Make the payroll tax cut permanent

Mercatus Center senior research fellow and Social Security trustee Chuck Blahous has a post up at Fox News asking Congress to think twice about the consequences of extending the supposedly temporary payroll tax cut at the end of this year. Blahous writes:

While nearly everyone has focused on the debatable efficacy of temporary payroll tax relief as a stimulus measure, few seem to have noticed the severe problems it could create for Social Security itself.
Specifically, the proposal would accelerate a process begun last December: transforming Social Security from what it long has been—a benefit earned by worker contributions—into an income tax based system more akin to welfare.

But isn’t this a development many conservatives would embrace? Consider The Heritage Foundation’s section on Social Security in their Saving the American Dream long-term budget plan:

Heritage proposes to solve these problems and strengthen the Social Security system by tightening its benefits and returning it to its original purpose: a guarantee that older Americans won’t fall into poverty. Heritage proposes to make Social Security “real insurance” for Americans as they reach retirement. … Social Security will gradually be transformed from an “income replacement” system back to its original purpose of guaranteeing seniors freedom from fear of poverty and assuring a decent retirement income. This means that Social Security benefits will evolve over time into a flat payment to those who work more than 35 years—a flat payment that is sufficient to keep them out of poverty throughout their retirement. … Because the new Social Security is a real insurance system, designed to protect seniors from poverty, retirees with high incomes from sources other than Social Security will receive a smaller check, and very affluent seniors will receive no check.

The more Democrats cut Social Security’s primary funding source, the payroll tax, the more the myth of Social Security as a separate program, with a real trust fund, will be exposed.

Getting the American people hooked on big government by giving them all Social Security benefits, regardless of need, was one of the best political bets Democrats ever made. But now, in a short sighted attempt to goose the economy, the Democrats want to undermine this accomplishment. Let them. Let the Democrats have their payroll tax cut … but only if its permanent.

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