American Elephants

Mucking Around With Taxes by The Elephant's Child
February 10, 2012, 7:37 am
Filed under: Capitalism, Economy, Politics, Progressivism | Tags: , ,

The Congressional Budget Office (CBO) expects the Social Security trust fund to peak in 2018 and decline to $2.7 trillion in 2022 — a full $1 trillion less than Social Security’s actuaries predicted last year.  This suggests that the current depletion date may jump ahead by several years when the Social Security trustees release their annual report this spring.  In other words, Social Security lost a trillion this last year.

Social Security’s assets are offset by the Treasury’s equal debt. This is bookkeeping mumbo jumbo that means that the program has the legal authority to pay promised benefits until its special Treasuries are spent.

Under current law, once the trust fund is gone, Social Security could only pay 78% of annual benefits. Call this a looming big hole in the safety net, which means more personal savings, longer careers or big tax hikes. Consequences.

Social Security is already taking in less money than it is paying out in current benefits.

The 2-percentage-point payroll-tax cut doesn’t affect the trust fund, because that money is repaid to Social Security. The article does not indicate how the money is repaid — from those millionaires and billionaires? From knocking more people up into the alternative minimum tax category? Higher taxes on gasoline? It is repaid with IOUs.  I think this is what the Brits call “jiggery-pokery” — I haven’t really got a proper definition of that term yet, but I like the sound of it.

President Obama wants the payroll tax cuts extended.  This is Keynesian stimulus again. They just won’t give up on old John Maynard Keynes ideas. They’ve never worked, but hope springs eternal. We’re taking money from a pay-as-you-go retirement system and replacing the cash with IOUs.  There’s a remarkable lot of creative bookkeeping going on in the nation’s capitol.

A new study by the nonpartisan Tax Foundation says “there is no significant relationship between payroll taxes and long-term economic growth.” It is the worst way to give the economy a boost.

American companies pay a corporate tax rate of 39%, among the highest of all OECD countries, and bad for competition.  Trimming that rate by 10% would boost total real GDP by $1.5 trillion over the next decade. The fastest-growing economies in the OECD all have the lowest corporate taxes.  The only one where U.S taxes are lowest is the payroll tax — the one that doesn’t make any difference.


Outed! Exposed! Caught Out! by The Elephant's Child

For years, ever since Franklin Roosevelt signed Social Security into law in 1935, Democrats have talked about old age insurance. You paid (that line on your paycheck marked FICA—which stands for the Federal Insurance Contributions Act) into the Federal Old-Age and Survivors Insurance Trust Fund.  Insurance —you pay in all those years, and when you turn 65 you start receiving the benefits to which you are entitled from the Trust Fund, the “Lock-Box.”

I’m the president of the United States, and I want to make sure that I am not engaging in scare tactics.  And I’ve tried to be responsible and somewhat restrained so that folks don’t get spooked.

So said President Obama in his June 29 debt ceiling press conference. Only two weeks later, a CBS news anchor asked Obama whether he could “tell the folks at home that no matter what happens, the Social security checks are gonna go out on August 3?” President Obama replied that whether it was Social Security checks, veterans’ checks or disability checks:

I cannot guarantee that those checks go out on August 3 if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it.

What President Obama made clear is that, just as Conservatives have been saying for years, there is no lock-box, and no Trust Fund.  Benefits are paid from current payroll tax collections.  The “Trust Fund” contains IOUs from the government which has spent the money supposedly in the trust fund and written IOUs to itself.

Social Security was based on the idea of a growing population, where there would always be more people in succeeding generations to pay for the smaller generations who were retiring.  A Ponzi Scheme.  The Baby Boom generation was one of those unknown unknowns.  Their parents, who had grown up in the Great Depression and gone to war, and come back to a peaceful, booming America, wanted children.  After what they had been through the new world looked promising and hopeful.  Who knew that everyone else had the same idea? So that generation so welcomed and so celebrated brought with them all sorts of problems.  And they got all excited about women’s rights and women’s careers, and weren’t much interested in having lots of children.

Well, there is more than enough in the Treasury to send out the Social Security checks, and the veterans checks and whatever else is necessary. But they need to cut back, way back, on the spending.  Our problem is not enough income, but too much outgo.  The debate about the debt limit has been confused by Obama’s inclination to refer to “revenues” (taxes) and “investments” (spending). He talks about “reducing the spending in the tax code” (raising taxes) and of “further improving Medicare” (cutting Medicare more) by further empowering the Independent Payment Advisory Board — those 15 unaccountable bureaucrats who will decide what Medicare will pay for.

He did it.  He tried to scare the old folks for political purposes. He exposed the fabled Trust Fund and the Lock Box. And he thinks that ordinary people are paying so little attention that they won’t know or understand the debate.  I think he’s wrong on that one too.

In 1940 — 222,488 beneficiaries received $35,000,000.
In 1950 — 3,477,243 beneficiaries received $961,000,000.
In 1960 — 14, 844,589 beneficiaries received $11,245,000,000.
In 1970 — 26,228,629 beneficiaries received $31,863,000,000.
In 1980 — 35,584,955 beneficiaries received $120,511, 000,000.
In 1990 — 39,832,125 beneficiaries received $247,796,000,000.
In 2000 —45,414,794 beneficiaries received $407,644,000,000.
In 2008 — 50,898,244 beneficiaries received $615,344,000,000.

The first of the baby boomers, born in 1945,  reached 65 last year. Their numbers will increase until the peak year of 2024, when numbers will begin to decline until 2030, when we reach the baby bust. It’s simple demographics.

Democrats Cheer at their Own Obstructionism by The Elephant's Child

George W. Bush developed a cautious plan for rescuing Social Security, by allowing people to — if they chose — to invest a small portion of their FICA payments, which would probably bring a higher return than Social Security would.  Democrats, with their usual inability to grasp basic economics, shrieked that Bush was trying to take Social Security away from Granny, and shot down the whole idea.

Social Security Is in Far Worse Shape Than You Think
Social Security Disability Benefits Unsustainable

George W. Bush also called for reform of Fannie Mae and Freddie Mac seventeen times in 2008 alone.  Democrats in Congress insisted that the giant government sponsored enterprises (GSEs), who feature so prominently in any account of the causes of the financial crisis, were in fine shape, and needed no reform.  They just needed to loan more money to more unqualified homebuyers to increase homeownership.  Democrats  enthusiastically voted down any reform effort.

Did You Know that Bush Called for Reform 17 Times in 2008  Alone?

Incompetent, irresponsible and impossibly partisan. It’s like living in a dysfunctional family where the mom is a shopaholic and kleptomaniac, and the dad keeps trying to restrain her and keep her out of jail.  And of course Dad is accused of being mean.  Go Figure!

Obama’s “New” Politics by American Elephant

…sound an awful lot like the same old Democrat lies and fear-mongering:

Obama to Seniors: McCain Will Take Your Social Security Away

Still squandering the opportunity to fix Social Security and make retirement better for Americans in order to demagogue the issue, scare voters, and keep them dependent on big government, and thus Democrats.

Can someone remind me again, why we aren’t supposed to call them evil?

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