I did some math:
In 2011, Obama cut the percentage of FICA deductions on every employee. The EMPLOYER paid the old, full amount of 6.2%
Let’s say that there are 100 million people working in the USA.
Let’s say they are making only $10 an hour—40 hours a week and 52 weeks a year.
That is 2040 hours a year, times $10 per hour, an earnings of $20,400.00 annually per worker.
For 100 million workers, that is a total of $2,040,000,000,000.00==2 Trillion, 40 Billion dollars gross earnings.
Current 2011 reduction at 2% for the worker, has created a shortfall into Social Security funds of $40,800,000,000.00 40 Billion, 800 million dollars.
This is at a rate of only $10 an hour.
Millions of people earn more than $20,400 annually in this country and thousands earn well above $250,000. FICA deductions cut off at just over $100,000 of gross earnings per employee.
Now, Obama wants to raise the cut in FICA tax deductions to 3.1% for the employee AND 3.1% for the EMPLOYER both.
That totals 6.2% combined.
Using the same 100 million workers & the same annual earnings of $20,400.00 per person, that cut of FICA deductions will amount to $126,480,000,000.00 126 BILLION, 800 MILLION less into Social Security.
In 2011, Social Security went into NEGATIVE position: meaning that more money was already being paid out than was going into the account.
This action for 2012 on the part of Obama would move that shortfall up 3.1 times the shortfall of 2011.
This is a very conservative calculation of such shortfall, since I only used a wage of $10 per hour, barely above the minimum wage.
Such actions will collapse Social Security in a matter of months—by the time November 2012 gets here, the system will be on the ropes.
Current workers also need to realize that every dollar less they pay into the system is less money that they will get when they retire.
Obama is destroying another part of the American system.
This increase in the FICA cut will only accelerate the whole collapse.
“using...annual earnings of $20,400.00 per person, that cut of FICA deductions will amount to ... 126 BILLION, 800 MILLION less into Social Security.”
Pretty Good conservative calculation. And interesting.
Kudlow did a segment with Oklahoma Senator Coburn yesterday or the day before. Coburn estimated that the resulting shortfall to Social security “trust fund” would be 330 billion from the worker and employer FICA contributions. This is double your estimated shortfall, but , I believe Coburn’s based his result on $40,000 average worker salary.