Wednesday, December 08, 2010
Now Wait Just A Minute!
Ummm, did Republicans, with President Obama's help, manage to kill Social Security Monday?
The tax deal reached Monday by the White House and congressional Republicans would cut worker payroll tax contributions by about a third. The White House said the arrangement will put more money in workers' pockets at a time when there is considerable concern about weak demand for goods and services undermining a fragile recovery.
The tax deal reached Monday by the White House and congressional Republicans would cut worker payroll tax contributions by about a third. The White House said the arrangement will put more money in workers' pockets at a time when there is considerable concern about weak demand for goods and services undermining a fragile recovery.
That might be true in the short term, but lowering payroll taxes by 2% will drain money out of the trust fund. Although described as temporary, the "cut" is scheduled to expire in 2012. Seeing what we just saw with Republican strong-arming over extending the Bush tax cuts, which would have expired at the end of the year, does anyone really believe that in an election year there will not be the same clamor to extend the cut, further draining income from the Social Security system?
The payroll tax is a flat tax, which means higher income earners will see most of the savings. The 2% cut might have been a good idea if in exchange the earnings cap (currently at $106,800) was lifted, in essence requiring every earner, regardless of income, to kick in 4.2%. That didn't happen, and I think Social Security is now doomed. It will be a slow, painful death, put the poison was administered, and Democratic politicians do not have the backbone to administer the cure, and Republican politicians don't want to.
UPDATE: Ayup!
Republicans acknowledged that the expiration of the tax holiday will be treated as a tax increase. "Once something like this goes into place, a year from now, when it expires, it'll be portrayed as a tax increase," said Sen. Bob Corker (R-Tenn.). So in a body like Congress, precedents matter and this is setting a precedent. I think that certainly is going to create some problems down the road if it passes."
Given that Congress, under Democratic control, can't gather itself to let tax cuts for the wealthiest Americans expire, members of both parties are convinced that letting the payroll tax rate revert back to its current spot will be near impossible.
Nice job Mr. President! Seriously, which party do you belong to?
Think I'll be buying Nestle stock. They own Ralston-Purina, the makers of Friskies cat food. Since that's what many baby boomers will be eating in 20 years, it seems like a good investment.
Labels: politics, social security
