Taxes go up in 2013 for 163 million workers

President Barack Obama isn’t talking about it and neither is Mitt Romney. But come January, 163 million workers can expect to feel the pinch of a big tax increase regardless of who wins the election.

A temporary reduction in Social Security payroll taxes is due to expire at the end of the year and hardly anyone in Washington is pushing to extend it. Neither Obama nor Romney has proposed an extension, and it probably wouldn’t get through Congress anyway, with lawmakers in both parties down on the idea.

Even Republicans who have sworn off tax increases have little appetite to prevent one that will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.

Why are so many politicians sour on continuing the payroll tax break?

Republicans question whether reducing the tax two years ago has done much to stimulate the sluggish economy. Politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security.

They are backed by powerful advocates for seniors, including AARP, who adamantly oppose any extension.

“The payroll tax holiday was intended to be temporary and there is strong bipartisan support to let that tax provision expire,” said Sen. Orrin of Utah, the top Republican on the Senate Finance Committee. “The continued extension of a temporary payroll tax holiday has serious long-term implications for Social Security and, frankly, it’s not even clear that it has helped to boost our ailing economy.”

The question of renewing the payroll tax cut has been overshadowed by the expiration of a much bigger package of tax cuts first enacted under President George W. Bush. The Bush-era tax cuts also expire at the end of the year, and Congress is expected to try to address them after the election, in a lame-duck session.

The payroll tax cut could become part of the mix in negotiations that could go in many directions. But lawmakers in both political parties say they doubt it.

(AP) In this Feb. 1, 2012 file photo, House Ways and Means Committee member, Rep. Kevin Brady,…
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“I think there’s a growing consensus that Congress and the president can’t continue to divert such a critical revenue stream from Social Security,” said Rep. Kevin Brady of Texas, a senior Republican on the tax-writing House Ways and Means Committee. “I think more and more Americans understand that that payroll tax cut, while politically appealing, is endangering Social Security.”

Read more here.

End Social Security as we know it? You should hope so

Actually … you need to feel a little sorry for the Democrats as they try to make their case for the reelection of Barack Obama. They have absolutely no record of accomplishment to run on. Obama has been a complete failure by any metric.

Here’s a new drinking game for you – and the longer Obama remains in office the more we need some good drinking games. Just watch any news interview program and wait for the panel discussion with the ubiquitous “democratic strategist.” At some point in the discussion the prog will start taking about Republicans “wanting to end Social Security as we know it.” When you have nothing going for your side try to frighten the old folks.

I don’t think that any GOP candidate has done a good job of putting this point across (though Perry tried last week). For people who are now eligible for Social Security benefits and people who are nearing retirement age — say those over 55 — there is simply no reason whatsoever for them to worry about their benefits either being reduced or stopping altogether. It’s just not going to happen. There is no Republican candidate out there who would allow that – and the voters would make sure it doesn’t happen. Those who talk of Social Security reform are looking into the future – not the present – and the future is where the collapse of our Social Security lies.

In 1981 the Galveston County Commission made a proposal to the county workers to ditch the Social Security system and go with a private plan they called the Alternate Plan. The county employees voted on the issue amidst great pressure from unions to turn it down and remain with Social Security. The Alternate Plan won, but not by a wide margin. The Social Security Administration was notified that Galveston County employees would no longer participate, and the private alternative was instituted.

Financially, nothing really changed with the county employee paychecks. There was still the 6.2% deduction from every paycheck for the employee’s contribution to the plan. The county still paid a matching contribution — actually a bit more. That’s where the similarity to Social Security pretty much ended. Galveston County hired a financial planner to set up the plan. The goal was to be a good replacement for Social Security .. with better benefits guaranteed. Every worker had his own account and account balance. The money was pooled into a private sector investment account with a guaranteed minimum rate of return.

So … now the payoff. How are the employees of Galveston County, Texas doing with their Alternative Plan vs. other Americans who were not lucky enough to get out of Social Security?

First … let’s deal with retirement income.

If you’re a low-income worker making about $26,000 a year when you retire you get about $1,007 a month from Social Security. Make that $1,836 per month under the Galveston plan. That’s a difference of $829 a month or almost $10,000 a year. Are you low-income workers out there glad you were able to keep Social Security “as we know it” and not become a part of a plan like Galveston County’s? Yeah — that’s costing you ten grand a year.

What about middle-income workers? The difference there is $1,540 from Social Security and $3,600 from the Alternative Plan. The monthly difference? Try $2,060 per month or almost $25,000 a year. That’s your penalty for letting the Democrats demagogue any attempt to privatize Social Security over the years; $25,000 per year. Don’t you just love your Democrat masters?

And now for the high-income Galveston County workers. These are the people who max out on their Social Security taxes. They get about $5,000 to $6,000 a month from their Galveston Plan vs. $2,500 from Social Security. That’s a difference of between $2,500 to $3,500 per month or $30,000 to $42,000 a year MORE from the Galveston private plan than from Social Security.

There’s something else we need to cover here. The death benefit. If you’re part of Social Security your survivors get the incredible sum of $255. That ought to pay for one spray of flowers for your casket, not much more. After that $255 payment the rest of the money you have paid into Social Security is pretty much gone. Wow! What a deal! But what if you’re part of the Galveston County Alternative Plan? You’re survivors don’t get the princely sum of $255. They get four times your salary tax free. There’s a maximum of $215,000. So there you go! Under Social Security, $255. The private plan? Four times your salary.

There are two other counties in Texas, Matagorda and Brazoria, who pretty much did the same thing that Galveston County did — pull out of Social Security for a private plan with similar results. So … you might wonder why more government entitles haven’t done the same thing! With spectacular results like this you would expect government workers would be clamoring for a private plan of their own. Well you can blame that on the Democrats too. They saw these local government entities bailing on their precious Social Security system and passed a little law in 1983 shutting that door for good. To put it just a bit differently — in 1983 the Democrats erected an economic Berlin Wall around Social Security; not to keep people from getting in on their wonderful ponzi scheme, but to keep people from getting out.

So … for all of your senior, wizened, wrinkled citizens out there just waiting to cast your votes for Obama next year so that you won’t lose your precious Social Security. Just think about the statistics you’ve read above.

Romney and Perry on Social Security

As expected, the debate last night started out with a sparring match between Rick Perry and Mitt Romney on Social Security. Here’s a look at how that exchange transpired:

Romney: “Does Governor Perry continue to believe that Social Security should not be a federal program, is unconstitutional and it should be returned to the states, or is he going to retreat from that view?”

Perry: “If what you are trying to say is that in the 30s and 40s that the federal government made all the right decisions, I disagree.” (applause) It’s time for us to get back to the constitution. A program that has been there 70 or 80 years, we’re not going to take that away. But for people to stand up and support what they did in the 30s or what they are doing in the 2010s is not appropriate for America.”

Romney: “But the question is, do you still think that social security should be ended as a federal program, as you did six months ago when your book came out, and returned to the states? Or do you want to retreat?”

Perry: “The issue is, is there a way to move the states into social security for state employees or for retirees. We did in the state of Texas in the 80s.” (alludes to Galveston). “I think those types of thoughtful conversations with America, rather than trying to scare seniors like you are doing and other people, it’s time to have a legitimate conversation in this country about how to fix that program …” (applause)

Romney: “Governor, the term Ponzi scheme is what scared seniors. Number one. Number two: Suggesting that Social Security should no longer be a federal program and returned to the states, and is unconstitutional, is likewise frightening.”

Perry: “You called it a criminal .. you said if people did it in the private sector, it would be called criminal. That’s in your book.” (applause)

Romney: “You gotta quote me correctly. You said that “it’s” criminal. What I said is that Congress taking money out of the Social Security trust fund is like criminal, and it is and it’s wrong.”

Considering the fliers the Romney camp has been sending out since the last debate just days ago, this exchange is not earth shattering. Maybe this will change after last night’s debate, but after the debate last week, despite his comments on the Social Security Ponzi scheme, Rick Perry actually enjoyed higher poll numbers among senior citizens than Mitt Romney. Funnily enough, it’s the young people who Perry wants to be honest with who currently sitting in the Romney camp.

I was also please to hear Governor Perry allude to the Galveston model of Social Security. He should stick more to this argument and flush it out like fellow candidate Herman Cain, who again told America about the Galveston and Chilean models for private retirement accounts.

When it comes down to the economy and job creation, Perry and Romney don’t appear to be too far apart. Both advocate for lowering taxes and regulations. In their handling of the issue last night, Perry had the good applause line while Romney had a more detailed plan:

Perry said that he wants to free up small businesses to do what they do best, and he would do this by lowering taxes and regulations. He said: “People are tired of spending money that we don’t have on programs that we don’t want.”

Romney also had a good metaphor about Obama trying to jam quarters into a pay phone in order to solve a smart phone economy. He then presented a seven point plan: 1. Competitive tax code 2. Regulations to work to encourage enterprise 3. Trade policies 4. Energy security 5. Execute the rule of law (stop the Boeing decision of NLRB) 6. Institutions to create fantastic human capital 7. Balance the budget

Then Wolf Blitzer tried to manufacture the sparks once again, asking Mitt Romney if Rick Perry deserves credit for creating jobs in Texas. To which Mitt replied, “I think Perry would agree with me that if you are dealt four aces, that doesn’t necessarily make you a great poker player.”

‘Ponzi Scheme’: Is the Romney-Perry Exchange on Social Security the ‘Bite of the Night’?

It’s working…

What’s working? Our Dear Ruler’s threat to hold back Social Security checks for seniors if the Republicans don’t cave in to unneeded tax increases on a deal to raise the debt ceiling. Never mind that there will be plenty of revenue to send out those Social Security checks on schedule … plenty. Obama knows that millions of seniors depend on those checks and that these seniors can be easily frightened by any politician who wishes to exploit that dependency. Dear Ruler is just such a politician.

So now we’re starting to get the story that seniors are shaken up and starting to demand that the GOP give into the Democrat demands for tax hikes. Now that’s a no-brainer. I think it’s fair to say that just about 100% of seniors who are dependent on their Social Security checks won’t be the least bit affected by an tax increase on people and small businesses earning over $250,000 a year. So the tax hike doesn’t matter. The Social Security check does.

I heard one wizened citizen say that her payments to Social Security were mandatory … so why can they just decide not to pay her benefits? Well here’s your surprise. Yes, you have to pay your Social Security taxes; but NO, the government does not have to send you your SS checks. There is no law which guarantees to you the payment of Social Security benefits. Now there’s where the GOP should go with this .. they should introduce and pass with all deliberate speed legislation in the House which states that certain obligations of the Federal Government will be paid before others. Perhaps debt obligations should come first. After all … Article IV of the Constitution does guarantee the payment of our country’s debt obligations. But what should be next? Let’s put Social Security payments as number one. Payments to active duty military as number two, and payments to veterans to number three. This law would mean that Social Security payments would be made BEFORE congressional or executive branch salaries, and before Air Force One gets refueled.

This legislation might not make it through the Senate – the Democrats control the Senate – and would certainly be vetoed by Dear Ruler. Why? Well think about it. How could Obama had threatened seniors with their Social Security payments if those payments were guaranteed by law? That is a card the Democrats play often, and a card the Democrats will not give up. So the Republicans should get this legislation in motion. One of two things happens: Either the legislation becomes law and the progs lose this particular card to play, or they show they aren’t really all that interested in seniors getting their payments in the first place.

Win-Win for the good guys.

Just what we need .. more spending!

Earlier this week we had the tax cheat, Tim Geithner, tell us, “It’s going to feel very hard; harder than anything they’ve experienced in their lifetime now, for a long time to come.” Peachy! Then we get Federal Reserve Chairman Ben Bernanke telling us that the recovery “will likely remain moderate” for a while, with unemployment falling “only gradually.” Fantastic! Is it any wonder why 63% of Americans now believe that our country is headed on the wrong track?

But if you ask the Obama administration, this has nothing to do with their policies. Nope. Ben Bernanke managed to blame it on “temporary factors” including gas prices, increased food prices and the earthquake in Japan. Oh … and there’s Greece. While we are at it, why don’t we blame the lack of hiring by US businesses on our outdated patent process. Oh wait, we’ve already heard that one … from our Dear Ruler.

Why doesn’t Barack Obama acknowledge the fact that almost one-third of all corn that is grown in this country is now used to satisfy ethanol fuel subsidies? What kind of an effect is that having on food prices? Or why doesn’t Ben Bernanke acknowledge that his “quantitative easing” experiments have decreased the purchasing power of Americans? Federal Reserve Governor Alan Greenspan says that there is zero evidence that this giant inflow of money into the system has even worked .. unless you consider weakening the dollar a success. But now Ben Bernanke has told Congress that he plans on yet another round of “quantitative easing.” Oh joy!