Re: Economic Stimulus Package Would Place Social Security Trust Fund in Deficit for First Time Ever Next Year

mg wrote:

On Jan 31, 9:14 am, Alan Lichtenstein <a...@xxxxxxxxx> wrote:

mg wrote:

On Jan 30, 5:27 pm, Sordo™<sordo™@prolefeeding.org> wrote:

Economic Stimulus Package Would Place Social Security Trust Fund in
Deficit for First Time Ever Next Year

http://sev.prnewswire.com/publishing-information-services/20090129/DC...

Only $57 Billion in Surplus Forecast for 2010, But $80.8 Billion Needed
for Stimulus Plan's Payroll Credit

WASHINGTON, Jan. 29 /PRNewswire-USNewswire/ -- The Congressional
economic stimulus plan would place the Social Security Trust Fund into
deficit for the first time ever next year, if the current economic
stimulus package is passed by both Houses of Congress.

Social Security is funded by payroll taxes that employees and their
employers pay into the system. Money that comes into the Social Security
Trust Fund is used to pay the Social Security checks retirees receive
each month, and since the creation of the Trust Fund in 1983, the
program has always had more money coming in than going out.

However, that may change as soon as next year, due to a proposed
refundable payroll tax credit which would offer workers a refund on
their portion of Social Security taxes, meaning there would be
insufficient cash to pay benefits. The $145.3 billion refundable payroll
tax credit proposal would give individual workers up to $500 and couples
up to $1,000.

According to the 2008 Social Security Trustees Report, the estimated
surplus under "high cost," or bad economic conditions, is as follows:

Year Social Security Trust *Payroll Credit Costs,
Fund Projected Surplus Proposed Legislation
(Billions) (Billions)
2009 $54 $24
2010 $57 $80.8
2011 $43 $37
2012 $26
2013 $5

* Source: Joint Committee on Taxation

"A sufficiently funded Social Security Trust Fund is critical in
ensuring that seniors don't have to endure benefits cuts," said Daniel
O'Connell, chairman of The Senior Citizens League. "Although we
recognize the economy is in bad shape, we don't think putting the Trust
Fund into the red is a responsible response."

The Senior Citizens League is advocating for any decrease in payroll
taxes to be taken from the general treasury, not the Social Security
Trust Fund.

With 1.2 million supporters, The Senior Citizens League
(www.SeniorsLeague.org) is one of the nation's largest nonpartisan
seniors groups. The Senior Citizens League is a proud affiliate of The
Retired Enlisted Association.
Website:http://www.seniorsleague.org//

I've read some articles where some Republicans are suggesting a
payroll tax holiday, but I haven't seen any evidence that Democrats
support it.

Again, the article may ASSUME that the refund is coming out of FICA
revenues and NOT from the General Account. More likely, the refundable
credit will come from the General Obligation Budget and NOT from FICA,
thus taking the refund out of a different pot, and not endangering
Social Security. The article doesn't say, and I have seen no
particulars as to the respective funds from which such a 'refundable
payroll tax credit' may come.

Granted, it's only bookkeeping, as the Government is the final
responsible entity for any deficit, but at least on the accounting, if
the refund doesn't come out of Social Security Revenues, but out of
General obligations backed by Treasury debt, then the fund is still solvent.

However, I do agree that the issue is moot, as the Government has spend
the surplus anyway, and this is only a paper exercise.


Politically speaking, I think it makes a huge difference because if
the Republicans can find a way to draw down the Social Security
surplus, it gives them more ammunition to try to kill the program.
Also, if they take it out of Social Security funds that means they
will have to figure out a way for workers to pay for it eventually.
With general funds, I think the eventual cure for the national debt
will wind up being inflation, or maybe a tax increase on those at the
top end of the tax bracket (and inflation).

Well, you're right about the political conjecture. As long as there are dimwits like Sheila, I suppose you do have a point. And if there is a real deficit that has to be made up, it will be very difficult to determine how much the taxpayers at large must fund, or the contributors to FICA must fund, since the surplus has long been spent by the Government, making all taxpayers responsible.
.

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