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The Senate’s Social Security/Medicare “bait and switch”

This week, the Senate will take up a bill concerning extending the reduction in the amount of taxes Americans pay to fund Social Security and Medicare.  The bill contemplates extension of the lower tax rate Democrats, at the urging of President Obama, put in place two years ago as a “temporary” measure to boost the economy. 

Of course, as we now know, it “boosted” nothing, while at the same time it did lower the revenue collected by two federal programs that are in serious financial difficulty.

The bill pending before the Senate is nothing more than another President Obama campaign issue, courtesy of Senator Harry Reid (D. Nv.).  It will never pass, but, before you “blame” the evil Republicans, you need to understand why the bill will never pass.

The announced plan is to “offset” the decreased revenues to Medicare and Social Security by a 3.25% surtax on millionaires.  As best I can tell, the Senate defines a “millionaire” as an individual actually earning $1 million a year.  This is unlike the President’s definition of “millionaire” which is an individual making more than $200,000 a year.

Digging down into the weeds of this bill, you learn that the revenue from the 3.25% surtax is not going to bolster Social Security and Medicare, but rather is being placed in “general revenues”, I suppose to be spent on who knows what. 

The Republicans will vote against this bill, as well they should.  But understand why.

Social Security and Medicare are still going broke, but will do so only faster if this bill passes.  The proposed surtax is not designed to offset anything, other than other government excessive spending.  Americans are still on the hook for massive Social Security and Medicare “entitlements” that we can’t begin to afford.

But, the bill’s certain defeat does make a wonderful campaign issue for the President…unless you understand what the bill actually says.

 

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63 Responses to "The Senate’s Social Security/Medicare “bait and switch”"

  1. Lynn says:

    I wonder if any elite University will take a poll to see if any dim-witted (my word –  dim-witted, unlike a Dims-witted) person who listens  to and reads only  MSM would know that Social Security and Medicare are still going broke? The ones I know keep telling me that is not until 2024, like that solves anything. LOL

    • Dimsdale says:

      Thanks!  I think….   ;-)

      • Lynn says:

        Oh you know I meant that as a compliment. Dim-witted people are socialists and Progressives. Dims-witted People want to take back our country and let it be “We the People” instead of We the Sheeple. Sorry, if there was  a misunderstanding, I just get tied up with my never-ending sentences and troubled syntax. No I did not say sin tax.

      • Dimsdale says:

        I was just teasing!

  2. Dimsdale says:

    Despite all the Democrat chicanery, the underlying admission by them is that lowering taxes boosts the economy!  Even though they are doing it to expand their class warfare mantra and steal more money from “the rich” via backdoor “offsets”, I find this public hypocrisy to be hilarious!

  3. Plainvillian says:

    Senators continue to lie.  Is there a single public institution one can trust?

  4. sammy22 says:

    Let me see if I have this right: lowering taxes is good  because it boosts the economy. However, the lower taxes dig a deeper deficit hole. What to do, what to do. Oh, I know: cut taxes AND cut spending. That will fix everything.

  5. sammy22 says:

    Great arithmetic! Welcome to a new math: 1+1=3…..

    • crystal4 says:

      As the republicans have been saying…if we want to continue the payroll tax cut for the middle class, we need to find spending cuts to offset them!!! Yeah!!
      Just like we found spending cuts to offset the tax break for the wealthy!!!
      Oh, wait….

      • Dimsdale says:

        Aside from the fact that it was Øbama that extended the so called Bush tax cuts, who proposed the payroll tax cuts for political reasons?  Øbama.  Who keeps telling us that if we return to the full 6.2% payroll tax ( 2% increase) “the typical middle-class family is going to see your taxes go up by $1,000 at the worst possible time.”  Hmmm.  But a return to higher tax rates for everyone with the elimination of the Bush tax cuts (read it: Øbama tax increase) is not detrimental to the taxpayer, or the economy?  Sounds like someone just wants to keep Bush in the game as a whipping boy, and using the “let the rich pay for the payroll tax cut” is yet another backdoor class warfare method to put in permanent tax increases, as the payroll tax cut fades away (probably on a Christmas Eve).
         
        I think the math goes like this: -1 (tax cuts) +4 (increased spending) = +3 (just a little less spending).  And since we can’t pay it, we borrow from the Chinese with interest (put another +4 in there).
         
        Offset tax cuts with less spending, not more taxes.

  6. Eric says:

    These noble public servants really know how to drive their poll numbers down.  Can’t they do anything without being slimy about it?  I have to fault the deems on this particular issue, but they all do this sort of thing.  I wish our Congressmen really were public servants instead of the self-centered arrogant money grubbers they really are!

  7. JBS says:

    Sing it: “It’s getting to smell a lot like election time, the smarmiest time of the year . . .”
    “Brought to you by your friends at the DNC.
                                                     It’s Political Theater at its best!
    Cast as the vile villains are none other than,
    those evil, rotten, child hating, candy stealing, bad air, bad water, bad food, bad attitude and thoroughly conservative, The ones liberals love to hate and  set up for a fall,
                                                 The Congressional Republicans!
    (catcalls, hisses and boos from the left)

    “Watch the antics as the Dems, featured in white hats, position the outmaneuvered and delusional entitlement killing, deficit reduction hawks to their just demise for the coronation and accumulation of our most generous, Mr. Hope and (spare) Change himself, our beloved <span…

  8. sammy22 says:

    It’s now clear what the Republicans want (at least Dims): cut taxes AND cut spending. And that is the “road to recovery”??

    • Dimsdale says:

      Yes.  And I am an independent (unenrolled up here) by the way.  Cut taxes and let people decide where their money is spent, and cut spending which is driving us off the economic cliff.  In neither case is this a 100% proposition, which is how it is usually portrayed in typical, Democrat reductio ad absurdum fashion.
       
      The alternative: keep spending, keep taxing, learn to speak Greek.  Spend, spend, spend, then trying to catch up with taxes, is no way to run a country.  Except into the ground.  Are you proposing that the Øbama method of throw money at a problem and print more to cover the difference is working?

  9. sammy22 says:

    The second para above is in typical, Republican reductio ad absurdum fashion. This is why the problems the country really faces are not being solved.

    • Dimsdale says:

      Only the “learn to speak Greek” part.  I reviewed every post of yours heare, and notice you have a dearth of solutions, resorting to asking questions, poking fun and pointing out “holes” in the statements of others.  How about answering a question or two or supporting a position?  It is too easy to be a devil’s advocate (giving you the benefit of the doubt).

  10. JBS says:

    What I read here is typical of a Democrat, criticize with out offering solid concrete examples of how to realign the country’s finances. Most individuals responding to the posts in this blog are concerned that the country is inextricably headed for a European, i.e. Greece, bankruptcy.
    Without reducing the growth of the federal deficit, curtailing some or all of the federal programs, Departments, Agencies, etc., this country is headed for sure financial doom. The United States can not keep spending at the rate that we are currently witnessing. Most here understand that the power of the government to tax its citizenry is finite. There is a diminishing rate of return that can be expected from any economy regarding its ability to shoulder a tax load. I know that we are near or at our capacity to be taxed. Without new growth in the private sector, the government will have less and less economy to tax, thus spending cannot continue. Borrow? At what point will the Chinese and other nations that hold our bonds say that we have borrowed up to our limit – they do have that right – and further credit is impossible. At what point will the private sector conclude that initiative, growing a business or launching a new one is is…

  11. sammy22 says:

    JBS you are just sermonizing, and you make assumptions about party affiliations. I said it before and say it again: the path to a solution to the fix we are in, is both a tax reform (which is at least fair) and spending cuts. What the Republicans keep hammering at is tax cuts period! There are Dems and Repubs in Congress and they cannot manage to come to a compromise.

    • crystal4 says:

      Well, not exactly true, Sammy…depends on who the tax cuts are for.
      Good ole Grover met with House Repubs yesterday and told them NOT to vote for the extension  of the payroll tax cut (an extra $1000/yr for a working family). He said that wasn’t raising taxes.

    • Dimsdale says:

      But you leave out the fact that the Democrats have had four years to do it their way: increasing spending (some we haven’t even seen yet) and raising taxes.
       
      When the payroll tax is viewed as what it truly is: a temporary tax cut (is there any other kind to Democrats?) to roll in permanent tax increases on the wealthy (for now, depending on the definition of “rich”) through the tact of “”how we will pay for the “temporary” tax””.  If spending weren’t out of control (and the SS “trust” fund hadn’t been raided), there would be no need for a means to “pay for it”.  Let’s see the Democrats make the payroll tax permanent.  After all, as Øbama and crystal say, it helps “working families”, right?  Note how that logic is never extended to the “Bush tax cuts”….

      • crystal4 says:

         
        First of all how do the Bush tax cuts help workng families???
        Secondly, you’re not addressing the question, just dispersing your same ole talking points.
        Why is eliminating tax cuts for the rich a tax increase and eliminating the payroll tax cut NOT a tax increase??? Because Grover says so???
        Congressional approval rating is at 9% now…how low can you go? the House Repubs have to be sweating it. If they go against Grover, he will use his PAC to smear whoever goes against him. If they keep going  along with him, their re-election chances are slim.
        Oh well, when you get in bed with the devil….

      • Dimsdale says:

        The Bush tax cuts cut working families (whatever that means) taxes too, just like the payroll tax reduction.  You labor under the misconception that only the rich get the Bush tax cuts; they get tax cuts in proportion to what they pay in taxes.  I don’t understand where you get “eliminating tax cuts for the rich a tax increase”.  Please link.
         
        Remember: Congress includes the Democrat controlled, do absolutely nothing Senate.  How’s that budget coming?
         
        As an aside, can you tell me when you went from the Koch brothers to Grover Nordquist?  Or do I have to consult the latest DU/Huffpo?  The Dems have their own “devil”….

  12. JBS says:

    Tax cuts would put more money into our pockets, our own money, right? BUT, there has to be cuts in the spending targeted and across the board.. Thus tax cuts and spending cuts. Painful, yes.    The current crop of politicians show no sign of being able to rationally approach either goal. The other side only wants more and more tax money to continue expanding their spending. Economics, simple math plainly shows that is not sustainable.
    Example: If there was a, 10% cut in taxation, there would have to be a larger percentage decrease in spending; that percentage will have to be much greater to effect any change. For numbers to debate, how about a 50% tax cut with a 70% spending cut? A start.
    Until something is done to cut taxes and spending, we will have only what we have now, Democrats who only want more and more spending and greater taxes on everything, plus new taxes such as a value added tax (VAT), national Internet taxes, and repeal of existing tax cuts already in place. Only to serve more spending. See above.
     

  13. JBS says:

    Malloy paid off the unions at the expense of Connecticut. He made a short-term deal with the devil; bait and switch by any other names. From the article:
    tax increases authored by Mr. Malloy are the highest in the state’s history . . . the Malloy way of achieving fiscal stability has paid off — at least for the short term . . . a two-year budget that calls for $1.4 billion in tax increases, about $800 million in spending cuts and a promised $1.6 billion in union concessions . . . projected surpluses . . .” Whoa, Malloy merely played politics with unproven numbers that have been shown to be felonious and delusional. To continue:  Still, there are . . .  ” significant long-term liabilities’ ” — more than $71 billion in long-term debt, one of the highest per-capita burdens of any state, according to the Connecticut Mirror. Malloy had to pay-off the unions to, hopefully for him, insure his reelection. Using any gimic is a very Democrat thing to do! (Emphasis added)

    The article continues to report only sound fiscal…

  14. sammy22 says:

    Well, well, how quickly positions change to suit an agenda. It used to be said that cutting taxes will bring in more revenue (see johnboy111 quoting econ 101). This thesis has been expressed countless times on this blog. Now things have changed to “admit” that cutting taxes will increase the deficit. Hence a tax cut now has to be simultaneously joined by a spending cut.

    • Dimsdale says:

      It only raises the deficit if you keep spending like the proverbial drunken sailor.
       
      How about the admission by the Democrats and Øbama that the taxpayer will be hurt by reinstituting the full payroll tax, i.e. increasing taxes (even though we know the ulterior motive)??

      • JBS says:

        Further political cover for future assaults against our money. The reduction in the payroll tax was Bush’s initiative. There is a built-in Democrat argument that a short-fall in revenue — read that as confiscation of our money — from payroll taxes will be Bush’s fault. Never mind that the Regime has been killing jobs, businesses, and investments through its policies and regulations.  The Regime will declare the Bush payroll tax cuts unsustainable. (I saw the news conference when the ZerO announced it, not a happy look on his face.) Ergo, blame Bush.
        It should be a simple thing to grasp that less people working in the private sector will mean lower overall income from which the government can confisticate money in the form of taxes.

      • crystal4 says:

        “It only raises the deficit if you keep spending like the proverbial drunken sailor.”
        Dimsdale, ok, I will be a broken record.
        The reason for the huge deficit is 2 wars…1st time in history we went to war without raising taxes) , Bush tax cuts which reduced revenues, medicare D (big bonanza for big biz and NOT paid for), and more citizens on food stamps, unemployment and medicaid.
        So, PLEASE tell me where this fairy tale of increased spending is…(besides on the military =your holy grail).

      • Dimsdale says:

        “To put that into perspective, when President George W. Bush took office, our national debt was $5.768 trillion. By the time Bush left office, it had nearly doubled, to $10.626 trillion. So Bush’s record on deficit spending was not good at all: During his presidency, the national debt rose by an average of $607 billion a year. How does that compare to Obama? During Obama’s presidency to date, the national debt has risen by an average of $1.723 trillion a year — or by a jaw-dropping $1.116 trillion more, per year, than it rose even under Bush.”
         
        http://www.npr.org/2011/01/25/133211508/the-weekly-standard-obama-vs-bush-on-debt
         
        That was in January, 2011.  The author concludes with:
         
        “It’s not often that one gets to hear a call for “responsible” fiscal stewardship from someone whose deficit spending is outpacing President Bush’s by more than $1 trillion a year — yet that’s apparently what we’ll get to hear tonight. But President Obama’s actions tell another, far clearer, story about his commitment to deficit reduction.”

    • JBS says:

      You are taking individual responses as representative of the whole. The proven mechanism of letting more people keep more of their own money for it to be available to them to buy goods and services will thus increasing the economy is fact. Neither taxation nor government spending increases the overall economy due to the fact that the government only can spend $0.60 to $0.70 out of ever dollar. The infrastructure of the government has to be funded before any money can pass through it.
      Yes, a tax cut has to be couples with a greater spending cut. (That is if the deficit is to ever be reduced.)

    • crystal4 says:

      Groucho Marx: “Those are my principles. If you don’t like them, I have others!”

  15. sammy22 says:

    The proven mechanism of “tax cuts=economic growth” has many detractors, who can “prove” the opposite as well. As to the reduction of the deficit, that will happen when revenue is larger than outlay. Your suggestion is not the only one that can achieve that objective, but you don’t like it.

    • Dimsdale says:

      Clearly, the current situation shows that government “stimulus”, which translates into a huge need for increased taxes since tax cuts seem to be off the table, has shown no positive effect; the economy still stinks.  The Democrats (and, apparently, you) seem to think that the size of the outlay is irrelevant, and that revenue can always be raised (only from the rich of course).  They believe that we “just haven’t spent enough” in some wild extrapolation of Keynesian theory.  If the deficit explodes, and our debt to China and others becomes unmanageable, we will never be able to get out from under it.  That is what excessive government spending of money we don’t have will produce.  The Dems bet that the cyclic nature of the economy would save them, but I believe that their foolish schemes have extended the lousy economy, likely well beyond even the best efforts of a new president that knows what he/she is doing.
       
      I don’t like what I see because it ain’t working!

  16. sammy22 says:

    Can’t stick just to the issue, eh? What I also have seen is that the tax cuts already implemented are not working either, nor does the retention of the Bush tax cuts, nor the spending cuts w/o tax increases. It’s easier to preach against the Dems regardless of merit.

    • Dimsdale says:

      I think I was right on target.  I guess you didn’t like the reply. 
       
      The tax cuts are trivial compared to the burgeoning deficit, so their “working” is barely a factor, and the promise of more proposed and impending spending (new “stimulus” spending and the specter of Øbamacare) is keeping the economy at a nadir.  People see where this is going and back off in spending.  Black Friday/Cyber Monday may be an exception, but I think people spent money on the big deals, and the remaining non-sale retail sales will suffer.  But I digress.  As for “tax cuts w/o tax increases, recent history has shown that it has been all spending increases with no regard for tax revenue, and that is why they (Democrats again!) are so desperate for tax increases: to cover the debt they rang up since 2007.   The Republicans, for all their faults, are spending pikers compared to Dems.

  17. JBS says:

    After all of this back-and-forth, I am really interested in what your idea of fiscal policy should be. I have advanced several ideas to hopefully spark dialogue.
    So, sir, what would you suggest, i.e. implementing fiscal policy and, what goals would you suggest be achieved?

  18. sammy22 says:

    One more time: reform the tax code (no cherry picking of this or that tax) and reduce spending (no cherry picking of this or that program). On reform, as an example: reduce/remove deductions (e.g. an heir of the Estee’ Lauder fortune buys art, donates it to his foundations and takes a tax deduction). On spending cuts, as an example: get rid of farm subsidies (the big agri-businesses should not have subsidies NOT to plant some crop). The overall goal should be, as a minimum, to slow down the growth of the deficit. Getting rid of the deficit will take longer than it has taken to generate it. An all or nothing approach will only result in the gridlock we have. Now your turn.

    • Dimsdale says:

      Now we are getting somewhere!  I agree with all of that, except I would propose that charitable donations continue to be deductible (even with an upper limit), as to do otherwise will negatively affect churches and charities, and have them replaced by government programs that will put even more people in the thrall of the government and brainless bureaucrats.  Add to the list the formation or expansion of redundant programs within and without government, and cap deficit spending, (i.e. stop generating new deficit spending while we try to fix the deficit spending we already have around our necks) and we might actually get a handle on this.
       
      Did I hear someone say flat tax?  ;-)

      • JBS says:

        Amen, I like concrete solutions as proposals. It beats throwing rocks at our glass house.
        How about a 15% reduction in all spending across the board? Coupled with a flat-tax, one where all people would pay an equal share of their income. Further, I liked the idea one of the candidates had, name escapes me, of ceasing all foreign aid to all countries and stopping all funding to United Nations (they don’t like us and want America to join in an anti-Second Amendment treaty anyway).
        Stop all contributions to any country, organization, group, non-profit, what have you, pending a case-by-case review. How’s about that?
        We’d quickly find out just who are real friends are in the world. Not just sycophants. (Hmmm, does any other other country on Earth give foreign aid to any other country?)

      • Dimsdale says:

        I like it!

    • JBS says:

      Nice to hear. Stay tuned! Or, reread above^^^

  19. Lynn says:

    OK, If Sammy and Dimsdale can come to a meeting of the minds and compromise. Why can’t Congress? They keep on insisting they get re-elected. Perhaps, because they can no longer steal, ( I mean take advantage of their NOT having to adhere to laws for the little people)  from us. OK after we reform tax code and Congress is not exempt from any federal income tax.  We must have term limits. I can dream can’t I.

  20. crystal4 says:

    Dimsdale:” During Obama’s presidency to date, the national debt has risen by an average of $1.723 trillion a year — or by a jaw-dropping $1.116 trillion more, per year, than it rose even under Bush.”
    “Actually $1.2 trillion of $1.4 trillion deficit was already projected before Bush left office. The CBO projected on January 7, 2009, that, including spending authorized under the Bush administration for the Troubled Asset Relief Program (TARP) and government takeovers of Fannie Mae and Freddie Mac, the deficit would total $1.2 trillion. According to the CBO, the actual FY 2009 deficit was $1.4 trillion.”
    http://www.cbo.gov/ftpdocs/108xx/doc10871/Summary.shtml#1045449

    • Dimsdale says:

      I believe it is sammy that noted elsewhere:
       
      ” CONGRESS decides how much money to spend and where to spend it. Pinning the tail on Pres. Obama can be fun, but it’s a diversion from the REAL culprit, and that is Congress. The national debt is climbing because money has to be borrowed to pay for past sins!”
       
      Now answer me this: who controlled BOTH houses of Congress between 1/2007 and 1/2011?  The first two guesses don’t count!  TARP, for all its faults, was reported to be mostly paid back (there’s a nice chart at http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program).  Can we blame the “stimulus” spending on Bush or the Repubs?  No.  In fact, Øbama cut the Republicans out of the stimulus spending discussions!  Øbamacare?  All Dem.
       
      And is it fair to compare 8 years of Bush to 3 years of Øbama?

  21. JBS says:

    We need a new post to comment upon.

  22. Lynn says:

    JBS, you have great posts. They are well documented and interesting. Why don’t you submit one? If Steve and Jim like it, I’m sure they’ll print it. If not, you can work out angst on a subject you enjoy, so you can’t lose either way.

  23. crystal4 says:

    Payroll tax cut
    has nothing to do with the trust fund.
    http://motherjones.com/kevin-drum/2011/12/no-payroll-tax-cut-doesnt-hurt-trust-fund
     
     

    • Dimsdale says:

      “Normally, a reduction in the payroll tax would indeed reduce contributions to the Social Security trust fund, but last year’s bill specifically made up for this loss from the general fund.”
       
      And the general fund has been raiding the “trust” fund since the late sixties.   A vicious cycle at best.  And if this is no issue for SS, then make it permanent, without backdoor taxes to “pay for it”, since, according to Mother Jones anyway, it is already paid for!

  24. Lynn says:

    Ha, HA, Dims you’ve got them by the …. Fill in whatever you want
     

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