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Politics
Obama Hurts Social Security

20 Dec 2011
Why is President Obama so eager to destroy Social Security? When President Bush proposed a modest change to Social Security it was decried as a back-door attempt to end Social Security. If that was true then Obama's 32% Social Security tax cut is far more dangerous.

Bush's proposal had two basic components: give workers the option to reduce the amount of taxes withheld from their paychecks for Social Security, and the concurrent right to place those funds in an investment account for retirement that they controlled. The only thing that made this proposal different from an IRA was the idea that funds targeted for Social Security would go straight to the workers' coffers, not that of the U.S. Treasury.

Objections were raised to his proposal because workers who invested their retirement funds would be putting their retirements at risk, if they invested in the stock or commodities markets. There was also great concern that reducing funds paid to Social Security would hasten its shortfalls, causing a true Social Security crisis for the first time in history.

Amazingly, Obama's tax cut, now renewed, perpetrates the very worst parts of Bush's proposal, but leaves the good parts ignored.

Just to review: the tax cut just renewed reduces Social Security withholding from 6.2% to 4.2% of your pay check. Journalists who know nothing about arithmetic call that a 2% tax cut, but it is actually a 32% tax cut: two percentage points divided by six point two percentage points. By comparison, Bush proposed cutting only as much as 25%.

We are putting 32% fewer funds into Social Security than two years ago one hundred ten billion dollars less annually. As a result Social Security's financial soundness is in much, much greater trouble than when Obama took office.

How many workers are saving that 2% a year of their income? How many are putting it toward retirement? Not many, it is safe to assume. Under Bush's proposal, everyone would have been saving toward retirement, even if some level of risk was attached. Under Obama's tax cuts, nothing new is going toward retirement, and the financial health of Social Security is worse than it has ever been. Under Obama, workers nearing retirement are in greater jeopardy than ever before.

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