Amy Winehouse and Social Security
Social Security benefits are financed by a payroll tax that was 6.2% of pay. This amount was paid both by employees and employers. When tax collections exceed the cost of benefits in any one year, the excess goes into a trust fund; when tax collections are insufficient to pay for benefits, the US Treasury pays the difference. Under President Obama, the Treasury has borrowed money to pay the difference, which happened in 2010 and is happening this year as well.
Last Year Obama cut the 6.2% tax only on employees by 2 points for one year. This had no effect of stimulating the economy, but it sharply reduced tax receipts so that the Treasury had to borrow even more billions to prop up Social Security.
During the recent debt increase negotiations, Obama wanted to extend this cut for another year, and he is still pursuing this move.
More Amy Winehouse government.