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Obama's Payroll Tax Deception

By       Message Frank Munley       (Page 1 of 1 pages)     Permalink    (# of views)   3 comments

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As the old saying goes, "Be careful what you wish for."  GOPhers will show themselves to be total hypocrites if they vote against a renewal of the payroll tax cut proposed by the Obama administration while at the same time going and on about how much they love tax cuts that, in their fantasy world, always pay for themselves.  But I for one hope the payroll tax cut is not extended.  Let me explain.  

 

In 1941, Roosevelt said:

 

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 "We put those payroll contributions there so as to give the contributors a legal, moral and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my Social Security program."

 

Roosevelt's point was that the payroll tax is dedicated to the Social Security program, and as long as Social Security is solely dependent on it, reducing the tax means reducing Social Security with all the political blowback that would accrue to any politician daring to do so upfront and explicitly.  What President Obama is proposing is instead to reduce the payroll tax that goes into the Social Security Trust Fund and make up the difference with a tax on millionaires.  But by Roosevelt's dictum, even that is a bad idea because it forces Social Security to be dependent on the oft-ugly political "sausage-making" process involved in budgeting the General Fund through the tax code and other means.  Mr. Obama's payroll tax cut is a threat to Social Security, because like all tax cuts in today's political environment, it will be very difficult to reinstate it.

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Now there will be some Republicans who will vote to go along with Mr. Obama and keep the tax cut in place so they can mindlessly adhere to their "any tax cut is good" ideology and sell this line to their voters.  Another more sinister motivation will surely also be active: reduce the tax, make the cut permanent, and refuse to make up the difference, because this is a sure way to throw Social Security into a financial crisis and ultimately eliminate it.

 

Thoughtless Democrats-in-name-only (DINOs) in Congress and the White House (and they are legion!) may believe that temporary reduction of the payroll tax is "progressive" because it puts money in the hands of lower-income people who have a high propensity to spend on consumer goods.  There is an element of truth to this for the employee part of the cut, but the employer part now being proposed will do nothing of value.  These DINOs also display a willful refusal to admit and act on the fact that the US tax code is a most complicated and constantly changing thing, full of loopholes but also forcing the better among us to contribute to the general welfare.  There are many, many creative ways to safely change the tax code to reduce taxes for lower-income brackets and make the rich pay the difference while retaining the payroll tax to protect Social Security's integrity.  

 

Real Democrats should live up to their party's long-standing commitment to Social Security and go the safer route of not just rejecting the proposed continuation of the payroll tax cut, but to reinstate the one Mr. Obama got last year.  Failure to do this will be just one more indication of how right-ward the party has drifted, a drift accelerating under  Mr. Obama.

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An excellent audio discussion of the impact of the payroll tax cut and its extension can be found at  http://hereandnow.wbur.org/2011/12/01/payroll-tax-cut .

 

 

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I am a retired physics professor. I have been concerned about the Palestinian-Israeli situation for years and have authored a number of op ed pieces on the subject, often in response to other pieces giving a distorted picture of the Middle East. (more...)
 

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