RE: Raising the Wage Base

[Michael Jones <powderfinger99@yahoo.com>]

<<<
The President commits 62% of the Unified Surplus to Social Security. Actually, the Social Security
actuaries already assume that money is their's because it comes from their FICA taxes. Thus, dedicating
it to Social Security doesn't help the Trust Funds. What President Clinton also does is give another 62% of
the surplus to Social Security. 
>>>

Hmm... It's very confusing how all these numbers add up. The President
is not actually counting the money twice. He is preventing the
money from being counted twice.

Let's take an example. Assume $100 of FICA taxes is received. 
Currently, the SSA loans the money to the treasury using a 
special bond. The SSA gets the IOU, including the promise
of interest.

So that $100 is then spent on other government operations. Under 
the Presidents proposal, the 62% excess revenues won't be
spent but will actually reduce existing debt. SSA is stilled
owned the money + interest. But the debt burden from the rest of
the government goes down, enabling the treasury to more easily
pay for future government.

>From a macro point of view, it doesn't really matter how the
revenues/bonds/debt (IMHO) are split up. The important trend
is does the total government debt go down. Using the excess
SS money to pay down debt does reduce the total government debt.
Currently, even though there are excess SS revenues 
(a surplus, if you will), the debt still goes up.

This is the hyprocrisy of the government budget. The more money
you give them, the more they spend. This was the sham of the
1983 Act which helped to "save" SS. It didn't actually save 
SS because it did nothing to reduce the long term government
obligations.

Since the operating budget is expected to be in surplus very soon,
this simple change the president is proposing won't hurt at all.
It will simply mean that the government can't spend the excess
FICA taxes on new government, as it has in the past.

Michael