The End of the Social Security System

Does the 2% payroll tax decrease portend the demise of Social Security as we know it? More than likely, yes.

Bill Jacobson makes the case, which he’s been making ever since the Obama election in 2008:

We have maintained the myth for several decades that FICA payments actually exist in a social security trust fund.  I say this is a myth because in fact the money is lent to the government for general budget purposes and in return the trust fund receives promises to repay the loans.  At the end of the day, the social security trust fund is only as good as the government’s general ability to pay, which is endless because the government always can print more money.  The result of printing more money out of necessity would be inflation.

The current tax holiday for a portion of employee FICA payments is another step in divorcing employee payments from employee benefits.  Employee payments into the system will be reduced, but benefits will not be reduced as a result.