nd financing social insurance from general government revenue the way most affluent nations do. That would violate implicit belief that each pays own way and should in future But that would have violated the deeply felt belief that America's retirees had paid their own way in the past and should continue to pay in the future. 1983 Moynihan and Dole raise retirement age and SS taxes The bipartisan fix, largely engineered by Moynihan, D. NY., by the then former Senate majority leader, Robert Dole of Kansas, accelerated scheduled pay-roll tax increases and raised the age at which today's young workers would be eligible for tomorrow's pensions. SS self financing thru 21st century The package, it was believed would make the system self-financing through the middle of the 21st century. Needed SS trust fund to work But to cover future obligations, the Social Security Trust Fund would have to take in far more cash than it paid out for many decades, $4 trillion surplus by 2030 The Trust fund balance, accumulated in government bonds, would rise to six times the annual outlay by the year 2030- an incredible $4 trillion in 1990 dollars. And at the time of the 1983 compromise, Moynihan admits, little thought was given to the political or economic implications of the surplus. Reagan Income tax cuts had already eroded Federal revenue Even before surplus pay-roll revenue started pouring in, Congress and Ronald Reagan's administration had committed the government to returning most of the money in the form of large income tax cuts enacted in 1981. Federal revenue as % of national income stable, Payroll Taxes from 23% in 1981 to 29% in 1989 Total federal revenue as a percentage of national income remained virtually unchanged. But the proportion of revenue coming from the regressive pay-roll tax rose from 23 percent in 1981 to 29 percent in 1989. 3 of 4 families pay more SS Taxes than Income tax Three out of four families with a taxpaying breadwinner now pay more in Social Security taxes than federal income taxes, when employer contributions are counted along with the deduction that shows on the paycheck. Increased tax burden on lower and middle class families To Moynihan, this increased tax burden on lower- and middle-income families is "totally unacceptable". But it is another consequence of the Reagan tax shuffle - what Moynihan calls "the dirty little secret"-- that most worries economists and perplexes the public. SS Trust fund a bookkeeping concept The Social Security Trust Fund is a bookkeeping concept. Surplus revenue, $55 billion in 1989 and climbing, is indeed credited to the fund and used to buy government bonds that pay interest. Fund no tangible assets But the fund owns no tangible assets, no gold or factories or office buildings that could someday be traded for the goods and services pensioners need. Same as most conservative private pension systems That fact in itself, Aaron of the Brookings Institution argues should no be troubling. The most conservative private pension systems and insurance companies operate the same way, accumulating paper claims on future income. No real assets being set aside What troubles Aaron and others is that productive assets are not being set aside elsewhere in the economy to ease the burden of caring for people now in their 30's and 40s in their dotage.” Loss in SS tax revenue would be compensated for by rise in Corporate Taxes: Big Business Opposes George Will, Washington columnist, Feb. 18, 1990 "The dispatch of five paragraphs was buried deep in the Wall Street Journal, as befits news of class struggle in this moment of capitalist triumphalism. The small, laconic headline was: "Moynihan Plan Opposed By Manufacturing Group" The board of the National Association of Manufacturers had met and frowned might