Social Security is going bust … so, cut he amount of money coming in … huh?

I’m surprised that it took over a week for this obvious uh-oh to get publicized …

The Deficit Reduction Commission concluded that Social Security (and Medicare) were going bankrupt and needed to be modified to get the Fed debt down.  Their idea: start retirement later.

Within hours of the published recommendation, the crack Obama and GOP negotiators agreed to cut payroll taxes to stimulate the economy.  In case they don’t know it, “payroll taxes” are the contributions that are supposed to fund SS and MediCare.

With a time delay, some folks are figuring out that putting less money into a program that’s going bankrupt means that it’ll go bankrupt faster.

President Barack Obama’s plan to cut payroll taxes by 1/3 for a year would provide big savings for many workers but …  could jeopardize the retirement program’s finances.

Social Security is funded by a 6.2 percent payroll tax on the first $106,800 earned by a worker. The tax is matched by employers. The package negotiated by Obama would reduce the tax paid by workers to 4.2 percent for 2011. Employer rates would stay unchanged.

Obama administration officials say that a payroll tax cut is an efficient way to stimulate the economy by immediately increasing take home pay for about 155 million workers.

The government would borrow about $112 billion to make Social Security whole.

Advocates and some lawmakers worry that relying on borrowed money to fund Social Security could eventually force it to compete with other federal programs for scarce dollars, leading to cuts.

Associated Press, Social Security advocates fear payroll tax cut, Dec 12, 2010

No kidding …

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