Obama plan hastens the end of Social Security

 

While everyone likes paying lower taxes, working Americans should hold the applause.
This is not a government "savings."  It merely hastens the day that Social Security benefits will become unavailable to those same workers.
They used to say that there is no such thing as a temporary tax hike, that new taxes never go away.
In this new century, it's just the opposite: Congress enacts "temporary" tax cuts, but then can never muster the gumption to let them expire.
The Bush tax cuts enacted in 2001 and 2003 had a sunset provision that had them expiring in 2010.  But, last year they were renewed for another two years.
It is now long forgotten that 42 percent of the $783 billion Obama stimulus program wasn't spending at all, but tax breaks for individuals and businesses over the next 10 years.
That, apparently, was not enough to stimulate the economy so, in 2010, Obama proposed a one-year 2 percent cut in Social Security withholding taxes for employees to further stimulate the economy.
We can now see how well that is working. The national unemployment rate is stuck at 9 percent, employers are no longer hiring, the stock market is in retreat and the economy is slowing.
So tonight Obama will almost certainly propose renewing that tax cut, which diverts about $200 billion a year into the pockets of wage earners but out of the Social Security system.
There is even a rumor afoot that he will match that tax cut with a 2 percent reduction of the employer side of the Social Security withholding tax.
Does anyone seriously believe that such temporary tax cuts will ever expire?
Perhaps Obama has secretly come around to the position held by many Republicans, that Social Security is unsustainable and should be drastically curtailed or eliminated.
Last year, the Social Security Administration ended its longstanding practice of mailing benefit estimates to workers.
These were the annual statements that showed how much money workers had paid into Social Security over their working lives and how much they could expect to receive from it when they eventually retired.
The official explanation was to save money on printing and mailing. Still, one can't help but wonder if the mailings were ended because they set an expectation that the government has no intention of fulfilling.
At this point, most Americans are simply left wondering what to believe.
Politicians say they are committed to preserving Social Security, then they turn around and vote to deprive the program of funding.
It is the classic Washington switcheroo: claiming to giving a tax break with one hand while taking it away with the other.
Some economists say the payroll tax cut does little to stimulate the economy and will actually have the opposite effect.
As more older workers come to believe they will not receive Social Security benefits, they will increase their retirement savings, having the opposite of the intended effect, even less short-term consumer spending.
In the meantime, the real twin killers of economic recoveries — fear and uncertainty — abound.