How the Payroll Tax Cut Extension Affects the Future of Social Security

The Payroll Tax Cut Extension became a political fight in Washington, the Obama Administration cruised to a short term victory by portraying the GOP as the friends of the rich and demonizing the Tea Party as those standing in the way.  Canada’s Conservative government took another approach.  It will increase its payroll taxes to the tune of a $306 between employers and employees to pay for both unemployment insurance benefits and to fund the Canada Pension Plan. 
The U.S. Payroll Tax cut was to be a temporary measure, which will now go into its second year.  Approximately $110 Billion will be shifted from the Social Security Trust Fund.   While the tax cut extension may be popular with voters and was a tool for the Obama Administration to further conduct its class warfare, the bottom line is that the money shifted from the trust

fund, further reduces the ability of Social Security to fund itself, which was the basis of Social Security. 

Canada’s Conservative government, which has managed to keep the economy as the most stable within the G8 has set deficit reduction as a major goal.  Canada enjoys one of the lowest corporate tax rates and while there are concerns that Canada is not an island on its own.  The U.S.,, by far is Canada’s biggest trading partner with $1.2 Billion of goods crossing the northern border daily.  While the Canadian Taxpayer’s Association is not  happy over Canada payroll tax increase, the Canadian government is concerned about having the funding for the Canada Pension Plan and Employment Insurance.  
If Social Security is to be viable, politicians can’t keep stealing from Harry to pay Paul.   With Baby Boomers leaving the work force at a steady pace, more seniors will be relying on a Social Security payment.   Eventually the cost of the program, if retained will end up being taxed to those working. 
Is the short term political gain from a tax cut extension really good policy for the future of Social Security?  Probably not.
Washington Post says:
“The prospect of policymakers continually turning to the payroll tax as a way of providing economic stimulus troubles experts, some lawmakers and both public trustees of the Social Security trust fund. Their concern: that Social Security will lose its status as a protected benefit owed to every working American and instead become politically vulnerable, just like any other government program.And as this year’s debate about the nation’s debt showed, nothing is off limits to the political brinkmanship that has come to dominate Washington.“It’s a grave step for Social Security,” said Charles Blahous, one of two public trustees for Social Security and a research fellow with the Hoover Institution. “It just seems to me the program both financially and politically will be on a lot rockier footing.”

About the Author

Karl Gotthardt - Politisite Managing Editor Maj. Gotthardt is a Retired Military Officer with 35 years service in the Canadian Armed Forces. He spent most of his time in the Military in Infantry Battalions. Karl took part in training for Afghanistan as an Operator Analyst with the Canadian Maneouvre Training Centre. Karl is a qualified military parachutist and military free fall parachutist. He earned his U.S. Master Jump Wings in Fort Benning, Georgia. Karl enjoys working with horses for the last 24 year. He owns six. He has experience in breeding, training and of course riding.Karl was born in Germany and is fluent in both English and German and he speaks enough French to "get in trouble". Karl has written or writes at NowPublic, All Voices, Tek Journalism and many others.

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