President Obama gave Republicans a political victory and announced a tax cuts compromise on December 6th. The compromise validated the manner in which Republicans had held middle class tax cuts, jobless benefits, and other agenda items that would benefit Americans hostage until they were able to get President Obama and Democrats to extend tax cuts for all Americans, including the top 2%.
In his announcement on the deal, Obama declared, "We have arrived at a framework for a bipartisan agreement." Anyone who heard that should have known what was to follow wouldn't be good. Like comedian George Carlin said, "The word bipartisan means some larger-than-usual deception is being carried out."
Obama detailed, "For the next two years, every family will keep their tax cuts." That meant wealthy families across the nation would be able to get as much caviar as they wanted for the Christmas holiday. There would be no need to cut back on any holiday gluttony.
Obama added, "In exchange for a temporary extension of the tax cuts for the wealthiest Americans, we will be able to protect key tax cuts for working families -- the Earned Income Tax Credit that helps families climb out of poverty; the Child Tax Credit that makes sure families don't see their taxes jump up to $1,000 for every child; and the American Opportunity Tax Credit that ensures over 8 million students and their families don't suddenly see the cost of college shooting up." This effectively demonstrated complicity toward the Republican idea that the rich should not have to face increased taxes if working and middle class Americans are going to enjoy tax cuts or receive "government handouts."
Obama indicated that jobless benefits would be extended for 13 months and would provide relief for 2 million Americans. This was to be celebrated until Obama indicated a kind of poison pill solution had been proposed to gain support for including jobless benefits in the deal. A 2 percent employee payroll tax cut for workers next year would be included.
Brian Wingfield of Forbes.com wrote, "Instead of seeking a two-year extension of the Making Work Pay tax credit, which benefits middle class families, the administration agreed to a one-year, 2% reduction in Social Security payroll taxes for all Americans. The Making Work Pay credit, part of the 2009 stimulus bill, phases out for individuals making more than $75,000 per year ($150,000 for couples). But there's no income limit for the payroll tax holiday. In other words, the rich get a benefit where they didn't enjoy one before."
Reducing payroll taxes certainly will have some effect in decreasing the perceived solvency or health of Social Security. Cutting payroll taxes will undermine the Social Security Trust Fund. Tax relief for Americans by cutting Social Security taxes is not what Americans want. As AARP reported on the 75th anniversary of the program, "Americans place a high value on Social Security and support more revenue for it even in a time when concerns about the federal deficit and government spending are high." Americans would be willing to pay more payroll taxes to ensure the program can continue to pay out benefits to retired Americans.