What if your employer came to you and said, “Hey, I’ve got some great news. We’re going to lower your contribution to your 401(k). That’s going to put about $1,000 more in your pocket this year.”
You’d be asking the obvious questions, right? What does this mean for my 401(k)? Who’s going to make up the difference?
“Oh, you are, eventually,” the boss answers. “We’re going to either take a bigger chunk out of your paycheck down the road or we’re going to lower the amount you get when you retire.”
How many people would go for that? Then why are we going for this ridiculous “payroll tax cut”? Both Democrats and Republicans keep calling it a payroll tax cut because they don’t want you to know what it really is. It’s a Social Security and Medicare contribution cut. Common sense would tell you that if you contribute less there’s going to be less money when you retire. But it’s even worse than that. Since we’re paying for retirements right now, the cut in contributions has an immediate effect, in the billions of dollars.
We are in a pay-as-you-go system. In other words, what we’re contributing now is paying for the retirement of our seniors right now. Sorry, Virginia. There is no Social Security Trust Fund. It was all a ruse. Most of us understand that and we’ve come to terms with that. In fact, we’re trying to figure out how to fix this whole mess.
One way you certainly don’t fix it is by depriving the Social Security system, which is already upside-down, of much-needed contributions. Yet both parties seem to think we’re stupid. Maybe we are. According to an AP/GfK poll, a full 58 percent of us are in favor of continuing this nonsense of a payroll tax cut.
I know what some of you are saying, “I thought you were for cutting taxes in order to stimulate growth.” I am but this is the wrong tax to cut. This is not so much a tax but a contribution to a retirement plan. If we cut our contributions then there are serious consequences. We instantly increase the deficits and the debt because they take money out of the general fund to make Social Security payments.
If President Obama really believed in stimulating the economy through tax cuts he would a) make the Bush tax cuts permanent for ALL Americans and b) lower taxes even more. So why hasn’t he? It’s pretty simple. Nearly 47 percent of the people don’t pay taxes in this country. Who do you think they vote for when they go to the polls? Everybody who’s drawing a paycheck pays into Social Security and Medicare. By lowering their contributions Obama is able to reach all those people who don’t pay income taxes. In other words, he’s managed to bribe us with our own money.
As I recall it was one of those real smart guys at our country’s founding who said once elected officials had learned to do that the jig was up. I’m paraphrasing, of course. We have nearly 60 percent of the people who are either so misinformed, so gullible or so stupid that they would go along with a scheme that deprives Social Security of money just so they can buy a few more Christmas presents.
One congressman proposed that we give people an option. If they opted for the payroll tax cut their retirement would be put off by a month for each year they did it. It was shot down.
Yep, sure sounds like the jig is up to me.