Now that we have proven beyond a shadow of a doubt that the Social Security ‘Trust Fund’ is fictional through and through (see Ponzi 1; Ponzi 2; and Ponzi 3), here is our proposal that should be passed immediately:
Cut all Social Security (OASDI) payroll taxes by 10% across-the-board tomorrow!
Why not? We are ‘over-collecting’ nowadays from the mandatory payroll tax side of the ledger more than we need to meet current Social Security obligations. That means more is being collected from both employees and corporations than necessary. And from sole proprietors, the generating nuclear core of small business and jobs, the percentage being pilfered is doubled.
We are not using those ‘surpluses’ to pay down the national debt as originally intended as a result of the 1983 Social Security Act. So why not return the excess amount of payroll taxes paid to their rightful ‘owners’ in the first place, the people and corporations who have been paying ‘too much’ since 1984?
Cutting OASDI payroll taxes by 10% would be an economic stimulus plan that would have an immediate positive impact on the economy. The first $1.7 trillion Obama stimulus package, soon to be followed by another inept second economic stimulus plan along the same order of magnitude, will take years, if ever, to make a difference.
Cutting the payroll tax by 10% on every worker will roughly eliminate the entire Social Security surplus between now and 2017. It will allow between $68 billion to $80 billion annually to be left in the pockets of workers and business to spend as they see fit, not the government. The five-year totals could be over $350 billion and the ten-year totals would approach the magical $1 trillion mark.
The 10-year figure is close to the Bush tax cuts of 2001 in magnitude. The only reason why this makes sense nowadays is because when compared to the monstrous Obama stimulus package(s) on the order of double trillions of dollars per year, cutting the payroll tax by 10% looks positively puny by comparison. Plus it would go to work immediately to inject some confidence and money back into the private sector.
It is a “fair” tax cut since everyone would receive something back based on their payroll tax participation. Such a payroll tax cut would be considered “progressive” since higher income wage-earners would receive the same percentage cut but would be limited in the actual amount since their payroll tax contribution is capped each year once they earn over $100,000 in income. No more speechifying or pontification by Robin Hood defenders on the left screaming about the ‘injustice’ of higher-income people getting big tax cuts while the poor underclass gets ‘nothing’.
But the main reason to cut payroll taxes by 10% is to eliminate whatever vestige is left over from the well-intentioned but flawed execution of the 1983 Social Security Act. The ‘surplus’ was part of a deal to get conservatives to support the acceleration of higher payroll taxes in the prospects of paying down the national debt in full by around the year 2000.
“The road to hell is paved with good intentions”. Never has this been more true than with the 1983 Social Security Act. Social Security was “saved” for a few more decades from insolvency, which “was a good thing” as Martha Stewart might say. But the national debt was supposed to have been paid down to zero, and it was not and that is a darned shame. This is a colossal collective failure on the part of Congress, the White House, the AARP and the American people that will be analyzed in abject horror and disgust by future historians and Americans.
So, the time has come to admit that it was a Capitol failure and return to the days when Social Security payroll tax income equaled Social Security payment outgo on an annual basis and leave it at that.
No one who is over the age of 66 today and currently receiving benefits will be affected by any future changes in Social Security taxes or spending that will be necessary to save the system around the year 2017, only 8 years from now (so this will not be your fight and you can please stay out of it). 2017 is the Doomsday when the ‘surplus’ completely evaporates and payments exceed payroll tax income once again, just as in 1983.
So hold onto your hats and wallets, ladies and gentleman…here comes the massive “Save Social Security Act of 2016!”….unless the “Save America First! Act of 2010” doesn’t have to happen first.