People on the right who want to cut Social Security will always make a fiscal argument for doing so, talking about how it no longer pays for itself. They will do so no matter where the payroll contributions are set, and they would do so even if they remained untouched. Meanwhile, people on the left who want to save Social Security will scream bloody murder any time anybody suggests even something as small as raising the retirement age in 50 years’ time. Trying to get these two camps to come to agreement on anything will always be impossible. And I fail to see how adding the general fund to the payroll tax as a contributor to the Social Security trust fund is going to change that dynamic.
Mike Konczal reckons that we would be better off, politically, with a tax rebate out of the general fund rather than a reduction in payroll withholding. But that ignores the behavioral economics of the reduction in the withholding tax: people are more likely to spend a relatively invisible increase in their take-home pay, and they’re more likely to save, or deleverage, with a one-off rebate check from the government.
The debate, in a year’s time, about whether we should let the payroll-tax cut expire is going to be a fascinating one to watch. But I don’t think it’s going to have much if any effect on the future of Social Security.
But go ahead blame Obama for delivering the final blow to the end of Social Security. It gets so much accomplished...
I am Frank Chow and I approved this message