2012.02.22
Gilley: A wake-up call
Is Washington ready to kill Social Security?
By Wade Gilley
Gilley, a retired university president, former secretary of education in Virginia and an appointee of President Ronald Reagan, lives in Reston.
Republicans in the U.S. House of Representative have now joined President Barack Obama and the Senate in supporting a continuation of the so-called payroll tax cut.
They have extended for another year the so-called payroll tax on individuals at a one-year cost of $100 billion to the Social Security Trust Fund despite strong objections from some leaders in both parties.
For years we listened to, mostly election year, chatter about the GOP wanting to end Medicare and Social Security. The previous 3-4 months it’s been B-B-B-Barry and the Dems championing the defunding of these two programs. Call the WHITEHOUSE and tell us what that $40 a pay period would mean to you.
Remember the Paul Ryan commercial pushing Gramma over the cliff in her wheelchair? That was in response to Ryan’s long term budget plans reining in federal spending and making programs like SS and medicare more solvent.
When the left worsens the solvency of programs like Medicare and SS, when the Obama administration, once again, puts one group against the other, the political pundits have a hard time finding their voice.
Comment by BUD — February 22, 2012 @ 7:14 am
I don’t think the rage against “entitlements” has been election year chatter in the least. Ryan’s “budget” put in on paper. Ending the Social Security and Medicare programs as we know them has been the TP/GOP agenda for a long time. They hated it then, and they hate it now. They don’t like being forced to pay a minimum wage to workers, pay matching FICA for workers or to pay taxes. We get it already!
There is no doubt that the “payroll tax cut” has to be done after this year, workers and employers are the backbone of the SS/Medicare program and we have to do our part. but the bigger issue for the economy and our psyche is the end of the majority of the “Bush tax cuts” on the largest incomes and other tax reforms that will allow us to pay off all of our “IOU’s”.
Pretending people who live to be 95-100 have “paid into” what they will get out of Social Security, long ago became a meme. It is no longer insurance (if it ever was) that you paid for, but a program you paid into for the generation of retirees before you. Add in the cost of Medicare and retirees do not even come close to paying for themselves and neither does the PR tax deduct when it is taken away. It will have to become, means tested at the very least.
Blaming Obama and the Dems for handling the economic crash and residuals as they have is pretty cheeky from the folks who helped us get to that crash in the first place, but there we are.
Once again, I think America is smart enough to distinguish and I think we can fix all of this if we can get the tax reform, war heads and spending reforms needed. Frankly none of which is on the horizon from Congress like the ones we have had recently.
Comment by Sandi Saunders — February 22, 2012 @ 8:08 am
You would think someone with Mr. Gilley’s background would know that there has been reduction in the money going into the SSN Trust as the general fund is reimbursing all reductions in taxes collected. This is a non-issue.
Comment by Richard J Beason, CPA — February 22, 2012 @ 9:46 am
“but the bigger issue for the economy and our psyche(?) is the end of the majority of the “Bush tax cuts” on the largest incomes and other tax reforms that will allow us to pay off all our IOUs.
The old rallying call of “Do it for the children” has been replaced by “Win one for the Psyche!” I like it.
How is it these are still referred to as Bush tax cuts when B-B-B- Barry and the dems voted to keep them going in Dec 2010? How is it that these taxcuts on the rich, when eliminated and generating revenue(in theory cuz it aint gonna happen)of $70B/yr will alow us to “pay off all our IOUs?” Interest on our debt is approaching $500 B/yr.
Comment by BUD — February 22, 2012 @ 9:48 am
4. BUD – no one ever indicated it would. It is but one part of making the tax code more fair.
Comment by Richard J Beason, CPA — February 22, 2012 @ 12:46 pm
“In psychology the psyche ( /ˈsaɪkiː/) is the totality of the human mind, conscious and unconscious.”
http://en.wikipedia.org/wiki/Psyche_(psychology)
IDK, but I guess for the same reason Clinton’s DADT and Bush’ NCLB were called that after they were gone? Just a guess.
It will pay off our IOU’s the same way you climb a mountain, one step at a time. Were you expecting us to win the lottery?
What right wing site started the “B-B-B- Barry and the dems”?
Comment by Sandi Saunders — February 22, 2012 @ 12:48 pm
#5..Richard..Sandi just said so in the 2nd paragraph of her post #2…that’s why I asked how that would happen.
Sandi…How would an extra $70B a year pay off an IOU with $500B in annual interest?… “CUZ I SAID SO!!!
I know of no right wing site coining B-B-B-Barry and the dems.
Comment by BUD — February 22, 2012 @ 1:35 pm
What does B-B-B-Barry mean??
Comment by Scott M. — February 22, 2012 @ 5:42 pm
I never said it would do it all at once BUD! If those cuts are repealed, the tax structure fixed and the money applied to the debt we could pay it down. Is there another way? What way pays it all off at once?
Well if “B-B-B- Barry and the dems” is an original, it was great! I am assuming it is a play on “B-B-B-Bennie and the Jets”.
Comment by Sandi Saunders — February 22, 2012 @ 6:40 pm
Wade Gilley came to the correct conclusion (i.e., that the extension of the payroll tax holiday through 2012 was a mistake), but used faulty logic to get there.
Richard Beason is correct in #3. The US government is back-filling lost Social Security revenues with funds from general revenue: http://www.ssa.gov/oact/progdata/taxRates.html. See footnote (c).
Unfortunately, this is not without consequence. To back-fill, the government had to borrow an additional $100 billion, increasing the estimated 2012 deficit from $1.2 billion to $1.3 billion. This is additional money that will be lent to the government by China and the banks, and will have to be repaid by future taxpayers. With interest.
And if you’re wondering why banks aren’t bothering to loan to businesses or potential homeowners, now you know. Why bother with risky and time-consuming business loans or mortgages when you can buy T-bills quick and risk-free? The government seems to have unlimited appetite for borrowed money, and it’s sucking up money that could have been lent elsewhere.
Comment by Brian Lindholm — February 22, 2012 @ 7:24 pm
#9..you would be c-c-c-correct….
thankfully, I’ll give it a rest.
Comment by BUD — February 23, 2012 @ 7:00 am
11 – so, in other words, this is all a big shell game…just like nearly everything in DC these days…
Comment by The Other Rick — February 23, 2012 @ 7:22 am
@12 TOR, not only is it a shell game, but in my opinion, they don’t understand the rules!
I doubt sincerely most of our legislators have a clue about economics or capitalism, or much of anything else. They have to spend their time trying to get re-elected and schmoozing. Few of them (I’m assuming here!) have advanced degrees (being a lawyer doesn’t count as an advanced degree).
Always remember! Being elected DOESN’T mean you’re smart. I was going to say it simply means you’re popular but that isn’t true either. To get elected, all you need are more votes than the other person.
We are in deep doo-doo!
Comment by Scott M. — February 23, 2012 @ 8:02 am
“Being elected DOESN’T mean you’re smart.” AMEN 4!
I agree we are in some high weeds and being lead by people without clue, compass or even conscience to some extent.
The bottom line remains, we did not get here overnight or even over a Presidential term and we will get out of here even slower. The decisions required are hard, mainly in that they will require people to “buck the party line” and there are not many people who will do that, certainly not enough or we would already be making some of the changes needed. Suffering, and I do not believe it can be done without it, has to be shared and so does effort.
As long as we elect people with religious or wealth protecting agendas, we will remain on this trajectory. Closed minds cannot lead.
Comment by Sandi Saunders — February 23, 2012 @ 8:51 am
DC is full of shell games.
For example, the Small Business Administration recently changed the definition for some business types to be considered small businesses from $4.5M average revenue over the past three years to $14M. Said differently, a business that has averaged averaged less than $14M over the leas three years is now considered “small”.
So who cares, right?
Well, the $12M business can now compete with the same status as the $2M business, but the bigger “small” business is already better positioned in terms of manpower and other resources to respond to small business set-asides (which should be abolished anyway, but that’s a different topic), which will have the impact of crowding out the truly small businesses.
But the CPUSA/Obama Administration can now claim to have helped create small businesses and they can also claim to have increased opportunities for small businesses! Neat, huh!
A shell game! Figures lie, and liars figure.
Comment by 89Hoo — February 23, 2012 @ 9:13 am
89Hoo, you can blame Obama but it was the US Chamber of Commerce that sold out small business decades ago. A business designation of “small business” is virtually meaningless in many ways. The “small” companies that chafed at losing that designation if they made more revenue than the standard allowed wanted this change but in several areas small business has been competing with big business for a long time. 50 employees and 10 million should not have to compete with 1000 employees and 100 million in revenue, but it has been the norm for some of us for a long time.
When the economy wanes (or worse, like now, tanks), those big boys come and take work from the true small business without a whisper of interference. It may be new for your industry, but it has been that way for a while for some others.
The Chamber does not want to fight them and the best the government can offer is the SWaM Certification to give you a leg up on contracts that call for an actual certified small business which is still stiff competition. If one is not specified, it is absolutely cut throat.
“After receiving numerous public comments to the proposed rule published in The Federal Register on March 16, 2011, the SBA determined that increasing the size standards in these industries:
will enable more small businesses to retain their small business status; and
will give federal agencies a larger selection of small businesses to choose from for small business procurement opportunities.”
http://www.sba.gov/about-sba-services/7367/46471
If only liars figuring was a new phenomenon. Money talks, it always has.
Comment by Sandi Saunders — February 23, 2012 @ 10:36 am
The CPUSA? Really?
Comment by Sandi Saunders — February 23, 2012 @ 10:38 am
Sandi, I don’t blame Obama (at least not exclusively), but I’ll be stunned if he does not take advantage of it. As I said DC shell games have been a staple for years.
Comment by 89Hoo — February 23, 2012 @ 10:52 am
Precisely 89Hoo, “for years”. For centuries really. We were “ruled” by a monarchy, then an elected Congress and now, finally by a Plutocratic Wealth Industry. Make no mistake about it, both sides (and plenty of the middle) are willing to look the other way for enough money.
Our political structure demands money and the people with money demand service or results. Are we any different? I am willing to pay for what I want and so are they only on a much larger scale that is all. I can only have a vote, they can buy an entire politician (or more). Who is the most influential? We created this monster and fighting it back into submission will be more daunting than many can stomach.
Do you think we have a “welfare state” because pols like poor people? Do you think we have subsidies to industries drunk with profit because it is in our national interest? Do you think we interfere in other nations because they fascinate us? This is a conspiracy of epic proportions – whatever serves wealth is all that matters. From keeping the poor contained to mollifying victims to fighting wars for resources to paying to play.
Everyone knows the “zealots” who made us care for the elderly and infirm but no one seems to notice how we affected the world, shifted dynamics, made/unmade kings and propped up or destabilized countries, raped and pillaged resources, wreaked havoc with native financial institutions, prostituted our armies and denigrated the noble ideals of our founding, all in service of wealth.
Comment by Sandi Saunders — February 23, 2012 @ 11:09 am