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RE: Is FICA Tax too low? or too high?


>From: Michael Jones

>>>>The fact remains that since the tax increase of 1983, the Social Security trust fund has accumulated 800B worth of notes. The other debt accumulated from the operating budget is about 3.7T.

>>>>I am not an expert on the federal budget. However, common sense tells you that the total debt is about 4.5T. If the government did not spend the 800B on other spending, the total debt would be 800B lower than it is today. This is a fact.

You are not really making any sense. First, the gov't did not spend any SS excess on 'other' things. It is prohibited by law from doing that. It merely borrows the SS excess before holding public bond auctions. Secondly, if the general fund had SPENT $800 billion less, obviously we would have that much less total debt. But that spending and its authorization is unrelated to SS. So why is that relevant to a SS discussion?

If the general fund had spent $800 billion less, it would still owe the SS trust fund $800 billion. Why? Because $800 billion is what the SS excess was, and the general fund borrowed more than that to fund its spending. It would have still had to borrow from the SS trust fund first. The law requires that. We would just have less public debt. And as a point of fact, the total debt is about $5.6 Trillion (there are other trust funds besides SS).

>>>>The Trust Fund does not help the solvency of the system unless the excess FICA taxes pay down debt.

The trust fund helps SS solvency by storing the excess SS taxes. The trust fund helps solvency by paying down the PUBLIC debt. If there was no TF, there would be $5.6 Trillion of public debt, and NO money to help SS survive between 2013 and 2034. That is what helps solvency. SS was never designed to reduce the National debt, only to store the SS excess.

>>>>The spending as a percentage of GDP IS important (currently, it is about 20% today, much too high). However, in the context of debt and interest payments, it is not relevant.

It is indeed relevant to show that your 'theory' that the SS excess in the TF caused the politician's to spend more than they would have otherwise. It shows that your 'theory' is unfounded in fact.



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