Payroll Taxes Are the Achilles Heel of Social Security, by Jim Kavanagh

to the order of me

Image by frankieleon via Flickr

by Jim Kavanagh
Writer, Dandelion Salad
The Polemicist
August 21, 2020

On August 8th, Donald Trump took four executive actions on coronavirus relief. One was a memorandum deferring, to the end of the year, payment of the employee portion of the payroll tax for employees making less than $4000 biweekly. (Employer payments had already been deferred in the CARES act.)

He did this, according to the language of the memorandum, because “This modest, targeted action will put money directly in the pockets of American workers, and generate additional incentives for work and employment, right when the money is needed most.”

In an additional Trumpian flourish, he stated: “If victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax… I’m going to make them all permanent,” and: “If I win, I may extend and terminate… I’ll extend it beyond the end of the year and terminate the tax.”

To that effect, he included this language in the memorandum: “The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”

The “payroll tax” is, of course, the FICA tax—part paid by the employer and part by the employee—that is earmarked for the Social Security and Medicare Trust Funds. The understanding is that Social Security and Medicare (SS&M) benefits are paid out from these funds. For FDR, that understanding “justified” SS&M in fiscally stringent terms that would make SS&M impervious to challenge from conservative politicians: “We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”

This is the dominant paradigm about SS&M funding, shared by the vast majority of conservative Republicans, liberal Democrats, and radical leftists. Thinking in that paradigm, the vast majority of liberals and leftists immediately and strenuously protest any attempt to cut payroll taxes as inevitably undermining the SS&M programs those taxes supposedly pay for. These are, after all, the only semi-social-democratic programs U.S. capitalism has seen fit to tolerate, and we must not allow those who are trying to destroy them to succeed.

The reaction to Trump’s announcement certainly follows that pattern: citing two progressive critics, Lorie Konish at CNBC reports: “Trump’s payroll tax cut would ‘terminate’ Social Security, critics say”; Jon Queally in Common Dreams says: “Trump Just Admitted on Live Television He Will ‘Terminate’ Social Security and Medicare If Reelected in November,” quoting Nancy Altman, president of Social Security Works to the effect that, “[Trump’s] promise to ‘terminate’ FICA contributions if he is reelected is a full-on declaration of war against current and future Social Security beneficiaries”; and Dave Lindorff in CounterPunch says “Trump Launches Attack on Social Security and Medicare.”

These are the typical responses of liberals and leftists, and not only them. As Andrew Solender reports in Forbes, “however much [Republicans] dislike those payroll taxes,” they, too, understand that those taxes “go exclusively to fund Medicare and Social Security” and are loath to upset that arrangement.

We might remember that we’ve heard all these concerns before, though with somewhat less MSNBC/CNN/DNC hysteria. In 2011, Barack Obama—excuse me, the Obama-Biden administration and the Democratic-controlled Congress declared a “payroll tax holiday” for exactly the same reasons as Trump just did (in a considerably more dire economic situation)—because, as Obama said: “It will help families pay their bills, it will spur spending, it will spur hiring, and it’s the right thing to do.”

According to an NPR report in December, 2011, that holidayreduced Social Security’s revenues this year by $105 billion,” though, “Obama showed no sign of being troubled by those facts when he … called on Congress to extend the payroll tax cut for another year.”

Others were troubled, however, including Republican Senator Lamar Alexander, who said: “Getting rid of the way we fund Social Security through the payroll tax is a dangerous idea. Taking money from Social Security funding is a long-term raid on solvency of Social Security.” The same progressive advocate quoted this month, Nancy Altman, was then “alarmed to see a Democratic administration dipping into Social Security’s revenue stream to stimulate the economy,” and “worried the payroll tax cut has become so popular it will be hard to end it… Many of us at the time said that it’s no way this is just going to last one year. And sure enough, we’re back now talking about expanding it.”

So, although both Obama and Trump saw a value in sometimes cancelling payroll taxes, in order to stimulate the economy (and surely, also, because it’s “so popular”), everyone from right to left agrees: it’s absolutely necessary to keep the payroll taxes, because terminating them means terminating SS&M themselves, given that those taxes are necessary to fund those programs.

Except they are not, which is what Trump and Treasury Secretary Steven Mnuchin were telling us.

Here’s what Trump said, “promis[ing] to protect the program”: The payroll tax cut “would have ‘zero impact on Social Security,’” because the program “would still be funded ‘through the general fund’.”

And here’s Mnuchin, in an interview with Chris Wallace (Wallace’s questions in bold type):

“I want to pick up on what you just said: that if the president’s re-elected he would like to cut the payroll tax. The payroll tax is what finances Social Security. The payroll tax is what finances Medicare. Democrats are now saying if President Trump is re-elected he’s going to gut those programs because he’s going to gut the tax that pays for them.

“Chris, that’s not the case. There would be an automatic contribution from the general fund to those trust funds. The president in no way wants to harm those trust funds. So, they’d be reimbursed just as they’ve always been in the past when we’ve done these types of things…

“I just to be clear here though the Democrats are saying the result of a payroll tax cut is, it would mean a cut in benefits for Social Security and Medicare, to which you say…

“That’s just factually inaccurate. There’d be no reduction to those benefits and the president’s made that very clear.”

Trump and Mnuchin are asserting here, contrary to the dominant left-right common wisdom, that terminating the tax does not mean terminating the program. And they are right. It is true that, economically, these social programs do not depend on payroll tax contributions to the trust funds.

For whatever opportunistic reasons and however fragmentarily, they have opened the door for questioning the “payroll tax/trust fund” structure, which is actually a weak and failing line of defense for SS&M that must be abandoned. The better response of the left is not to reflexively reject what they are saying, but to say “You’re right. The tax isn’t necessary,” and take the discussion in a much more productive direction.

If you don’t like admitting that these execrable characters are right, take it from FDR, who, as mentioned above, invented the whole payroll-tax/trust-fund scheme. When challenged on it, he openly acknowledged it was a fiction (what I called, in a previous article, the Roosevelt Ruse). Here’s the full quote excerpted above (new parts highlighted):

“I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.

So, FDR himself knew and said that payroll taxes are an economically unnecessary political device, which he thought would protect Social Security from conservative attacks.

How’s that working out? Has the payroll tax stopped those attacks? Or hasn’t it—disliked and regressive as it is— become, not the potent armor it was supposed to be, but the Achilles heel in programs like SS&M? Hasn’t it been the easiest target, inviting incessant and “popular” sniping by the right?

In fact, as Alan Nasser has shown, in his informative article, How Franklin D. Roosevelt Botched Social Security, FDR set up the payroll-tax/trust-fund scheme the way he did not just to mollify other conservatives, but because it reflected his own conservative mindset on such matters:

“Roosevelt wanted to design Social Security in such a way as “to preserve the system of private enterprise for profit…[and] compete as little as possible with private enterprises.” The program was to … embody to as great an extent as possible the principles of capitalism. To Roosevelt, this meant that a plan … must conform as closely as possible to the existing system of private insurance; … Social Security was made to inhabit and accommodate itself to the space within which private profit is made. [It] required, then, an economic counterpart to the private individual insurance premium… the payroll tax, a deduction from the wage.”

Thus, despite any pretension that it’s a talisman against the right, the payroll-tax/trust-fund scheme is intrinsically conservative in design, and everyone defending it is supporting a fundamentally conservative fiscal arrangement. It’s another example of adopting a conservative framing in the hope that it will keep conservatives at bay. How has that ever worked out?

Think Obama and healthcare. Payroll-tax/trust-fund SS is the ACA of public pension programs, tax-premiums and all.

Why are leftists so resistant to recognizing all this? Payroll taxes are just about the most regressive taxes there are. To employees, they are a wage tax; to employers, it’s equivalent to a wage increase, but one that the worker does not get, and is passed on to consumers as a price increase, thereby paid again by the working class. This is the thing leftists want to fight for? Because they think it’s necessary? Even when many on the left, the chief economic spokesperson for the ruling class, and the inventor of the scheme tell us it isn’t?

The result is that Republican reactionaries delight in watching left defenders of SS&M (and proponents of Medicare-for-all) preach about the need to raise the most regressive taxes on the most overtaxed people, the largest deductions from working-class paychecks every week. “Just a teensy bit. This is the last time, I swear. We’ll take more from billionaires.” To which, those Republicans will riposte, addressing the workers: “They’ll never stop raising those taxes.” And they will be right.

Watch the reaction of every single young worker when s/he gets their first paycheck. What provides the best explanation to build a politics around that?

So, when anyone—Trump, Mnuchin, or FDR—opens the door to another paradigm that does not depend on payroll taxes to fund SS&M (or taxes to fund government programs in general), maybe we shouldn’t insist on closing it without looking in. If we walk through it, maybe we’ll get out of the room where we’re being nibbled to death trying to defend unpopular, regressive, and unnecessary taxes that working people rightfully abhor.

Of course, there are a number of ways in which the Trump-Mnuchin assertion can be developed politically, and I am not suggesting that Trump, or Mnuchin, or the Republicans, or Biden, or the Democrats would actually develop the implications of that assertion in a way that will strengthen rather than undermine SS&M.

I am saying that the fundamental premise they have stated—that these programs do not depend on the payroll tax—is A) correct, and (relatedly) B) provides a much stronger ground on which to fight for the universal social-democratic programs we need than does the current common wisdom.

And I am saying that leftists should take hold of what they are saying, encourage everyone to pay attention and take it seriously, and develop the left position on where to go with it. When someone says: “You can stop paying those payroll taxes and still get SS&M,” the best response of the left—if that is really possible—is not to say” “No, you can’t. Don’t listen to them. You cannot accept that 6% immediate pay raise they’re offering you!” Anybody who says that better be damn sure they know what’s possible and what isn’t.

So, are Trump and Mnuchin right in saying that, even without payroll taxes, SS&M “would still be funded through the general fund,” and, “There would be an automatic contribution from the general fund to those trust funds. … just as they’ve always been in the past”? What does it mean to say that the payroll-tax/trust-fund arrangement is an unnecessary fiction?

In fact, this is an economic reality known and stated for years since FDR by economists of all stripes. Here’s Robert Eisner, who was an economic advisor to George McGovern, in his 1998 article, “Save Social Security From Its Saviors,” talking about the “fundamental misconception”

“that payment of benefits somehow depends upon the OASDI (Old Age and Survivors and Disability Insurance) trust funds. The trust funds are merely accounting entities. Our payroll taxes or “contributions” go directly to the United States Treasury. Our benefit checks come from the Treasury—and those receiving them can verify on those checks that the payer is the Treasury of the United States, and not any trust fund.

“Social Security payments are an obligation under law of the U.S. government. Our government and its Treasury will not, indeed cannot, go bankrupt…

“Expenditures alleged to be related to trust funds are often less than their income—witness the highway and airport funds as well Social Security. There is no particular reason they cannot be more. The accountants can just as well declare the bottom line of the funds’ accounts negative as positive—and the Treasury can go on making whatever outlays are prescribed by law. The Treasury can pay out all that Social Security provides while the accountants declare the funds more and more in the red.”

Eisner cites a 27-year veteran of the Office of Management Budget, who, regarding the “misconception” that benefit payments depend on the trust funds, confirmed to him: “You are absolutely correct on this point,” adding, “very few if any of the academics or analysts who comment on Social Security have the guts (or perhaps knowledge) to recognize this fundamental fact.”

And, more recently, James K. Galbraith:

“Social Security and Medicare are government programs; they cannot go bankrupt, and they cannot fail to meet their obligations unless Congress decides… to cut the benefits they provide. The exercise of linking future benefits and projected payroll tax revenues is an accounting farce, done for political reasons.”

You can also look at economist Mike Norman’s page, with screenshots of the Daily Treasury Statement, showing that “employment taxes” do not “go into the ‘trust fund’ where they are either used to pay for benefits or saved for later,” but “deposit into, and withdraw from, the same Treasury General Account as all other government programs.”

Norman also finds the trust-fund scheme to be the Achilles-heel:

“I make these points because the supposed Trust Funds have now become the weak point for Social Security and Medicare. The Peterson hacks love to scream about how the funds are going broke, and how we need to slash benefits NOW!! The reality is that Social Security and Medicare will always be solvent, just like every other federal program. There is no financial reason why the federal government cannot just credit our bank accounts in any amount that it wants.” [my bold type]

There are a few things to unpack from these quotes. One is the relatively simple fact that payroll taxes are treated as part of the Treasury General Account, and labeling them part of a “Trust Fund” is just that—labeling. It’s like a putting a “Super Important” tag on an email, so you can know exactly how many super-important messages are part of the big pile you’re ignoring. The “Trust Fund” is part of the big pile of taxes registered in the General Account. It’s a labeling/sorting/accounting device, not really a separate “thing.”

That is the simplest point in what Trump and Mnuchin said, and it is probably as far as they would ever want to go with it. It’s relatively safe because it leaves the General Fund as the place where taxes that pay for programs are found. But there are a couple of other points in what Eisner and Norman say above that lead us beyond that, to exactly where the left should move the debate.

One of those important points is Eisner’s: That “Social Security payments are an obligation under law of the U.S. government… The Treasury can pay out all that Social Security provides while the accountants declare the funds more and more in the red.”

Here’s the relevant section of a Congressional Research Report on “Social Security: What Would Happen If the Trust Funds Ran Out?” from 2014, updated in July of this year:

“Legal Entitlement to Social Security Benefits

“The Social Security Act states that every individual who meets program eligibility requirements is entitled to benefits. Social Security is an entitlement program, which means that the federal government is legally obligated to pay Social Security benefits to all those who are eligible for them as set forth in the statute. If the federal government fails to pay the benefits stipulated by law, beneficiaries could take legal action. Insolvency would not relieve the government of its obligation to provide benefits.” [bold type in original]

As the Report also recognizes, there is another law, the Antideficiency Act, which “prohibits government spending in excess of available funds” and reactionaries would undoubtedly try to use that law if the “Trust Funds” were depleted, but “Social Security beneficiaries would remain legally entitled to full, timely benefits and could take legal action to claim the balance of their benefits.”

As Stephanie Kelton says: “There is no economic justification for cuts to either program [SS&M]” on the basis of the solvency of any trust fund, “The decision is entirely political.”

By the way: Yes, “entitlement”—a word we should stop avoiding and step right into. As defined by the Congress, an entitlement program is one we have a right to as citizens. Isn’t the whole point that healthcare and a decent pension for old age and disabilities should be a right? Isn’t a right something we’re entitled to?

See Alan Nasser again on the lingering legacy of FDR’s conservative framing, which too many leftists have joined the Demopublican mainstream in accepting:

“Roosevelt’s repeated characterization of social insurance as an ‘earned right’ condenses in two words the contradiction implicit in American elites’ construal of social democratic benefits. ‘[E]arned right’ is an oxymoron. One has a right by virtue of what one is; one needn’t do anything to have a right. American citizenship bestows certain rights. To claim these entitlements one need only be an American citizen.”

A right. Something for which one needn’t do anything, including pay a tax.

Which brings me to the larger point implied in Eisner’s, “The Treasury can pay out all that Social Security provides while the accountants declare the funds more and more in the red.” What Eisner says of the trust funds here is also true of the General Fund. Thus, Mike Norman’s, “There is no financial reason why the federal government cannot just credit our bank accounts in any amount that it wants,” while the accountants declare it’s in deficit.

This is the point, which has been known to economists for at least 74 years (“Taxes For Revenue Are Obsolete,” 1946), and has been highlighted recently by Modern Monetary Theory (MMT) (and which I’ve dealt with at greater length in two previous essays): taxes do not fund federal government programs.

Taxes, whether registered in the spreadsheet labelled Trust Fund or General Fund, are not real revenue that “pays for” any government program.

Here’s what all the rigmarole about “trust funds” comes down to:

Two parallel but separate things are going on.

  1. They—the managers of the monetary system—create a spreadsheet labelled “SS Trust Fund ” (or “General Fund,” or whatever). They mark down the numbers in workers’ paychecks, and mark the up numbers in that spreadsheet.
  2. They spend/create money (e.g., SS benefits), as required by law.

They then say the money spent/created in 2 must not exceed the number shown on the spreadsheet in 1, and, furthermore, that the money spent/created in action 2 comes from thing 1.

Debate ensues, forever, between progressives and conservatives, about how to get those numbers to “balance.” They have won. The terms of the debate guarantee it.

(“They” being the managers of the money system, who know what they’re doing, the politicians, most of whom don’t, and the ruling class both groups work for.)

It’s a fiction, a pretext—per Galbraith, a farce. There is no necessary economic relation between the numbers on spreadsheet 1 and the activity in 2. Paraphrasing Eisner: The government can pay out all the benefits in 2, while the accountants declare 1 in deficit. Forever.

The alleged need for the numbers in 1 to equal the numbers in 2 is their “construal” of how “social democratic benefits” are financed, which guarantees there will never actually be such things. It’s a politically-confected correlation, not an economic causality. As FDR himself, who did the confecting, stated.

As long as we accept this framework, we are in an economically senseless and politically losing battle. We’ll be constantly insisting on drawing enough “payroll tax” numbers from workers’ paychecks into the Trust Fund spreadsheet to equal the amount of benefits paid. In other words, running Social Security in a way that “embod[ies] to as great an extent as possible the principles of capitalism”—you know, like a business. Exactly the neo-liberal austerity mandate that we reject from RepubliDems in every other instance.

The left should refuse this debate and replace it with a framework that dispenses with the notion that a social program must be run like a business—i.e., on the condition that it doesn’t “lose” money. We must finally say that the “Trust Fund” spreadsheet is unnecessary, that 2 has nothing to do 1, and that we absolutely should terminate payroll taxes and set SS&M benefits however we want.

Because we can.

We have a fiat money system. Within that system, the federal government cannot “lose” money by paying for social programs. It creates money—as much as it wants, without “collecting” anything in advance. It does this through a political decision, by passing a law saying, “the following sums are allocated,” thereby directing the Treasury to mark up those amounts in the accounts of citizens, businesses, and organizations.

Money is thus created by spending, and before any of it is retrieved (actually, cancelled out) through taxation. It’s not tax-and-spend, but spend-then-tax. And it’s an entirely political process. It’s time to recognize this “fundamental fact.”

Understanding the spend-then-tax public money system does away with trust finds and payroll taxes and balancing spreadsheets as the canards that they are. It concentrates the mind right where it should be for leftists, on the entirely political questions about of the government doing the spending: Who controls it? Whom does it serve? For what purposes does it spend/create money into society and tax/retrieve it out?

Consider the logic of the alternative—the common-wisdom, dominant paradigm of the left and right: If government spending depends on tax revenue, on dollars that come from “taxpayers,” that means public wealth depends on private wealth. It means public programs can’t be considered a “right.” They have to be purchased by the private money of taxpayers. That gives those who pay more taxes a prima facie claim to demand more influence on how “their” “taxpayer money” is spent—i.e., more political power. They are, in effect, society’s donors.

It also means that the programs you can “pay for” with taxes on the rich are limited to the amount of money the rich have, which means we have to keep the rich around, and have to make sure they stay rich. Look at Bernie Sanders’sMake Billionaires Pay Act.” It says that, “By taxing 60 percent of the wealth gains made by just 467 billionaires during this horrific pandemic, we could guarantee healthcare as a right for an entire year.”

Wow, one whole year! So, “Tax them some more!” the taxes-pay-for-SS&M progressives will say. Well, exactly. Drain ‘em dry! But don’t you then dry up the tax well from which you extract the “taxpayer dollars” to “pay for” everything? Where are you going to get the money then? Higher payroll taxes, maybe?

At that point—or now, thinking through it—can we recognize the answer that’s left (in every sense of the word) and obvious: From the same place we always actually have got the money—the political decisions of whatever public authority has the power to say “the following sums are allocated.”

As a socialist, my goal isn’t to make billionaires pay; it’s to make them disappear. Even short of socialism, I’m in favor of a robust social-democratic taxing policy that establishes an effective minimum and maximum income and wealth policy, which would entail imposing confiscatory taxes on upper tiers of income. I have no contradiction there with my promotion of SS&M and other robust social-democratic policies, because I know we don’t need the money of the wealthy to buy them.

I understand that probably most leftists are still reluctant, as I was for a long time, to accept the assertion that taxes don’t fund government spending, though I’d say it’s staring us in the face as an empirical policy fact. We’ve just seen—what $4-6 trillion having created out of the very real power of the purse, too blithely dismissed as “thin air.” It certainly didn’t come from “taxpayer dollars.”

Still the assertion contradicts a deeply-ingrained paradigm, within which leftists have developed a comfortable, and often effective, discourse of reform. I get and respect the resistance from those who really are not persuaded. It’s either right or wrong, and the debate about it is ongoing and necessary.

Less palatable to me are those on the left who say: “You’re right, of course, taxes don’t fund government programs. But we can’t say that. People just won’t understand. We have to stick with the what everyone’s familiar with.”

Really? “I know the truth, but I can’t/don’t want to explain it to them, the working class comrades I claim to be fighting for and with. They won’t understand it. We have to keep stringing them along with a false narrative.” You can’t handle the truth! is a position for the left? Not a good look.

One of the main reasons why leftists don’t want to accept, or admit they accept, that taxes don’t fund government programs is that they think accepting that notion surrenders any argument for taxing the rich. In fact, it just changes the reasons why we must tax the rich—not because we need their money for anything, but because they’re too rich, and that gives them too much political power. You don’t let individuals hoard a $100 billion of socially-created wealth for the same reason you don’t let them have an atomic bomb. We surtax the rich to limit material and political inequality (and inflation), and that’s a perfectly good reason in itself. We don’t need their money, but we have the right to take it. Because we, as a polity, literally made it. It’s actually quite simple, and not hard to explain.

Will the rich use the notion that we don’t need their money to pay for programs as an argument to oppose taxation? Duh, yeah they will, as they use any argument for that purpose—like, you know: “Why do we have to pay for everything to cushion the lives or all those non-taxpaying moochers with our hard-earned taxpayer dollars?”

We are going to have to fight them about taxes, along with everything else, no matter what. There is no trick or formulation or accounting entity—”trust funds” included—that is going to stop the wealthy from demanding their right to suck up all the wealth of society. And the Roosevelt Ruse not only won’t stop them from undermining SS&M, it is the Achilles heel that the neo-liberals target, and will eventually hit, to take those programs down. It’s not “If we terminate the payroll tax, we will terminate the program”; it’s “if we don’t terminate the payroll tax, it will terminate the program.”

Does everyone not recognize the truth that “the supposed Trust Funds have now become the weak point for Social Security and Medicare”? Everyone should, since it’s been evident for a long time. I am not in the slightest bit fooled about where the Republicans—led by Trump, Mnuchin, or whomever—are going to go on SS&M, no matter what any of them are saying now. They are going to revert to the neo-liberal, austerian, deficit-fear-mongering paradigm. They are, that is, going to go to exactly the same place Obama the Obama-Biden Administration was when Mike Norman wrote that in 2014, where Biden has been for 40 years and any Biden-Harris administration will be, and where Hillary met Pete—at the intersection of Peterson Way and Clinton Avenue. They’re going to go right to the trust funds (bankrupt!) and the payroll taxes (insufficient!) to prove we have to cut, er, “save” SS&M.

Nor, however, am I foolish enough to think that meeting them on that ground—debating how to make the SS&M business “solvent”—is going to work to my advantage. That’s exactly where they want me to be. The left has to stop arguing within precisely the economic framework that everyone from FDR to Stephanie Kelton have dismissed, but the Pete-Peterson RepubliDems love. We should take every opportunity—including any formulations some politician might inadvertently or opportunistically give us—to shift the ground of debate.

In the present circumstance, that means saying something like, “You’re right. The payroll tax isn’t necessary. In fact, ‘The Treasury can pay out all that Social Security provides while the accountants declare the funds more and more in the red.’ And the same is true for Medicare, and any Medicare-for-all program. Thanks for pointing that out. Now, let’s make it so for everything.”

This issue, like too many others over the past four years, is dominated by reactive politics, by instinctive and instant revulsive reactions to Donald Trump. Trump has been a bird in the house of American politics for four years. Let’s not allow him to become a bird in the house of our minds.

Social Security and Medicare have been under attack for decades, at least as much from Democrats as from Republicans. Donald Trump didn’t start the fire to burn them down, and nothing he has done or said about them has been anywhere close to as damaging to SS&M as Obama’s almost-successful “Grand Bargain” initiative or Biden’s constant carping. Nothing anyone has said about Social Security in the last year is truer than Trump’s remarks that Biden has a “terrible record” on Social Security and “Democrats are going to destroy your Social Security.” The problem isn’t Donald Trump. The problem is the neo-liberal austerity paradigm that the Republicans—who will push Trump where they want him to go, and the Democrats, and everybody on the left or right who is clinging to the payroll tax/trust fund ploy is embracing and perpetuating. It’s not social democracy; it’s soft left neo-liberalism.

If, in the present crisis, the left can’t seize on any statement or action that can free social programs from the absurd constraints of the payroll-tax/trust-fund scheme that “embody[s] to as great an extent as possible the principles of capitalism”—well, that will be one more opportunity given by this unprecedented crisis which the left has failed to turn into the kind of change that is as radical as reality.

Payroll taxes are a bad idea. And it’s the progressive left’s stubborn defense of them and the paradigm they sustain, not Trump or Mnuchin’s insouciance about them, that poses the greater danger to the future of Social Security, Medicare, and all such programs.

IMHO:

This is not a left slogan: “Keep payroll taxes so the trust funds are solvent! Then levy some more so we can have Medicare-for-all!”

This is: “Abolish payroll taxes and extend Social Security and establish Medicare-for-all! We control the money!”


About The Polemicist

Left-socialist analysis from Jim Kavanagh, a New York City native and denizen. Also publishing on Dandelion Salad, CounterPunch, Op-Ed News, The Greanville Post, Reader Supported News, Z, and various sites on the net.

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From the archives:

Joe or No? by Jim Kavanagh

Debate on Modern Monetary Theory (MMT) Parts 1-4 (updated)

How We Pay For Medicare For All

“Taxpayer Money” Threatens Medicare-for-All (And Every Other Social Program) by Jim Kavanagh

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