Skip to main content

View Diary: The President Agreed With Mitt Romney on Social Security in the Debate (264 comments)

Comment Preferences

  •  If Social Security had been changed to be paid (0+ / 0-)

    out of the general fund instead of keeping it as an insurance program, then we would be having a very different discussion. One in which we could not say that SS does not contribute to the deficit, but instead would be one of the driving contributions to the deficit. If FICA taxes had not been raised and SS were funded by the general fund, then income taxes would have had to be increased. While that might have been a more progressive tax than FICA, the problems of continuing to get adequate funding from the general fund would make a very  complicated political problem. It would have made Social Security similar to Medicaid funding and on a more dicey footing.

    The big increase in FICA taxes then was because they waited until the fund was inadequate to pay current beneficiaries. The crisis was brought on by high inflation (in which prices went up almost 100% during the '70's and since COLA was added during that time, Social Security benefits increased to keep up with inflation) and high unemployment so that there was not enough revenue coming in. If they had addressed the problem earlier, the increase in FICA could have been less.

    As best as I can figure, Social security benefit payments have gone up about 450% from 1975 until now also so higher than doubling the tax.

    There were other increases in benefits also in the 1983 act. Gender bias was eliminated and there were increased benefits to widows and disabled people. Federal workers (including Congress) and employees of nonprofit organizations were mandated to be covered and taxed under Social Security.

    You can't scare me, I'm sticking to the Union - Woody Guthrie

    by sewaneepat on Fri Oct 05, 2012 at 05:25:55 AM PDT

    [ Parent ]

    •  Please understand (2+ / 0-)
      Recommended by:
      LaEscapee, priceman

      The budget doesn't have to balanced as long as we're saving money in the private sector and importing more than we're exporting. In fact, we need a deficit as large as the absolute value of the amount the private sector saves and the trade deficit, because if we don't have deficits that large then we have less than a full employment budget. So, to have full employment with a deficit less than this sum, we must have the private sector increasing its debt.

      Everything I've just said is a consequence of a well known macroeconomic identity. If Governments try to hold down the deficit deliberately, then either savings or the trade deficit or both must be reduced. If we reduce the trade deficit we are giving up real wealth. If we reduce savings then we're getting poorer, at least collectively, and perhaps even going into debt to a greater extent than we have been.

      So get over it! Until the US exports more than it imports, it will hurt our economy to balance the budget. It is austerity! It will cost jobs. Obama's deficits are not too large. They are too small. Clinton's surpluses were not good. They were bad. They caused a mild recession at the end of his term and the beginning of Bush's. To maintain economic growth during his surplus years, Greenspan had to throw a big debt party, the full effects of which weren't felt until the crash of 2008, because he and Benanke continued the party until then.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site