Tuesday, December 20, 2011
The real problem with the payroll tax holidayCharlie Pierce spells out clearly the political problem with President Obama's "temporary" payroll tax cut: it allows the opponents of Social Security to portray it as a welfare program that is draining tax revenues from hard-working families to give to unworthy types. Here's his version from The Truth About Our Payroll Tax Cut Esquire Politics Blog 12/19/2011
In our current political climate, and in the political climate that is likely to prevail for the balance of my lifetime, it's almost impossible to reverse a tax cut already in place because of the same dynamics that make it almost impossible to levy a tax increase on any group of people with sufficient clout to resist it. One of the reasons we're in the mess we're in today is that George W. Bush rammed through tax cuts the benefits of which accrued for the most part to the richest people in the country. He then launched two off-the-books wars and passed a new Medicare entitlement that was paid for largely through the sale of magic beans. And even with all of that, and even with all of official Washington having conniption fits over The Deficit, the government is ripping itself apart trying to rescind only those parts of the Bush tax-cuts that benefited the richest members of society. Nobody who can fight it ever gives back a tax cut. Ever.Franklin Roosevelt insisted on having a dedicated funding stream for the Social Security social insurance fund, to emphasize that it is social insurance and to give people a clear sense that they were contributing to their own retirement security through the tax. That arrangement has been an important part of the program's secure political support.
Since the Obama Administration has periodically pushed for a Grand Bargain involving the phaseout of Social Security and Medicare, they have removed the partisan firewall that the Democratic Party has long maintained around both Social Security and Medicare. It's hard to imagine the Administration didn't also have in mind how the payroll tax "holiday" - which as Pierce says, could easily become permanent - could open a new line of attack against Social Security.
There are other options such as a tax rebate of a similar amount that could be structured to go to everyone who pays payroll taxes.
An adherent of Keynesian economics like Robert Reich finds the payroll tax idea attractive because it's easy to implement and provides additional funds to people who are most likely to spend it immediately and therefore provide a stimulative effect to the economy. But the political problem it presents for Social Security that Pierce explains so well is real.
Tags: social security
| +Save/Share | |
Links to this post:
No subject for immortal verse
That we who lived by honest dreams
Defend the bad against the worse."
-- Cecil Day-Lewis from Where Are The War Poets?
[Tip: Point cursor to any comment to see title of post being discussed.]
SEARCH THIS SITE
News & Media Links