Tuesday, February 22, 2005

Should we raise taxes for Social Security?

Economist Thomas Sowell has the following short and sweet observation about the wisdom in raising Social Security taxes:
Raising Social Security taxes today will not leave a dime more to pay pensions to future retirees. Right now there is more money coming into the system than is going out -- and the difference gets spent on other things. Higher taxes now would mean a bigger excess to be spent on other things, leaving nothing more for the future.
I've made mention of the so-called "surpluses" of the Clinton years. There was no such thing. Their "surplus" went like this:

Let's say that Congress projected in its budget that $500 billion would be collected in Social Security payroll taxes. Let's say that the actual amount collected was $900 billion. Did the extra $400 billion go into the mythical SS "Lockbox"? Hell no! Part of it went to plug the spending deficit of $300 billion. That left a budget "surplus" of $100 billion, right?

Wrong! The SS surplus was indeed real, but the budget "surplus" was not...because the extra money collected for SS should have gone into the SS "lockbox"! But since (a) Congress overspent the way it always did (and does) and saw the SS surplus funds as a way to plug the hole, and (b) Congress spends the SS money faster than Domino's get the pizza to your house, there is no "lockbox"...and therefore, no "surplus"! But Congress (members of both parties) wanted to be able to go back during elections cycles to brag about the bang-up job they did in balancing the budget and even having money left over!

So, considering that Congress pissed away all SS surplus funds in order to further bloat government and buy votes, what makes a sane person believe that raising SS taxes would raise additional money for SS that would not be pissed away, too? Their track record isn't very flattering!

By the way, this is an indictment on both Republicans (who controlled the purse strings in the 1990's as well as today) and Democrats (who controlled the Oval Office for most of the 1990's)! Greed and powerlust know no political parties.