Reason and Radical

Covenant

Kevin Drum writes here about how the Bush administration wants to break the covenant made between the wealthy and the rest of us regarding Social Security.

So this was the implicit bargain in the reforms recommended by Greenspan and signed into law by Reagan: From 1983 to 2018, low- and middle-income earners would pay excess payroll taxes. This allowed income taxes to be kept low, and primarily benefited high earners.

Then, beginning in 2018, instead of raising payroll taxes to pay for baby-boomer retirement benefits, Social Security would begin selling its bonds back to the government.

To pay for those bonds, income taxes would be raised - high earners would begin paying higher income taxes.

In other words, the fact that income taxes will eventually need to be increased in order to cover Social Security benefits was part of the Greenspan/Reagan plan from the start.

And this is what Bush wants to renege on:

...[the] implicit promise that high earners will keep their part of the bargain and begin paying their share of Social Security's costs when the baby boomers retire.

posted by Leimodnu @ 11:13 AM