The Motley Fool Discussion Boards
Retirement Discussions / Retire Early CampFIRE
|Subject: Re: Harry Reid is dangerously stupid.||Date: 10/3/2012 11:40 AM|
|Author: AdvocatusDiaboli||Number: 646730 of 837717|
I wonder what is behind the Democratic commitment to avoiding reality at all costs. Is it raw stupidity or is it something more sinister? In Reid's case, it comes across as raw stupidity.
It's a question of how you define the deficit.
In essence, if you want to "cut SS to decrease the deficit", you're defaulting on the Social Security Trust fund which was created by Reagan to ensure the long-term viability of SS.
Until very recently, Social Security was in surplus, with that surplus being "invested" into government bonds. Unfortunately, the way the accounting was done was to count SS payroll taxes towards general government revenues so that the SS surplus seemed to reduce the actual deficit the government was running. Which it really didn't.
This optical illusion/sleight of hand/accounting fraud allowed Reagan and Bush II to cut taxes and run deficits that were much larger than they appeared. Bush II, at the peak of the economic cycle, was running a deficit that was really around 700 billion dollars.
In retrospect, the SS looks less like a mechanism to guarantee the viability of SS and more like a strategy in which the GOP raised taxes (payroll taxes) on the middle class, using the proceeds to finance tax cuts for the rich.
|Copyright 1996-2016 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|