By Alan Lidstone
May 14, 2005
The Administration and Republican members of Congress have no plans to reduce FICA payroll taxes, but rather will implement a major reduction in retirement benefits. The following information is provided for your consideration in the very aggressive and determined Administration effort to plunder current and future retirement assets to satisfy the fans and supporters of the Administration who see no need to pay adequate wages, provide benefits, or pay taxes of any kind.
Briefly, the proposed change for "progressive indexing," the President and the Administration reduce benefits for anyone currently earning more than $20,000/year or $385/week, which covers approximately 70% of the working population. In addition, over time it will drive down the retirement benefits for all eligible workers to the same real dollar benefit. A major factor in the proposal is to free up FICA contributions to use Three to Five Trillion dollars to implement the "personal account" proposal.
The basic Administration mantra that basing the Social Security retirement calculation on wages as opposed to increases in inflation is incorrect and results in higher than necessary payments. This completely ignores the fact that payroll taxes are based on wages earned, not on changes in inflation. It imposes substantial benefit cuts for retirees, while leaving the FICA taxes unchanged. With a straight face, the President tells us it is not considered to a violation of repeated long-standing promises made by Congress on many occasions, or a tax increase.
The Administration sees no problem in telling Americans to just pay the increasing costs for heating oil, gasoline, health care, and housing. At the same time the Administration ignores the collapse of defined benefit plans (from approximately 130,000 plans in 1985 to 40,000 in 2005), the cancellation of retirement health benefits for retirees and increased costs for working employees by thousands of corporations, the shortfall of $450 Billion Dollars for defined benefit contributions as declared by the Pension Benefit Guaranty Corporation, reduction in real average income in 2004 from prior years, and proposing Social Security benefit cuts of 20-40%.
Reuters News Agency reported on April 26, 2005, that "Some companies have withheld or are considering holding back contributions to employee retirement plans this year to take advantage of a funding law that would disappear if Bush administration pension reform proposals are adopted by Congress." What a surprise, if you don't make legally obligated contributions to pension funds, the incidence of pension fund failure increases!
The Administration sees no need to review the current trends in corporate and governmental denial of responsibility for retirement benefits obligations for working and retired Americans. Pending Administration proposals are no more than a ruse to raid the Social Security trust funds, and aid corporate contributors who long ago absolved themselves of responsibility for employees, retirees, and paying any taxes for any reason.
Somebody should be looking out for the Electorate because the Executive and Republican members of Congress are too busy covering their tracks, avoiding military service, and taking trips paid for by lobbyists. Thank you for informing the public of the current shenanigans and consideration of my comments.
and do not necessarily reflect the opinions of Sitnews.