Why Extending Payroll Tax Cuts Makes Social Security's Future More Uncertain

[Donnachaidh]

http://gocl.me/r2G54B

Here's the problem with extending the payroll tax cuts: They're unlikely to ever be restored. And if they're not restored, you've done what Republicans have been trying to do for decades: turned Social Security into a welfare program that no longer pays for itself, but comes out of the general fund and for the first time, adds to the deficit.

So when you hear people saying it's a good idea for the economy, they're right -- for the short term. It's additional stimulus at a time when it's badly needed. But for the long run, it will politically undermine the long-term future of Social Security -- which the administration probably considers a feature, and not a bug:

The President asked for a $175 billion one-year extension and expansion of the employee payroll tax holiday now in place, halving the tax rate to 3.1 percent in 2012. He also proposed halving employer payroll taxes to 3.1 percent for the first $5 million of payrolls in 2012. The president also wants a complete payroll tax holiday that would apply when companies grew their payrolls by up to $50 million in a year by hiring new workers or raising the salaries of existing workers.These cuts in the Federal Insurance Contributions Act tax (FICA) may be one of the best available stimulus options in the current political climate, and they will have a positive economic impact.

Ananalysis by The Center for Budget and Policy Priorities notes that the cuts already in place make a substantial difference in the spending power of middle class families, and that allowing them to expire at this time would be very negative for growth:

Video and more at the link --

[madfloridian]

1. Link says page not found.

I went there to C&L and found it, and then I put a link here. And it does not work. How very odd.

http://crooksandliars.com/susie-madrak/why-extending-payroll-tax-cuts-makes-

Just says page not found.

[Donnachaidh]

2. new url posted.

sorry about that -- the original was too darned long.

[ProSense]

3. This part is great:

Here's the problem with extending the payroll tax cuts: They're unlikely to ever be restored. And if they're not restored, you've done what Republicans have been trying to do for decades: turned Social Security into a welfare program that no longer pays for itself, but comes out of the general fund and for the first time, adds to the deficit.

So when you hear people saying it's a good idea for the economy, they're right -- for the short term. It's additional stimulus at a time when it's badly needed. But for the long run, it will politically undermine the long-term future of Social Security -- which the administration probably considers a feature, and not a bug:
<...>

The argument is basically don't implement an idea good for the economy, "badly need stimulus," because Republicans will likely do something negative in the future.

Republicans are going to attack Medicare and Social Security in the future anyway. Bush tried to privatize it. House Republicans passed the Ryan plan and "Cut, Cap and Balance," and they're likely going to continue to push these plans.

"They're unlikely to ever be restored"

Fear mongering! The extension is for one year. It would require a new bill. If Republicans have the power and the numbers to dismantle Social Security, they will likely go the route of Bush's scheme or Ryan's plan.

Why is there such concern about what Republicans might do...and in the future? Maybe it's time to stop hyping the flawed notion that Social Security is being jeopardize when it's not.

[Fumesucker]

6. A very large chunk of what DU is has to do with worrying about what Republicans will do..

Indeed, we are often urged to vote for Democrats no matter what because Republicans are so evil, wicked, mean and nasty.

Inevitably, restoring this tax to its previous level is going to be painted as a tax hike and it will be another in an endless series of hills that the Republicans will choose to die on.

But Republicans are zombies, they come back from everything, one resigns the office of president in disgrace and we get exactly four years of a Democratic POTUS and it's Mourning in America again.

[kentuck]

7. "Why is there such concern...?"

Good question.

Perhaps because people see how dedicated the present Democratic Party is to the idea? Maybe they would campaign against the Republicans and maybe not. This is not your grandfather's Democratic Party. They are a bunch of spineless wimps that no longer represent the people that vote them into office. They are powerless to fight the Republicans even when they have a huge majority.

Maybe the concerns are legitimate?

[customerserviceguy]

8. We already know Rethuglicans will do everything possible to gut SS and Medicare

Why do we have to go along with it?

When the President got his first FICA tax holiday passed at the end of last year, I could already foresee the words, "Every proposal I’ve laid out tonight is the kind that’s been supported by Democrats and Republicans in the past."

Yep, once he got them to do it once, he thinks they have to do it again.

[xchrom]

4. Recommend

[kentuck]

5. Rick Perry will have been right....

It will be nothing more than a Ponzi scheme, if that were to happen.

[Owlet]

9. I haven't seen any evidence

that cutting an individual's FICA tax has any major impact on the economy. Cutting the payroll tax only benefits a person who is actually on a payroll, in other words, a person who has a job. I'm not talking about the employer side of things - just the employee. Let's say I gross $1000 a week. The proposed tax reduction adds another $30 a week to my paycheck. Does that mean that I'm going to go out and spend that $30 on something? Not necessarily. I may decide to pay more toward reducing my credit card balance, or maybe I'll just put the money in the bank or buy lottery tickets with it. None of those activities, as far as I can determine, will help create jobs. I understand the argument in support of the payroll tax cut: I just don't see the data to support it. I'd like to see it, if it exists. I'm easily persuaded by facts. :-)