Social Security and the Tax Cut Extension Proposal

I agree with Calculated Risk’s assessment of the one year cut in the payroll tax:

There are two obvious alternatives: 1) Social Security will receive something close to $120 billion less than currently estimated in 2011, and this will negatively impact the long term Social Security projections, and 2) the full amount of the payroll tax will still be credited to Social Security (as if there was no cut), and the 2% cut will come directly from the General Fund in 2011 – so this tax cut will have zero impact on long run Social Security projections.

The second is by far the better alternative. Social Security is already having a cash flow problem (payouts exceed inflows) and, if the system merely foregoes the $120 billion in income, it will bring foreward the date of its actuarial insolvency from the present projection of 2037.

2 comments… add one
  • john personna Link

    I was surprised by sightings of the Bond Vigilantes yesterday. That could change everything.

    Or, it could just be a frightened farm boy who thought he saw the bad men, off in the distance ….

  • Drew Link

    How much is left in TARP? Could those funds be used to avoid raiding SS?

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