When Social Security began in the 1930s, Republicans demanded that it not be funded through the General Fund and income taxes but through a special fund and payroll taxes. FDR accepted that demand and thus created an argument for why Social Security and later Medicare must be preserved: They are self funded and not a burden on the income tax paid General Fund.
If the 9-9-9 Plan were implemented, the wall of separation between the programs and the rest of government will be gone. Then it will be easier to say that we can’t afford those programs. They already attack the plans as going bankrupt, which is impossible under the current funding scheme.
Most significantly, what will happen to the huge trust funds if the fiscal Chinese wall between those programs and the rest of the government is dismantled? Currently, the General Fund owes the Social Security and Medicare trust funds Trillions of dollars which are part of the gross debt, but not part of the public debt. If the General Fund begins paying the entitlement programs, then those trust funds will disappear like a puff of smoke.
Killing the trust funds is the true goal of the Right. Since the 1980s the deficits have been kept low because the surplus money going into the trust funds and subtracted from the gross debt to arrive at the public debt, thus allowing for lower income taxes. Now that the trust funds are being drawn down, those loans made to the General Fund are being collected and those repayments are being added to the public debt. The gross debt does not change, but the red ink simply moves from money owed to trust fund to money owed to public. If 9-9-9 were to become law, then the trust funds would be no more. Poof, trillions in debt is gone.
Then they simply say, the taxpayer can no longer afford to pay for these expensive programs like Social Security and Medicare with such high deficits, and then they go away or get reduced significantly.
Herman Cain will then get his wish to privatize pensions under the Chilean Model.
