>>>>In the original intent of the system, there was a concern that deviating from pay-as-you go would cause politicians to spend excess contributions. The thinking was that if the government had to spend every contributed dollar on benefits, it couldn't use any excess money for other government.
Nice theory, but 100% wrong. The initial SS legislation provided for the FICA tax to begin in 1937 but no retirement benefits were to be paid till 1942 (although it was later moved up to 1940). So what happened to all the money collected before retirement benefits checks started to go out? They were put into the SS trust fund and loaned to the general fund to cover deficits. EXACTLY AS IT IS DONE TODAY. Indeed, if you look through the messages on this forum, you will find a quote purportedly from FDR, speaking against pay-as-you-go.
>>>>They were right. The 1983 tax increase did not increase the
solvency of the system, because the government took the tax
increase as a license to spend more.
Actually, no such thing happened. Domestic discretionary spending increased less than 1% total over the next 3 years after the 84 FICA increase (in nominal dollars, not constant dollars i.e. actually a decrease in constant dollars). In fact, total gov't spending (except for interest payments) as a percent of GNP went from 18.5% to 21% in the 5 years BEFORE the 1984 FICA tax increase, but declined from 19.9% to 18.2% in the 5 years after the 1984 FICA increase. Exactly the opposite of what you claim. I got the data from here:
http://www.concordcoalition.org/federal_budget/charts/index.html
>>>>The change made, however, has resulted in huge surpluses. The
government should adjust the payroll tax rate each year to
reflect the actual (or projected) benefit payments. But
the government will never turn down surplus money to spend
if it can get away with it.
>>>>The only time a tax increase would be appropriate (assuming
we still had a pay-as-you-go system) is when the benefit
payments start becoming larger than revenues. The SSA has
forecasted that this would occur around 2012. It is premature
to start taking about payroll tax increases.
Actually, you are trying to have it both ways. If you only collected enough to SS tax every year to pay for the costs of the program, the tax would need to increase long before 2012. That is merely the year when it would equal the current rate. And then it would have to go up the next year, because there would be no trust fund to take us to 2034.
