Thursday, February 17, 2005

The AP Misleads On Social Security

The headline of this AP story could not be more misleading, it reads: "Bush May raise Taxes for Social Security".

Reading that one would assume that the President is considering raising the payroll tax to cover the cost of "fixing" Social Security. You have to read past the headline to realize that what he actually said was that the option of raising the cap past the current $90,000 more quickly than it would normally rise to cover inflation:

Asked directly, Bush said he would not bar raising the $90,000 cap, although he does not want to see the payroll tax rate go up.


In the very next paragraph in fact, the President states that he is not open minded about raising the payroll tax:

"The one thing I'm not open-minded about is raising the payroll tax rate. And all the other issues go on the table," Bush said in the interview, according to an account in Wednesday's New Haven (Conn.) Register.


So is he really raising taxes to cover the costs of Social Security? No. One could argue that it has the same effect because an earner is taxed at the same rate on more of his money, but it is not the same as if the President said he was going to raise the payroll tax from 12.5% to 15%.

The White House made clear that just because the President said the option of raising the cap was on the table did not mean the President embraced the idea. This must be the path the Democrats and the liberal elite want the President to take because the AP goes out of it's way in this article to cite a vague economic analysis as saying that if the cap were lifted entirely the Social Security system would be okay for the next 75 years:

If Congress did nothing but lift the cap entirely and therefore subjected all wages to the tax, Social Security would be financially balanced for 75 years, though the system would again face trouble after that, according to one economic
analysis


fair enough and according to another analysis ( more details are apparently not needed to make it into the AP, so why should I provide them for A Time For Choosing?), the best solution is the creation of private accounts.

We have the opportunity to create a great security blanket that reflects the age in which we live with the creation of Social Security. It would give ownership to individuals and provide them with the opportunity to use a very small portion of their social security account to determine their own financial fate. The Democrats oppose it because they fear the public weaning itself off the government, and thus their party losing more power.






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