Facts About the Payroll Tax Cut Proposals to Jeopardize Social Security
Washington, D.C. – U.S. Senator Joe Manchin (D-W.Va.) released the following disturbing facts about the future of Social Security if Congress extends the payroll tax cut.
Senator Manchin said: “I truly agree with the words of our great President Franklin Delano Roosevelt – who created Social Security – when he said: ‘We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my Social Security program.’”
Senator Manchin added: “While I want to make sure that hardworking families have more money in their pockets, I won’t jeopardize Social Security to do it.”
PAYROLL TAX CUT IS IMMEDIATE THREAT TO SOCIAL SECURITY
- The only program that is funded by payroll taxes is Social Security. Working Americans and their employers each pay 6.2 percent of the employees’ salary to fund retirement benefits.
- For the first time since 1983 – when Congress reformed Social Security – the program took in less than it spent last year. The shortfall was $49 billion in 2010. The projected shortfall for 2011 is $46 billion.
- In 2010, for the first time in history, the federal government allowed working Americans to reduce their standard contributions to Social Security. Those cuts amounted to $112 billion.
- By 2037, according to the Social Security trustees, every recipient’s scheduled benefits will be cut by about 25 percent if no changes are made to the program.
PAYROLL TAX CUT IS DOUBLING DOWN ON FAILED POLICY
- Despite the payroll tax cut, the unemployment rate has remained at historic highs for the past year, which calls into question whether the cuts have been effective at all. The unemployment rate when payroll tax cut began was 9 percent. By November of 2011, it had fallen four-tenths of a percentage point to 8.6 percent, in large part because 315,000 Americans gave up looking for work.
- When the payroll tax cut was first enacted, there were 6.4 million Americans who were looking for work but were not included in the official unemployment rate. Today, that number has grown to 6.6 million Americans.
- The payroll tax cut extension is proposed for one year, but paying it back will take Americans 10 years. In the meantime, the tax cut does nothing to resolve the nation’s debt, which is now more than $15 trillion and growing every business day by $5 billion.
[CBS News on daily borrowing costs, Nov. 18, 2011. http://www.cbsnews.com/8301-505123_162-38042824/18-scary-us-debt-facts/]
PAYROLL TAX CUT IS A LONG-TERM THREAT TO SOCIAL SECURITY
- Congress has demonstrated trouble with ending so-called temporary tax cuts. If Congress extends or expands the payroll tax cut each year for the next 10 years, it will cost between $1.2 and $2.65 trillion dollars.
- While both Democratic and Republican plans make short-sighted claims to “pay for” the losses, the Congressional Budget Office looks further ahead. The CBO warned that the initial Republican bill does not cover the losses until 2018, while the Democratic plan does not achieve that mark until 2021 – three presidential terms from now.
- The plan to repay Social Security is that Americans must trust that Congress will transfer money from the nation’s general revenue fund to the Social Security Trust Fund. The American people’s faith in Congress to do its job is at the historic low of 9 percent.
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