The larger tax-cut deal Obama made with congressional Republicans contains a built in time bomb to help blow Social Security away, as was pointed out by Senate Democrats and other backers of the only public pension and disability plan seniors have, Social Security, which started paying in 1940, 70 years ago, thanks to FDR.
Obama, with the devil at his back, put in place a nearly 30 percent cut in the payroll tax, by reducing the portion for Social Security from 6.2 percent to 4.2 percent. He allowed it to expire in a year and that means workers will see a nearly 50 percent increase in payroll taxes as the rate comes back in place, which will be seen by and described by workers as a tax hike. The “small” cut is going to cost an estimated $120 billion per year.
Them dumb Dems should never have permitted a payroll tax rate cut. In fact, it’s never happened in the history of the program, not even for a short time, because payroll taxes feed the Social Security trust fund with the financial base for the program, Nancy Altman pointed out, author of The Battle for Social Security, a history of the program, also head of the advocacy group Social Security works. Republicans have won a sleight of hand, long sought victory, even as the grinning idiot, Obama, hails it as a win for his party. I would personally suggest he resign now as a Christmas gift to America and the rest of the world.
Republicans know that the expiration of the “tax holiday” is going to be seen as a tax increase and they said so, like Republican Senator from Tennessee Bob Corker.
“Once something like this goes into place, a year from now, when it expires, it’ll be portrayed as a tax increase,” he said.
Nor will the Republicans bother to mention it was a one-time benefit for the current tax program and an excuse to underfund and trash Social Security in the long run. No they’ll still be fighting to preserve the $700 billion in tax cuts for America’s top 2 percent earners. And it’s amazing that working or middle-class Republican voters, particularly seniors, don’t see or get that. This small “tax holiday” will bloom into the end of the full income stream for America’s only senior public retirement program, and end up killing it, the rich man’s dream since FDR created it in the first depression. We are now living through the trials of the second.
Given that Congress, even under so-called Democratic control, can’t push through expiration of those tax cuts to the rich, both the Dems and Repugs know letting that payroll “tax holiday” be a one-time deal and revert back to its present rate will be well nigh impossible. Republican Senator George Voinovich of Ohio chimed in, “There’s always a tendency to continue those things . . . Once something comes in, it’s very difficult to change it.” He admitted, “It would be detrimental to the Social Security system, especially when it’s in bad shape.”
In fact, Social Security is not in bad shape if it were just left alone by these collected crooks, including Obama. If it is, they could (perish the word) raise the tax to 7 percent or 8 percent or even raise the cap of taxable income, which now sits comfortably at $106,800, letting all those millionaires, multi-millionaires, billionaires and multi-billionaires off the hook at that point, including Warren Buffet who jokes that his secretary pays more taxes than he does. Ha, ha, that’s a real scream, Warren!
Of course, a White House official dismissed the concerns. He said, “It is explicitly temporary and there’s a general revenue transfer in the bill so it will not negatively impact the Social Security trust fund at all.” Right, and the check is in the mail. Democratic Senator Barbara Mikulski of Maryland, chair of the Senate Subcommittee On Retirement and Aging, is concerned (and said so) that the payroll cut will weaken Social Security and leave it vulnerable.
“I’m concerned,” she said, “this could be the beginning of the slippery slope to getting rid of the payroll tax and cause a way of getting rid of Social Security as a public issue in the way of heading to privatization,” meaning you’ll get a mini Wall Street account, with all the corruption that implies. Wall Street couldn’t hold on to their big-time investor money or their own, let alone your modest Social Security.
Senator Mikulski added, “I know it’s been recommended by several economists [free marketers no doubt], but this is really big. My question is, shouldn’t this be viewed in a more shockwave kind of way.” It sure as hell should. And let this be a shock to Social Security seniors, because I doubt there will be some big lobbyist ad campaign to alert you seniors to it.
Cutting Social Security of any payroll tax revenue will make it appear in trouble, less healthy in projection, which by the way, actually shows Social Security can pay full benefits until 2037 and roughly four-fifth of benefits over the next 50 years. That is if the collective crooks can keep their chopping blades and hands off it. Is that too much ask, America? Let me know.
Lamar Alexander, the Senate’s number three Republican, said that reform [which is not needed at this point] of Social Security should be tied to moving that tax rate back up. Okay, as I suggested, hike it 7 or 8 percent or merely buy back what you cut. Again, he harped about “ . . . making Social Security solvent in the long run,” the old collective crooks’ mantra. If someone had told the presidents from Reagan to Bush and Obama to keep their damn hands out of the Trust Box, it would be even more be solvent than it is. It’s filled with Treasury notes, promises to pay back monies they took out. Bush called T-notes “useless pieces of paper.” I guess, like the Bill of Rights and the Constitution, “goddamn pieces of paper.”
Also, cutting a person’s responsibility to chip in for Social Security also cuts the moral and political capital that’s kept the program together — despite the fierce hatred of Republicans and blue dog Democrats and the “investor types” for any program that provide for seniors’ futures. These are the same types that helped the corporations cut away medical and pension benefits. And now there’s more moolah for the insurance companies rolling in, $450 billion more for Obamacare alone.
Nancy Altman notes that such responsibility was put in place by FDR. He said to a Treasury official in 1941, “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 these taxes in there [which by the way earn a huge amount of interest], no damn politician can ever scrap my Social Security program. Those taxes aren’t a matter of economics, they’re, they’re straight politics.”
Senate Majority Leader Harry Reid (D-Nev.), a defender of Social Security, said he isn’t worried about the threat to the program. “The money doesn’t come out of Social Security. It comes out of the general fund.” Reid is right to a point. The revenue lost to the payroll tax cut will be sent from the general fund to Social Security. But will become a line item in the federal budget, always a mouth-watering line to cut out.
Republican Bob Corer said, “It really begins to break down the whole notion even further of a Social Security trust, when the general fund is going in.” Well, then, tell you pals and President Change not to take it out in the first place. Now that’s he’s joined your party, maybe he’ll listen. He admitted, “We’ve already abused the Social Security trust and there’s no question that taking this action is just another portion of the camel nose under the tent.” How about smacking that camel on the nose?
Montana Democrat Max Baucus, chairman of the Senate Finance Committee, said he wasn’t sure if the tax holiday would be allowed to expire in a year and would depend on economic conditions. “Where are we gonna be in a couple of years? What’s the economy in a couple years? What will unemployment be? What will other indicators say? But I do think it’s important to have a break in payroll taxes,” he said. Well, Max, let’s raise your payroll taxes to make up the difference, and premiums on your juicy pension and health plans, and those of all your fellow members of Congress. This way y’all will set an example, bless you. Tell me you will!
In so many words, “the holiday tax cut” is the latest dumb idea from Congress and the president, outdoing even George Bush for sneakiness, lack of compassion, and outright stealing, no matter what they call it, “an emergency move,” or “part of a tax-cutting deal,” etcetera. It is the same-old, same-old trick to pick the pocket of the senior, who worked all his life to pay for his benefits in retirement. And how they want to steal it because it’s the only goddamn real cash they’ve got.
This cut actually gives twice the benefit to a person making $100,000 as someone making $50,000, Nancy Altman noted. Dividing the stimulus evenly and sending a check to every worker would be fairer and more desirable. But hey, who wants to be fair?
As a matter of fact, Democratic Senator of North Dakota Kent Conrad, who is trying to outdo his GOP brother thugs in “reforming” Social Security, embraces the cut. He “strongly support[s] a payroll tax holiday because the Congressional Budget Office has told us it is the second most powerful thing we can do after extending unemployment insurance to help with job creation,” he said. How about public works projects, like Obama promised, or bringing back jobs from India and China and Mexico that Clinton and Bush gave away? How’s that Kent? Or getting the banks to pony up with their loan paybacks on a faster track? That is before “you drop the next shoe here” after January when you really go to town on the people of America with a hatchet, and Obama’s big, white-toothed smile to back you up. Ugh!
Jerry Mazza is a freelance writer, life-long resident of New York City. His book State Of Shock – Poems from 9/11 on is available at www.jerrymazza.com, Amazon.com and Barnesandnoble.com. He has also written hundreds of articles on American and world politics as an Associate Editor of Online Journal.