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HR25 Eradicates Social Security

Bush’s number one priority for his second term is to “save” Social Security through private investment accounts. Although he has criss-crossed the country diligently advocating private accounts, the more he spoke about them the less popular they became. But Bush has continued and I have been wondering why. The answer comes in the form of HR25, supposedly a sales tax bill to replace most other federal taxes and simplify and make fairer our tax system. HR25 “saves” Social Security in the way Bush intended - it totally eradicates Social Security.

Section 102 of HR25 says:

"Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed."

No more payroll taxes, or FICA. What does this mean? Well, if the employer does not collect payroll taxes there is no money for Social Security. No need to worry about saving Social Security. It no longer exists.

What is an employee to do? Of course, there are 401K accounts, health savings accounts, and - lo and behold - private investment accounts. Actually, there will be no need to worry about what to call them because under HR25 ALL investments will be tax free. Isn't this wonderful?

Wonderful for fatcat employers, not for employees. With one fell swoop, HR25 breaks forever the social contract between employer and employee. The contract has been fraying for many years. But this bill destroys it entirely.

The social contract assumed that business needed labor and labor needed business. Labor agreed to offer its skills and time to the company, and the company offered to take care of labor. No more. In recent years, employers have been retreating from the social contract a little at a time. I remember when IBM effectively told its employees:

"As long as you do not screw up, you will have a job for life. You will also have many benefits to make your life more pleasant, both now and after you retire. Should the economy go bad, we will initiate projects to keep you employed and at the same time help the company to be more successful in the future."

Which company says this today? Today there is no job security. Many are temporary or part-time employees. Why? To save the cost of benefits. Many are "independent contractors." Why? Same reason - to save money for the company. Companies are withdrawing or at least reducing health benefits. Pensions are disappearing. When employees ask for a raise, they are told the company may go overseas where workers are cheaper.

The one remaining source of security for workers is the Social Security system. HR25 will kill it. HR25 will divide the country into 2 groups: employers and employees. Employers will have no connection with their employees except to see that they come, do their jobs and get paid. They will think of them as another expense, similar to cement. When you buy cement your only concern is to see if it can do the job and if it is cheap enough. Similarly when you buy a worker you want to make sure that he or she can do the job as cheaply as possible.

HR25 will make employers effectively say:

"You are hired today because we need you and you are not asking too much money. If you invest some of your pay, you will have health care and a decent income in your old age. These things are your concern, not ours. As soon as we do not need you, we will lay you off. If we can find other people, either at home or abroad, that will do your job for less money, we will lay you off."

In my previous post on the subject, I said that a sales tax is a way to shift the tax burden from the rich to the poor. HR25 does this. In future posts, I plan to show that HR25 is an abomination that feeds the greed of the rich at the expense of all those who work for a living.

If we are not vigilant, Bush will get his wish of destroying Social Security. He does not care how it is done as long as it is done. Tell your congressman or congresswoman that you do not want Social Security eradicated with HR25 - or any other way.

Posted by Paul Siegel at August 12, 2005 6:17 PM