The Jobs Bill: Pretending to Fund Social Security
The President’s latest “jobs” proposal would extend and deepen cuts in the Social Security payroll tax. This policy essentially requires that income taxes (rather than payroll taxes) must be raised in the future, to redeem Social Security Trust Fund debt and to pay benefits. This would convert Social Security into something more like welfare, for which the funding is provided – not by contributions from all covered workers – but preferentially from those subject to the income tax. Choking off Social Security’s tax revenue and issuing debt in its place is a terribly short-sighted policy, both for Social Security and for the general budget. Social Security faces challenges enough without being the source of funds for yet another round of fiscal stimulus.