Oppose Social Security Tax Cut

by Steve Max

www.portside.org December 1, 2011

Yesterday I received an e-mail from MoveOn summoning me to a demonstration in support of the Obama Administration’s attempt to fundamentally restructure
Social Security and shift half of its funding into the congressional budget processes. Of course MoveOn never mentioned Social Security.  They are deceiving their members by saying
only that they support a “small but useful tax cut.”

I am sure that you too are being asked to join the campaign to restructure Social Security and I urge you not to do so. The argument that this Social Security payroll tax cut needs to be
passed as a stimulus measure is simply fraudulent. The same amount of stimulus can easily be created, as it has been in the past, by cutting the income tax for middle income people, and by making a payment similar to the earned income tax credit to those with lower incomes.

Instead of directly cutting the income tax, the Administration proposes to both extend and increase the Social Security payroll tax cut and repay the money to Social Security out of general revenue with new money from a 3.25% tax on incomes over one million dollars.

In a phone call yesterday with staff at Senator Schumer’s office, Daniele and I were told that the Democrats are taking this course because they might get Republican support
for restructuring Social Security but not for cutting the income tax. Well of course they might. The Republicans sense that this is their chance to change Social Security from the self-funding independent program that FDR set up, to one that can be largely controlled through the budget process by a majority of either house. That is assuming the Democrats will continue in the belief that allowing this tax cut to sunset is actually a tax increase, and will want to keep it on the books for years to come.

This morning it became clear that the President’s shortsighted opportunism has led the Democrats into yet another Republican trap. The Republicans have introduced
their own bill to extend the Social Security revenue cut at its present level for another year but to pay for it by freezing federal employee salaries and reducing the federal
work force by 10%. By promoting a smaller cut in Social Security revenue than the Democrats advocate, the Republicans can now masquerade as defenders of Social
Security, while still supporting a middle class tax cut and shrinking government. Pretty smart! To continue their stimulus charade, the Democrats will have to make the type
of compromise of which the Administration has been so fond.

Let us all demand that Obama and Congress end this dangerous game.

See also the posting by Social Security Trustee Charles Blahous explaining why this proposal is a bad idea.

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