the link between budget deficits and payroll taxes

This is an important article that explains the history of the Social Security trust fund and its relationship to the federal debt. In 1983, Congress actually increased payroll taxes, so that surpluses in the fund could be used to pay down the Reagan debt. However, the surpluses collected were not significant until 1999 and 2000, when under Clinton's watch they were actually used for debt payment and not for generic government spending.

Now, in the era of the Bush deficit, the Social Security surplus is being raided again - this time to mask the Bush deficit:

In the 2000 campaign, Vice President Al Gore said we should sequester the Social Security surpluses in a "lockbox" to prevent appropriators from spending them. Bush agreed in principle. But that commitment went out the window soon after the inauguration. In his first three budgets, Bush (who had the good fortune to take office at a time when the surpluses were growing rapidly) and Congress used $480 billion in excess Social Security payroll taxes to fund basic government operations—about $160 billion per year!
[...]
The accounting for Social Security surpluses has always been dishonest. But in the past few years, the Bush administration has made this shady accounting a central pillar of its fiscal strategy. The unprecedented reliance on these funds hides the failure of the administration to ensure that there is some reasonable correlation between the resources it has at its disposal and the spending commitments it makes. Bush & Co. have redesigned the tax system so that collections of the progressive taxes that are supposed to fund government operations—like individual income taxes—have plummeted. Instead, with each passing year we rely for our current needs more on the regressive payroll taxes that are supposed to fund our collective retirement.


This is why we really need a cut in payroll taxes, as Dean has proposed. The system of funding Social Security is broken - and the surpluses are going to justify massive government deficit spending. By cutting the payroll tax, Social Security's surp;lus can be reduced, preventing a dishonest Administration from using it to hide their fiscally irresponsible policies. The amount of funding for Social Security itself remains untouched, but since there is no "lockbox" for the surplus, we have to find some way to prevent the plunder.

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