Monday September 3, 2012

RICHMOND

We used to watch for the date when the payroll tax deduction for Social Security disappeared from our paycheck stubs. It would be a few months into the year, and then it was like getting a surprise raise for no reason at all. It wasn't much, but it was nice.

Now, in an effort to finance Social Security payments, everyone has that tax deducted until they have earned $110,000. Then they get their little surprise, which is more dollars, of course, than ours in the 1950s, ‘60s and ‘70s. On the other hand, a can of tuna fish was larger and less expensive then.

While people moan about how they will retire in 2025 and not get any Social Security because it will be bankrupt, one of the partial solutions is as obvious as the nose on Pinocchio's face. Up the ante. Deduct payroll taxes from paychecks of any size. Take it out of the CEO's $13 million salary right up until the last day of the year. Get it from Adrian Gonzalez and Lady Gaga.The balance on their direct deposits will still be enough to pay for their Escalades.

The howl following a proposal like that would be heard from coast to coast. It's a tax increase (basically), and it would come out of the pockets of the biggest salaries. There we go again, taxing the rich. Perhaps they'll have to sell a house.

The elephant in the room, of course, is the trust fund. They say the trust fund doesn't have money to go beyond a certain year -- not far in the future -- but the reality is that if your name was on that particular trust fund and you wanted to write a check on it, your bank would send you an overdraft notice.

Congress has, for years, borrowed money from the trust fund, so it's a gauzy thing at best -- a coffer of IOUs rather than a pile of cash. Congress "invested" the money in Treasury bills, which basically means that the government owes Social Security trillions.

After Peter borrowed from Paul, the cash went for roads, airports, warfare - whatever was needed. It would take increased income taxes to repay Social Security for all the money that's been borrowed and used for something besides your retirement check. Oops, there we go again, increasing taxes.

Up until 1983, my Social Security deduction was paying for my father's Social Security check. The theory was that the active workers' contribution would take care of those who were already retired. It worked. In 1983, looking at a slew of Baby Boomers whose retirements would have a huge impact on Social Security, it was decided to raise their deduction and set up a trust fund with the surplus the Boomers would create.

The trust monies were to be saved and invested. But the money was borrowed, not invested, and it was spent on various things.

So, Congress needs to repay its loans from Social Security, or full benefits cannot be paid after 2016. Extending the present payroll tax beyond that $110,000 a year begins to look better and better.

Certainly it's better than telling us our checks will be smaller, or no one will get them until they are 70. We all paid in -- and that's our money -- so Congress has to figure out a way to pay out -- not by cutting the entitlement and not by raising the age, especially at a time when many companies are urging their older workers to retire early.

Asking the American public to make up for governmental mismanagement is not the American way. The buck stops with Congress and the president, but they shouldn't stop the bucks.

Ruth Bass is a former Sunday editor of The Eagle and author of two historical novels.