A new report is out on the long term health of Social Security. There's little change from last year's numbers, with the fund staying solvent through 2041, and a change in employee payroll deduction of less than 1% required to make the system solvent for at least 75 years.
The social security trust fund shows a 75 year actuarial deficit equal to 1.70 pct of taxable payroll, 0.26 percentage point smaller than last year's estimate.
Naturally, the media joined Republicans in calling this a grim report of a huge, looming crisis.
Senator Judd Gregg, Republican of New Hampshire, said the report showed the looming crisis in entitlement programs “is not a phony issue, as some Democrats have stated, but a very real problem that is on our doorstep.”
$3 trillion war bill over the next ten years? That's looking too far ahead. Severe sea level rise in two decades? Just a guess. Social Security problem in 2041? A very real problem that is on our doorstep.
But that's not how the Prince of Dumbness, Robert Novak, sees it. Rather than making very minor increases in the payroll tax that would fix Social Security, Novak's advice to McCain is to cut payroll tax to win friends.
A major strategist in John McCain's campaign was asked privately this week whether his candidate might propose cutting the payroll tax. "Yes," came the reply. "No problem. Not a big deal." He was wrong on both scores. Cutting the payroll tax, which funds Social Security, would not be easy but would offer a rich economic prize in this lean Republican year. ... Neither McCain nor his advisers seem to realize the value of the political prize that they can grasp.
Yes, the value of cutting off the flow of money to Social Security. That's sure to attract votes among the people who think Grandma thrives on a nice bowl of kibble. And what about the problem with meeting that gap in Social Security?
The perceived need to offset losses in payroll tax revenue stems from a belief that the Social Security trust fund must be replenished. The truth is that there is no such fund, and the heavy payroll tax revenue resulting from the Greenspan Commission's 1983 "reform" not only provides enough money for Social Security but funds other programs, as well.
That paragraph is such a masterpiece of condensed obfuscation and idiocy, that I'd like to present: Robert Novak, the annotated edition.
The perceived need to offset losses in payroll tax revenue stems from a belief that the Social Security trust fund must be replenished [There's this idea that people who have paid into Social Security expect to get something out]. The truth is that there is no such fund [But the fund is empty], and the heavy payroll tax revenue resulting from the Greenspan Commission's 1983 "reform" [despite a reform that would have kept it solvent for a century] not only provides enough money for Social Security but funds other programs, as well [because we've been paying for lots of things -- including Iraq -- using the money Social Security has brought in].
In Novakia, the fact that we've run the Social Security fund dry and are dependent on the influx of new funds to not only pay Social Security but fund other programs is a good thing. It means we can safely cut payroll taxes because that would just... immediately wreck Social Security and lots of other programs.
As part of the Democratic obsession with making a progressive tax system still more progressive and redistributing income, Obama actually would raise the $102,000 cap on the payroll tax, and his tax credit would not change payroll tax withholding for employees or employers. There is an open field for John McCain, if he has the wit and will to enter it.
So, Obama's solution is to raise the cap on high earners, bringing more money into Social Security and keeping it stable. Novak's suggestion is that McCain screw Social Security immediately.
It's an open field, Sen. McCain. Please take that ball and run, run like the wind!
