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"America has two great dominant strands of political thought - conservatism, which, at its very best, draws lines that should not be crossed; and progressivism, which, at its very best, breaks down barriers that should never have been erected." -- Bill Clinton, Dedication of the Clinton Presidential Library, November 2004

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Monday, January 12, 2004


the link between budget deficits and payroll taxes

posted by Aziz P. at Monday, January 12, 2004 permalink View blog reactions
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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About Nation-Building

Nation-Building was founded by Aziz Poonawalla in August 2002 under the name Dean Nation. Dean Nation was the very first weblog devoted to a presidential candidate, Howard Dean, and became the vanguard of the Dean netroot phenomenon, raising over $40,000 for the Dean campaign, pioneering the use of Meetup, and enjoying the attention of the campaign itself, with Joe Trippi a regular reader (and sometime commentor). Howard Dean himself even left a comment once. Dean Nation was a group weblog effort and counts among its alumni many of the progressive blogsphere's leading talent including Jerome Armstrong, Matthew Yglesias, and Ezra Klein. After the election in 2004, the blog refocused onto the theme of "purple politics", formally changing its name to Nation-Building in June 2006. The primary focus of the blog is on articulating purple-state policy at home and pragmatic liberal interventionism abroad.