If Republicans float entitlement reform, Democrats accuse the GOP of trying to push Grandma off the cliff. But apparently it’s no problemo for the Democrats to slip a big fat $240 billion IOU into the Social Security fund next year.
What do I mean? The $447 billion “jobs bill” cuts employee payroll tax contributions from 4.2 percent to 3.1 percent and cuts employer contributions from 6.2 percent to 3.1 percent. The cost? $240 billion. In other words, this is $240 billion that won’t go toward funding Social Security next year.
As I wrote last year, Social Security is already upside down. Benefits paid in 2009 were $29 billion greater than the income collected through the payroll tax. And in 2010, the Social Security deficit reached $49 billion. There is a trust fund in place to cover present shortfalls, but even that is expected to be tapped by 2017.
Hill Republicans are torn on the proposed tax cuts and maybe it would be appropriate for Boehner to ask the Democrats how they expect to pay for their tax cuts. After all, the Democrats continue to make a real fuss about the Bush tax cuts not being paid for (which is debatable – tax revenue actually increased following the cut in tax rates).
Cutting the payroll tax rates could produce more employees paying into the system. But those gains won’t go far enough to offset the lost tax revenue and we’ll still be on the hook to meet our entitlement obligations. This seems like a great time for Republicans to bring some small entitlement reforms to the negotiating table.
Until then, click the image below for a prophetic video clip:
Neil Rosekrans is a founder and partner of StateBrief.com. He has been a guest political commentator for the Arizona Law Channel, NBC's Sunday Square Off and The Terry Gilberg Show on KFYI. Neil earned his undergraduate degree from Cornell University and earned his MBA and Masters in Public Policy, with an emphasis in International Relations, from Pepperdine University.
Neil and his wife, Beth, live in Scottsdale, Arizona. 
