Lefty LAT columnist Michael Hiltzik gets one thing right in his column about Obama’s payroll tax cut extension.
…It’s because with every extension of the payroll tax holiday, which was first enacted in 2010, the prospect that Congress will ever restore the tax to its statutory 6.2% of covered income recedes a little bit further over the horizon. And that’s bad medicine for Social Security.
To be fair, thus far the payroll tax holiday hasn’t impaired Social Security’s fiscal resources one bit. By law, 100% of the cut must be compensated for by transfers from the general fund; those transfers have come to about $130 billion since 2010, covering the original “temporary” one-year holiday and a two-month extension passed late last year.
The new extension will require a further transfer ofÂ about $94 billion, according to the Congressional Budget Office.
First, the reason Obama chose this as a “stimulus” is because so many citizens do not pay taxes, so there’s no possible tax break to give them. You can get cheaper than free.
Hiltzik argues that the money the federal government must borrow to cover the loss of dollars into the trust fund will not impair Social Security’s fiscal resources.
This is fantasy. The Social Security trust fund is not a real asset — the excess money paid into SS was not invested to pay tomorrow’s seniors. It was spent. Gone.
The federal government owes SS all that money, but since the federal government has no savings, it can only honor that debt by taxing future generations or by borrowing.
Where did the “$130 billion in transfers since 2010” come from? Borrowed money.
Bernie Madoff sits in prison, while our pols party on.