[skyredoubt]

If you want to understand all that is wrong with the current mainstream discourse on deficit, Social Security, debt to China etc, just spend a couple of hours reading this beautiful short book by Warren Mosler.

SEVEN DEADLY INNOCENT FRAUDS OF ECONOMIC POLICY

Regarding Social Security, the problem is of course not the lack of funds, as if the US government would be unable to mark the retirees accounts by whatever amount they are eligible each month. But this (look under "Deadly Innocent Fraud #4: Social Security is broken.")

The ‘intergenerational’ story continues
something like this: “The problem is that 30 years from now
there will be a lot more retired people and proportionately
fewer workers (which is true), and the Social Security trust
fund will run out of money (as if a number in a trust fund is an
actual constraint on the government’s ability to spend…silly,
but they believe it). So to solve the problem, we need to figure
out a way to be able to provide seniors with enough money to
pay for the goods and services they will need.” With this last
statement it all goes bad. They assume that the real problem of
fewer workers and more retirees, which is also known as the
“dependency ratio,” can be solved by making sure the retirees
have sufficient funds to buy what they need.
Let’s look at it this way: 50 years from now when there
is one person left working and 300 million retired people (I
exaggerate to make the point), that guy is going to be pretty
busy since he’ll have to grow all the food, build and maintain
all the buildings, do the laundry, take care of all medical needs,
produce the TV shows, etc. etc. etc. What we need to do is
make sure that those 300 million retired people have the funds
to pay him??? I don’t think so! This problem obviously isn’t
about money.
What we need to do is make sure that the one guy working
is smart enough and productive enough and has enough capital
goods and software to be able to get it all done, or else those
retirees are in serious trouble, no matter how much money
they might have. So the real problem is, if the remaining
workers aren’t sufficiently productive, there will be a general
shortage of goods and services. More “money to spend” will
only drive up prices and not somehow create more goods
and services. The mainstream story deteriorates further as it
continues: “Therefore, government needs to cut spending or
increase taxes today, to accumulate the funds for tomorrow’s
expenditures.” By now I trust you know this is ridiculous and
evident that the deadly innocent frauds are hard at work to
undermine our well-being and the next generation’s standard
of living as well.

[skyredoubt]

Payroll tax cuts are a good idea. A number of both liberal and conservative economists suggested it a long time ago as a good way to stimulate the economy. But then there is this:
Why do Republicans support a payroll tax holiday?

Here's why it's a trap: the deal calls for the payroll tax holiday to last for just one year. That means on January 1, 2012, payroll taxes would go back up to 6.2%.
Put another way, the Republican message in 2011 will be this: "If Congress doesn't extend the payroll tax holiday, everybody's taxes are going up on January 1, 2012."
If you don't think Republicans that's exactly what Republicans will say, then you haven't been paying attention. Not only will they demand an extension of the payroll tax holiday, they'll make extending it permanently the centerpiece of their 2012 Presidential campaign.
<...>
It doesn't take a rocket scientist to understand that cutting the employee side of the payroll tax from 6.2% to 4.2% on a permanent basis will force massive cuts in Social Security benefits. Republicans certainly understand the implications. And that's why they want this payroll tax holiday -- because it will help them undermine the entire Social Security system.

So, we're damned if we do and damned if we don't?
This kind of skewed thinking - that payroll taxes are needed to fund Social Security and other government programs - is exactly why we find ourselves in this trap. We need to educate ourselves as to how the government spends, why it taxes and stop behaving as if the government budget is like a household budget.

[Ratmagiclady]

So, we're damned if we do and damned if we don't?
.

Unless we start actually valuing things like investing in the people, instead of acting like corporate profiteering is a sacred cow, and it's all gotta come out of an already-undercompensated workforce or else go away.