Originally Posted by Hal :-)

I'm wondering, does it bother anyone else that Social Security and Medicare are part of the Debt talks?

They're separately funded programs. Social Security, in particular, has collected an excess $2.6 Trillion over the last few decades. It's an insurance program, and it's funded from the payroll tax. Calling it a tax used to be a misnomer. It was meant to be an insurance premium. Like insurance premiums, it's not deductible (most people don't realize they paid income tax on the withheld FICA all those years). Historically, there was an argument that it was taxable because, like other insurance, the benefits aren't taxed. We know that's no longer true.

Anyway, the payroll tax is dedicated to the social programs, Social Security, Medicare. It's extremely regressive. If you only make $1/yr, they'll withhold 7.6 cents. Many pay more payroll tax than income tax. It's only on wages, and only up to a little over $100,000. So it doesn't impact the wealthy class much. They don't pay after they hit the cap, and some truly rich escape even that through non-wages, dividends, capital gains, etc. It's also not middle class family friendly. A couple earning wages of $100,000 each pay twice what the individual earning $200,000 pays.

All that aside, the middle class has fully funded Social Security for 30 years into the future. Yet the debt talk is all about fixing Entitlements. We can't plan for next quarter, but we have to fix Social Security 30 years from now?

What they're really saying is we're never going to use the Trust Fund. Therefore Social Security is just another budget item. That being the case, why don't they just zero out the Trust Fund (that lowers the debt to about $12T), drop the unfair payroll tax in favor of the wider-base income taxes, and make Social Security pay-as-you-go, rather than pay-more-than-as-you-go.