Posted on 02/22/2009 7:53:48 PM PST by rabscuttle385
BY JACKIE CALMES
WASHINGTON — President Obama is eager to seek a bipartisan solution to ensure the long-term solvency of Social Security, people who have spoken with him say, but he is running into opposition from his party’s left and from Democratic Congressional leaders who contend that his political capital would be better spent on health care and other priorities.
Mr. Obama considered announcing the formation of a Social Security task force at a White House “fiscal responsibility summit” that he will convene on Monday. But several Democrats said that idea had been shelved, partly because of objections from House and Senate leaders.
The president signaled in his campaign that he would support addressing the retirement system’s looming financing shortfall, in part by applying payroll taxes to incomes above $250,000. But that would ignite intense opposition from Republicans, especially with the economy deep in recession.
Liberal Democrats are already serving notice that they will be equally vehement in opposing any reductions in scheduled benefits for future retirees. But any solution, budget analysts said, must include a mix of both approaches, though current beneficiaries would see no change.
Despite the long-running partisan divide over benefits and taxes, the advocates for a compromise see an opportunity now given the fact that the stock markets’ slide has discredited the idea of carving private accounts from Social Security. Former President George W. Bush demanded such accounts as the centerpiece of any compromise, while Democrats and some Republicans were just as adamantly opposed, dooming his effort in 2005.
“The carve-out account is off the table,” said Senator Lindsey Graham, a South Carolina Republican who has long sought a deal.
(Excerpt) Read more at nytimes.com ...
This month, Mr. Obama unexpectedly approached Mr. Graham when he was at the White House to meet with Rahm Emanuel, Mr. Obama’s chief of staff. Mr. Graham, who was a vocal foe of Mr. Obama’s $787 billion stimulus plan, said in an interview: “I know he’s sincere about wanting to do something about entitlements generally, health care and Social Security. And I want to help him.”
Miss Lindsay is a weasel.
Grahamnesty alert!
Socialist weasels ping!
There’s only one, ONE, workable solution. Unfortunately it’s politically impossible right now. And that is to privatize the whole thing.
A case can be made that the government should force people to buy annuities, much as it forces drivers to buy car insurance. It’s not the strongest case in the world, but a debatable case can be made.
A much weaker case can be made that the government needs to sell its own annuities. You don’t see people saying the government needs to run its own car insurance business, do you? They mandate it, but leave it up to the market.
And no logical case can be made for the government requiring that the mandated annuities be purchased from the government, in the form of what we call Social Security.
Social Security is really three issues, with the argument in favor of each getting progressively weaker.
There will be substantial reductions in Social Security benefits. The only question is the form of the reductions, direct or indirect. Direct reductions are preferrable because they are at least predictable. Direct benefit reductions may involve increasing the retirement age, lowering the cost of living adjustment, means testing, and increasing taxes on benefits. Indirect reductions involve lower economic growth and inflation. Major increases in payroll taxes will lower economic growth. In addition, most of the money from tax increases will just increase government spending because whatever surplus is generated will be spent on other government programs.
Social Security is not sustainable because the payroll taxes to support the coming retirement of boomers have already been spent. Social Security, Medicare, federal pensions, state and local government pensions, Medicaid, and welfare for the coming waves of immigrants will explode over the US and world economy. The carnage will be widespread.
Obama wants to end the Iraqi war.
Obama wants to cut the budget deficit in half.
Obama wants to solve the social security insolvency problem.
Yada Yada Yada.
How come just because Obama says he wants something, this is supposed to signal some kind of new realignment of ideas in Washington?
Guess what? Bush wanted those things. Clinton wanted those things. Bush wanted those things. Reagan wanted those things. Just wanting them doesn’t make it happen. I once dated a woman who wanted a Tiffany bangle bracelet and a verifiable nuclear freeze for Christmas. In the end she didn’t get either...which goes to show you talk is cheap and Obama’s talk is cheaper.
Also, Social Security benefits are already partially taxable, using a rather complex scale. Many people are not even aware that they are being taxed on their SS benefits.
I am guessing that this is the method they will use, full taxation of Social Security benefits would be “progressive” and would be a type of “means test” with out calling it such.
I am not advocating this idea, it just seems to be coming, IMHO.
The rats have upped the ante with "Make Work Pay", another refundable tax credit to augment the EITC. The employer's share of the payroll taxes are still collected so the poor are still paying some payroll taxes. Social Security is heavily progressive in its benefit formulas so it already has a substantial welfare component even before the refundable tax credits.
I agree that full taxation of benefits is coming. That tax increase is almost a no brainer for the rats. The AARP may protest however. For boomers, taxation of benefits is means testing because payroll taxes are not tax exempt. Effectively, taxes have already been paid on employee payroll taxes. This situation smacks of double taxation.
Increased taxes on benefits are just putting a finger in the dike however. 80% of benefits are currently taxable for retirees with more than $32,000 of income (including Social Security). Taxation of the additional 20% will not yield much additional tax revenue especially with many poor seniors because of market reductions. The rats probably have much fatter targets in mind. I think the rats will confiscate 401Ks of wealthy taxpayers. The rats could apply a special windfall retirement wealth tax to 401Ks larger than some arbitrary threshold.
I hear that is what Democrat Sen. John Edwards does.
www.usretirementrevolution.com
You are right about John Edwards. The Wall Street Journal reported that the Democratic Vice presidential candidate, John Edwards, had saved roughly $750,000 one year by taking his $26,500,000 of law firm profits and paying roughly $400,000 of this to himself in salary and the remainder as a "dividend." I suspect that the rats will change the status of Subchapter S corporations in their tax bill next year. They know that many more will use subchapter S corporations to evade payroll taxes. The rats also will not hesitate to use the power of the audit on a good conservative like you. Unless you are extremely wealthy, the rats will find a way to collect payroll taxes on Subchapter S dividends.
Up until the financial crisis, I would have agreed with your sentiment about forced buying of annuities.
Who is one of the largest players in the annuities market?
AIG
What would have happened to those annuity holders if AIG had gone belly up?
It is incredible how poorly managed AIG was. They allowed one portion of their business ruin the entire company. Paulson had to send them train cars full of cash.
At this stage we can’t trust anyone (government, corporations, etc).
To that I would say “the financial sector has been one of the most, if not THE most highly-regulated sectors of the economy since the Great Depression. The facts on this speak for themselves, despite the hysterical, ignorant rantings of the Paul Krugmans of the world, about the odd trivial deregulatory law here and there. A regulated industry is a *protected* industry, in which the major players are protected from (hypothetical) small, nimble competitors by virtue of the higher cost of entry into the industry (the cost of complying with regulations, which entails hiring more and more legal experts, more implementation workers, etc, etc). This makes the companies in the industry less dynamic, more oligopolistic (consult an econ textbook for a description of oligopoly behavior). Add to that the implicit assumption throughout the financial industry that if things ever got really bad, the government would bail them out, AND add to that the government-created problem (excess growth of the monetary supply post-9/11, forced lending, etc.) of the housing bubble and the bad credit poison that has affected the entire world’s financial system, and you have a recipe for a serious mess.”
Yes, right now the concept of private retirement accounts doesn’t look so good, but the theory rests on the concept that the government won’t screw up the economy with forced lending, unstable monetary policy, etc. IOW it assumes economic stability, which ain’t that hard to achieve if only politicians would keep their mitts off.
And anyway, right now we’re in a deep recession, it’s a buyer’s market for stocks. After the recovery, many smart buyers now (and their clients) will have cleaned up.
I give King RINO Bush points for trying to push reform. Although he continued to waste his efforts on it long after it was clear it was DOA in the swamp. That was the beginning of the end for him.
No we see Obama’s solution. A tax hike!
“Despite the long-running partisan divide over benefits and taxes, the advocates for a compromise see an opportunity now given the fact that the stock markets’ slide has discredited the idea of carving private accounts from Social Security.”
What the ****(heck) is the compromise then? A smaller tax hike?
Courtesy of ThePeoplesCube.com
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Lindsey Ping