With Less Payroll Taxes, Who Funds Social Security?

Both Democrats and the GOP can take credit for the payroll tax cut, but have they given enough thought to how it will change the funding of Social Security?

Slicing 2 points off payroll tax rates gives Democrats and Republicans each something to cheer. Republicans can applaud a truly stimulative tax cut. Democrats can rejoice over a tax change that lightens the relative burden on lower-income earners.

But over the longer term, things get murkier. Will the 2 points really be reimposed as scheduled? Won't Democrats then say: "Wait a minute, if the temporary Bush cuts must be renewed, why can't our cut also be renewed?" How will the Social Security Trust Fund be replenished? Will it be replenished?

It's possible we are heading to a world in which the missing money is compensated for by future spending cuts either inside or outside the Social Security system. Maybe means-testing will arrive at last.

If I had to guess, however, I'd guess that we have just begun the evolution to supporting Social Security benefits from non Social Security sources - and that America has just taken its first big step towards a VAT or carbon tax.