At last The Washington Post, which shaped much of the media coverage of the defcit and entitlement discussion last year, has produced a very good story about Social Security. This one offers another take on the Democrats’ drive to extend the payroll tax for the next two months. The message of Jia Lynn Yang’s piece: cutting payroll tax contributions to Social Security may have grave future consequences.
You would never know that, though, from the language the media used before Christmas to tell the payroll tax story. Most passed along the carefully crafted words of prominent Dems, including the president, that made the cut sound like a gift from Santa. Yang’s lede got right to the point: “By extending the payroll tax cut, Congress and the administration have quietly made a critical change in how Social Security is funded—one that some in Washington worry could undermine the program’s foundation if lawmakers keep renewing the tax break.”
Yang clarified what’s at stake for all Americans if Social Security’s financing changes. To cover the payroll tax cut made last year, the government has shifted about $110 billion from the general revenue pool to the trust funds. It must add another $19 billion to cover the two-month extension, and if the Democrats succeed in extending the tax holiday for the rest of the year, billions more will be needed. She noted that the payroll tax cut changes the simple premise of Social Security—that Americans pay into the system through payroll taxes while they’re working and receive monthly payments when they retire.
“Instead being a protected program with its own stream of funding, Social Security, by taking money from general revenue, becomes more akin to other government initiatives such as Pentagon spending or clean-air regulation,” Yang reported. When this happens, Social Security will be subject to the raw politics of Washington and special interest lobbying. In other words, farm subsidies might win over old-age pensions in future budget battles.
What’s more, these changes have been made without much input from the ordinary men and women who will be most affected decades from now. Nancy Altman, co-director of the advocacy group Social Security Works, told the Post that the tax extension was “done without any hearings, without any apparent regard for the impact on Social Security.” That’s why the Post’s contribution airing the downside of the tax cut is a significant contribution from the MSM.
Yang also interviewed Charles Blahous, a research fellow at the Hoover Institution who has strong Republican credentials. Blahous, one of Social Security’s trustees, also served as deputy director of George W. Bush’s National Economic Council. He offered another warning. “It’s a grave step for Social Security. It just seems to be the program both financially and politically will be on a lot rockier footing,” he said, referring to the long-term money shortfall the system faces in 2036. “Whether you’re on the left or the right, you should really dislike this. It has been somewhat mystifying, the determination to do this. I just think it’s shortsightedness.”
Campaign Desk has noted that members of Congress on both sides of the aisle believe that cutting the payroll tax may not be such a hot idea. In a Huffington Post piece Sunday, the progressive columnist Robert Kuttner added a political thread to the payroll tax saga that might need unraveling as the year goes on. He asked: “Will he (Obama) continue to support taxing millionaires as a way of defending Social Security? Or will he revert to his stance during his Bowles-Simpson phase of putting Social Security cuts on the chopping block as part of a grand budget bargain?”
Dems destroying Social Security is a darn good story in an election year. Republicans trying to save it? That’s another.