MyDD :: Beware the Social Security/Tax Reform shell game

Beware the Social Security/Tax Reform shell game

by Steve in Sacto, Thu Jan 20, 2005 at 06:29:37 PM EST

The White House political game planners envisioned actually enacting Social Security "reform" this year, followed next year by an aggressively partisan, regressive tax reform dressed as "simplification" as their wedge for 2006 elections. This would enable them to continue to run as reformers who get things done against Democrats who only defend the status quo. It's a smart strategy to force the Dems to oppose "tax simplification" (by making it unpalatably regressive) and it might well work at the polls. However reality on the ground in Congress is quickly rendering this plan obsolete and I fear an even more sinister plan is being hatched by Bill Thomas (and Tom Delay?) in the House.

The obstacle the GOP faces in selling SS reform/privatization is the transparency of the program itself. Revenues in, payments out, its fiscal health are all tracked separately, openly for all to see. Transparency is not the GOP's friend. Now, as this article in the Washington Post indicates, Thomas and Rep. Jim McCrery (R-La.), chairman of the Ways and Means subcommittee on Social Security, are looking to merge Social Security reform with tax reform so as to eliminate SS transparency, with the following sinister possibilities:

More after the flip:

De-linking Social Security from the Payroll Tax -- The idea here is to bring Social Security revenues and expenditures into the general budget process, eliminating the shell game of surpluses, IOUs etc. There are a couple of obvious problems with de-linking Social Security from a dedicated funding. On a micro level it essentially eliminates the current formula whereby specified payments in to SS result in a guaranteed payment back at retirement. That payment in/benefit out link will be completely broken. On a macro level, de-linking a dedicated revenue stream makes it much easier to scale back benefits since there will no longer be a revenue side of the balance sheet for comparison. Of course, de-linking the payroll tax is only the first step toward...

Elimination of the Payroll Tax -- Or, more precisely, elimination of the employer portion of the payroll tax. With SS on budget financed from the general fund, the payroll tax itself become anachronistic. A new "tax simplification" to streamline how government revenues are generated would eliminate the payroll tax -- and with it, the eliminated employer 6.2% would necessarily have to be recouped by, you guessed it, general income taxes on wages. Of course, fat chance the 6.2% employer savings would pass through to wages. Finally, merging of SS into the general budget without dedicated revenues and defined benefits reopens...

Private Accounts to Replace Social Security -- Because expansion of private accounts would no be longer linked to payroll tax/SS revenues, private accounts could be greatly expanded without any direct link to harming SS. Naturally, once private accounts have been expanded there could then be a corresponding reduction in SS benefits. Josh Marshall notes in his analysis of the Post piece:

...Democratic Social Security mavens Sperling, Orszag and Emanuel, who say this new tack from Republicans is a good thing. They then go on to lay out the Democrats position. For them, it's private accounts so long as they're on top of Social Security rather than carved out from Social Security revenues.

Of course, in this brave new GOP world there is no more "on top of" or "carved out." Support for expansion of IRAs, 401ks, etc. separate and distinct from a separate and distinct Social Security program is not what the GOP has in mind.

Democrats Sperling, Orszag, Emanuel and all of us had better open our eyes. Defeat of Bush's original vision, though commendable, is only going to result in new fights over equally, or even more sinister, GOP initiatives. Beware of Bill Thomas's assistance in supposedly killing the Bush SS privatization plan, only to use tax reform as a means of enacting SS privatization anyway.

Tags: (all tags)

Permalink :: 3 Comments :: Post a Comment

Where are the wages? (none / 0)

Of course, we all will need fat raises, right now, to make up for all of this...

Where are they?

by ultraworld on Thu Jan 20, 2005 at 07:09:56 PM EST

We need to save more money too.. (none / 0)

We should set up nonprofit buying clubs to buy things in bulk from progressive suppliers, and negotiate the best prices, just like the HMOs do..

Otherwise, we will all be eating out of garbage cans in a few years...

by ultraworld on Thu Jan 20, 2005 at 07:33:50 PM EST
[ Parent ]

Some other ideas... (none / 0)

Dinner clubs.. where people can cook and eat together

Information sharing networks, to help us all get ahead in our jobs.. or to get them..

Working/living overseas..

Purchase decision information networks - so we can make buying decisions intelligently and stop supporting companies that kill or exploit us or other people without any sense of it's impact.

It looks like the future will be one in which less people work and more work is done by machines..

So then, one of the only remaining kinds of real people power will be held by the consumer...

If people decide to buy intelligently, they can reduce the impact of this class warfare the GOP is waging on us.

By saying NO to the mindless consumer culture of buy, buy, buy...

All totalitarian cultures try to isolate people from alternative structures.. its kind of like a dysfunctional abusive family that hides the abusing parent...and tries to marginalize any whistleblowers.. But in order to do that, the abusive bully structure needs to have control over the flow of information and money.

Fighting them is what they want, and they will win, because they have been obsessed by building structures of control for years while we were busy having normal lives...

We need to walk away from their shell game...as much as possible... We can't win at THEIR game, we aren't mean and dishonest enough, and they take advantage of this..

So we have to make another one...

The key is to create a voluntary alternative universe where abundance, rather than scarcity rules..

This is already happening in the world of open-source software..

See
http://www.gnu.org/philosophy/philosophy.html
http://www.eff.org/

It could happen elsewhere, in other arenas too.. We need to take control of our money, while we still have it.

In THEIR world in 20 years most of us will be unemployed.. unless we have MIT-level skills and the diplomas to prove it...

We need to build an alternative world where people are valued by the interests, goals and values they hold, rather than simply how much money they make or ability to kill they possess...

by ultraworld on Thu Jan 20, 2005 at 07:56:37 PM EST

You are not logged in.

In order to post a comment, you must be logged in. If you have a member account, please log in to comment.

If not, you can make an account right here. It's quick and free.