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      Everyone remember the Panama papers? A leak of bank records showing that the ultra-rich are hiding massive wealth, tax-free and often breaking the law to do so? A rather weak set of laws designed to allow tax avoidance by rich people, at that. Found out the other day that the reporter who broke the Panama Papers story was killed by a car bomb. Coincidence, n […]
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Touching the 3rd Rail

It was former U.S. House Speaker Thomas “Tip” O’Neill who first called Social Security the “third rail of American politics,” and O’Neill did as much as anyone to make Social Security a deadly political issue.

But what happens if both legacy parties touch that rail together? Has it ever happened?

At Hullabaloo, Digby shared this link & story:

One More Nail In The Social Security Coffin

President Obama and the Republicans will say that the payroll tax holiday is all about stimulating the economy. But don’t be fooled. According to the Center for Budget and Policy Priorities,extending the Making Work Pay Tax Credit, is a much better, more targeted stimulus. See “Payroll Tax Holiday a Poor Stimulus Idea,” available at this link.

And the Making Work Pay Tax Credit poses no threat to Social Security. The innocent-sounding payroll tax holiday, on the other hand, will lead inexorably to killing Social Security. Let me explain:

Sixty members of the Senate are unwilling to raise taxes by 3 percent on the $250,000 and first dollar (and all those dollars earned above $250.001) of those making over $250,000 and by 1.6 percent more (for a total of 4.6 percent) on the $384,860 and first dollar {and all those dollars earned above $384,861) of those making over $384,860. They are even unwilling to spare everyone making less that one million dollars any increased taxes and simply raise taxes by 4.6 percent on the $1 million and first dollar (and all those dollars earned above $1,000,001 of the nation’s multimillionaires and billionaires. (I say multimillionaires because anyone with a net worth of a few million dollars is not making an annual income of over one million dollars.)

Given that unwillingness to raise taxes by less than a nickel on every dollar earned over $1 million, I find it unfathomable that a more conservative Congress, in two years, in an election year, will increase the payroll tax by 2 percent on the very first dollar, and every other dollar up to the cap, earned by virtually every single worker in the country. Consequently, I think we have to assume that the payroll tax holiday will be extended beyond the two years the president is proposing and quite likely could become permanent.

That means that the federal government will have to continue to transfer $120 billion to the Social Security trust funds each and every year even as it has to transfer more and more interest payments as the trust funds continue to grow and as interest rates return to more normal levels. Unless Congress acts to restore Social Security to solvency, the Treasury bonds held in trust will have to be redeemed, again on top of that new $120 billion transfer from the general fund, starting fifteen years from now, assuming Congress even continues to make the $120 billion every year before that point. These dollars will be competing with dollars for defense, environmental protection, education, school lunches, Food Stamps, Medicare, Medicaid, SSI, Pell grants for low income college students, and every other good and service financed by the federal government. (emphasis mine)

And Digby goes on to say,

“Meanwhile, they will argue that Social Security is now showing a much larger shortfall and they will use it to demand cuts in the program. (I realize that the president said that they will use general revenue to make up the shortfall, but I think we can comfortably predict that he will not be very effective at using what they will call an “accounting gimmick” to do that. Judd Gregg on just said on MSNBC right out that it’s coming from the Trust Fund, full stop. That will be their line whether it’s true or not.)

Now, I don’t know why she couldn’t see this coming.  As people in her own comments point out Obama signaled his willingness to mess with Social Security from pretty early in the primary fight.  Still, I’m happy to hear her publicizing this piece of the issue.  I’ve already been fighting over this with Facebook friends.  And the more links I can send them to the better.

So what do you think?  ARE the Democrats going to join hands with their Republican buddies and change the Social Security formula?  And if they do what’s left?  IS there even the cheapest excuse of a Democratic Party at that point.

And where do we go from there?