If Republicans had proposed temporarily cutting the Social Security payroll tax, Democrats would have thrown a fit.
“What? Are you trying to dismantle our social safety net? Are you trying to kill the only program standing between millions of seniors and abject poverty?”
And so it would have gone.
But, since the chief Democrat himself proposed this plan, it has generated only a limp protest from few in Congress and a handful of deficit reduction hawks.
Even a group which normally stands up for seniors, the AARP, has endorsed the payroll tax holiday negotiated by Obama and Congressional Republicans.
The plan, headed for approval this week, would use general fund revenue to reimburse the Social Security system for the 2 percent cut in the employee’s portion of the tax.
Social Security is funded by a 6.2 percent payroll tax on up to $106,000 of an employee’s income. That tax is then matched by employers.
So, the billions that would have been lost to Social Security will be reimbursed by the general fund, which means it will be borrowed and added to the national debt.
Obama will get a second stimulus bill, extended unemployment benefits and a continuation of tax cuts for families with adjusted earned incomes of less than $250,000 per year.
Republicans will get an extension of the Bush tax cuts for the wealthy and a cut in the estate tax for, well, the wealthy.
Social Security advocates, however, are nervous about two things, the precedent we are setting and the nature of the word temporary.
Social Security taxes “ought to be held sacrosanct,” U.S. Rep. Earl Pomeroy, D-N.D. and chairman of a House subcommittee on Social Security, told the Associated Press.
“When you start to signal that the (SS) tax levels are negotiable, you end up in long-term trouble in terms of making absolutely certain that the entitlement funding streams are secure.”
What’s more, Congress over the past ten years has been much better at establishing temporary tax cuts than restoring original rates.
The Bush administration tax cuts passed in 2001, during a period of federal surpluses, were supposed to last for 10 years and were set to expire in 2011.
However, while cutting taxes is easy, restoring rates to previous levels is practically impossible.
The prospect of going back to pre-2001 tax levels is now seen as an unimaginable tax increase.
And so it will be for the temporary Social Security tax break. Guaranteed, a year from now there will be those calling restoration of the regular Social Security rate a tax increase.
There will be calls to extend the tax break for the poor. Then for the middle class. Then, just for good measure, the wealthy as well.
Social Security is a federal program that works, and its long-term deficits are manageable.
But this tax holiday opens the door to other forms of meddling that do not serve the program’s best interests.
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