Obama: Gut Social Security Now, Don't Wait Till The Election

[Sirius]

Obama: Gut Social Security Now, Don't Wait Till The Election

Incredible that a Democrat would propose loud and clear that our Social Security system should be gutted starting immediately to get an up-tick, illusory as it may turn out to be, in GDP just before the next election. But President Obama's proposal to cut the employee portion of our payroll taxes in half and also cut payroll-taxes for small businesses will do just that.

The two measures would remove $240 billion from our Social Security system during 2012 and hand it over to consumers and businesses so that they can do some magic with it.

Will that nudge up GDP? Not by much. The problem is that the money we consumers spend goes into products that are to a great extent imported. Hence, our trade deficit will rise. This has already happened with the current payroll-tax cut. Since January, it has given consumers about $80 billion in additional spending money. And true: It nudged up consumer spending.

At the same time, our trade deficit, particularly with China, skyrocketed. YTD through July, it hit $433 billion. Same period last year: $330 billion. The $103 billion increase is largely attributable to rising consumer spending (including the impact of higher prices). A humongous trade deficit like this, aside from being a terrible drag our economy, is also subtracted from GDP (GDP = Consumption + Investment + Government Spending + Exports – Imports). And true again: GDP so far this year has barely budged though consumer spending is up.

Will it create jobs? Well, let's look at our current payroll-tax cut. And we see that a few jobs are being created in the U.S., but not many, and none last month. Meanwhile, lots of jobs are being created in China. Coincidence? Maybe not. This is the result of many years of corporate efforts to offshore production and services to countries where labor is cheaper (15.4 Million Missing Jobs). So the impact on job creation, thanks again to our trade deficit problem, will be minor.

So, what does cutting payroll taxes accomplish? It reduces the flow of money into the Social Security system by $240 billion a year.

And no one can ever let a payroll-tax cut of this magnitude expire. It would be perceived as a huge tax increase. It's already happening. The current one is supposed to expire by the end of December. But heck no! Instead, an even bigger one is being proposed to take its place. So this won't be a "temporary" cut. It'll be permanent. At least until the money is gone—maybe in a decade or so if disbursements stay at current levels.

Presidential candidate Rick Perry, who called Social Security a Ponzi scheme and monstrous lie, and who wants to unwind it, couldn't have come up with a more effective plan to put his campaign rhetoric into action.

Meanwhile, in another corner of Washington, a bipartisan group of lawmakers is hunkering down, trying to figure our how to make politically feasible and perhaps sensible adjustments to our entitlement programs, including Social Security, ironically, to keep them functional for a few more decades. Makes you wonder if these people ever talk to each other.

For some people, the $2.6 trillion Trust Fund doesn't exist, and thus the whole issue would be moot. Well, for Wall Street bankers it existed enough to where they were dying to get their hands on it when President Bush wanted to privatize it. Remember? At the time, I had dinner with some of them, and so giddy were they about the prospects of all this money flowing their way that they were barely able to eat. In fact, the Trust Fund is loaded with treasuries, like any wealthy and conservative investor. Whether or not these treasuries will be worth anything in the future is another question, but not just for the Trust Fund.

Wolf Richter

LINK :

Edited September 13, 2011 by Sirius

[wookie]

Your post is absurd. I'm not a fan of Obama at all. I think he is a dismal failure, but he did not ever say gut social security.

[blueblueparadise]

I believe in repaying what I borrow. Why don't the committees or whomever borrowed from Social Security PAY IT BACK! That would clear up the whole situation! It is not a Ponzi scheme. It was set up to assist people in their retirement years. It is not an entitlement. It was set up for those who PAID INTO the system! Let's get it back to what it was set up to be!

[len]

I believe in repaying what I borrow. Why don't the committees or whomever borrowed from Social Security PAY IT BACK! That would clear up the whole situation! It is not a Ponzi scheme. It was set up to assist people in their retirement years. It is not an entitlement. It was set up for those who PAID INTO the system! Let's get it back to what it was set up to be!

Unfortunately it is a PONZI scheme now since the lawmakers spend the collected money in the general fund; that is the problem. If the money was kept in a separate account and spent only on Medicare there might be a surplus. The greedy Washington legislature; looking for more money to spend, steal from this income stream. It has become a Ponzi scheme because there are more baby boomers qualifying for SS benefits than workers paying into the fund.

Couple this with all the unemployment and proposed SS tax cuts and soon it will fall like the house of cards that it has become.

The only thing I can figure is B.O. thinks his new healthcare will gain traction if Medicare fails......who really knows.

[tandy]

Sirius...good post and wookie, Sirius didn't write the article just posted it but the author did not say Obama said he would gut it...he did insinuate it but it doesn't matter either way, the facts are still facts and the dumbasses (retarded donkeys) in Dee Cee have run our country and her wealth in the ground....and continue to while we argue over who is at fault...in the meantime, we slip further into a bottomless cesspool with no intelligent solution offered by any of the Beltline goons. just my worthless opinion!

BlueBlueParadise...agree 100%