WUI (Writing under the influence)

I'm about to receive the last pay-check of the year. It's been a lot of fun for the last couple of years to receive that check. My 401k contributions have reached the allowed yearly maximum. But more importantly, several pay-checks ago I stopped wasting contributing money to the social security scheme fund. So the last check looks pretty impressive indeed.

But I'm hearing that the next year may not be as good because Bush is considering allowing thieves Democrats to raise the limit to well above what I will be making any time soon.

The issue is the price Mr. Bush is willing to pay to attract Democrats into a Social Security deal he could claim as a legacy. The President deserves credit for trying to reform Social Security while it is still in temporary surplus. But Democrats refuse to talk about personal retirement accounts for younger workers, and the White House is already signaling surrender on that proposal. The big question left is whether having everything "on the table" means conceding to Democratic demands for higher taxes today in return for future benefit cuts.

What liberals dearly want is to raise the payroll tax cap. Under current law, Americans pay a 12.4% Social Security tax on all wages up to $94,200 in 2006, and the cap rises each year with inflation. (There is also an uncapped 2.9% Medicare payroll tax on top of that.) So why not lift the cap a little more, say the taxers, perhaps to $150,000 if the trade-off is benefit cuts that will prevent even larger tax increases in the future?

One answer is that Social Security was always meant to be run like a pension program where the taxes paid by workers are linked to the benefits they get back during retirement. Eliminating or substantially raising the cap would convert Social Security into an overt income redistribution program. If that is the direction Congress wants to go, we should all then end the pretense that Social Security is some kind of "universal" insurance program and call it welfare for poor seniors.

Such a payroll tax hike would also eviscerate Mr. Bush's most impressive domestic achievement: the pro-growth tax cuts. If the tax cap were eliminated entirely, the President would be signing into law one of the largest tax hikes in U.S. history, or more than $1.3 trillion in new taxes over the first 10 years alone. About seven million families with an income of less than $150,000 a year would be hit with a tax increase of up to $6,000 a year.

It has taken me almost 20 years to make more money than the government can tax and now it may take me another 20 years to get there again. All for nothing. Social Security will fail. The math may be hard but it can't be interpreted in more than 1 way.

No wonder Bush has low approval rating.

He could improving both his rating and workers' lifes by cutting corporate tax rates. If it were up to me, corporate taxes would be eliminated. But I guess thieves Democrats like seeing jobs leave the US. It gives them a campaing issue.