robert Kuttner, tells us that Obama has won a great victory by getting the Republicans to extend the payroll tax cut; SS “will be made whole from transfers from general government revenues. So far, so good.”

So far so bad. The great glory of Social Security has been that it does not depend on “general government revenues.” It is not a welfare program. The workers pay for it themselves. Therefore it contributes absolutely nothing to “The Deficit.”

Since “liberals” frequently defend Social Security by pointing this out, you’d think that they could remember it long enough to avoid destroying the very foundation of Social Security.

But Kuttner tells us “there is no good reason why Social Security has to be funded entirely by payroll taxes.”

No reason, indeed, except that that is what Social Security IS. Fund it from the general fund and it stops being Social Security. It becomes welfare as we knew it. You can keep calling it Social Security but you will be fooling yourself.

Then Kuttner tells us, “the payroll tax…is one of our most regressive taxes…”

Except that it’s not a tax, and it’s not regressive.

A tax is a “required payment FOR THE SUPPORT OF A GOVERNMENT.”

The payroll “tax” does not support any government; it is used to support the person who pays the tax.

You can find reasons for calling the payroll tax a tax [it is a mandatory payment TO the government], but please contemplate this one fact: SS does not support the government. It supports the worker when he can no longer work. I am sorry if the use of the word “tax” confuses you, especially when i deliberately say “the payroll tax is not a tax.” The point here is to get you to think. Think about what Social Security IS, whatever words you want to use to refer to it.

As to being “regressive,” a low income worker can expect to get an effective “real rate of return” on his Social Security investment of 10% or so; a high income worker would expect about a 2% rate of return. How “regressive” is that?

Again, if you have been taught to say, “regressive tax, regressive tax, awk, regressive tax” whenever you hear Social Security, I can’t stop you. I can only ask you to think about the harm you are doing.

You don’t call SS a “regressive tax” unless you are advocating changing it to a “progressive” tax by turning it into welfare paid for by “the rich.”

FDR, in spite of what Kuttner says, was smarter than that. He knew what becomes of welfare programs, so he insisted SS be paid for by the workers themselves “so no damn politician can take it away from them.”

But Kuttner thinks that “making up the Social Security gap with a tax on millionaires is good policy. As long as the system is substantially financed by payroll taxes, the benefit still feels earned.”

How nice. The poor can feel they earned their benefit, while the millionaires who are not getting the benefit will feel so good about paying for it that they won’t bother to try to cut the benefits, or means test them, or raise the retirement age… because, you know, the rich are like that. Kind and generous about paying taxes, as long as the poor “feel like” they are paying for it.

I could let Kuttner and other pppprogressives call SS whatever they want in the privacy of their own faculty clubs, but when SS is under attack for its life, it is reckless irresponsibility to call it “a regressive tax” and to entertain sucker dreams about getting “millionaires” to pay for it.

The Social Security “gap,” before Obama started playing with it, was forty cents per week. Now that Obama has won his great victory over the Republicans the gap is sixteen dollars per week.

Since Obama has told the world that the Republicans won’t dare “impose such a huge tax raise on the middle class” we can be reasonably sure the Democrats won’t either.

So Social Security is now a welfare plan paid for by government deficits… just like Peterson always said… except it wasn’t true when Peterson said it. Now, thanks to Obama and the Democrats and “progressives” like Kuttner, it is.

SS could still be resurrected, but that would take some skill and leadership… probably something like a “making work pay” tax cut to replace the “payroll tax holiday,” so that when the tax cut has to end, the “tax increase” won’t get blamed on Social Security.

But skill and leadership we do not have.

Write this down, so when your children are forced to live in the poor house in their old age, someone may read it and remember that once upon a time there was a way for workers to save their own money so they could retire at a reasonable age… with their money protected from inflation and market losses, and government deficits… by the ingenious idea of pay as you go financing. This was called Social Security. But it was destroyed by “the friends of the poor,” who thought they could force the rich to pay for it.