Sat
Dec 11 2010
08:26 am

President Obama is proposing to cut the Social Security payroll tax to 1969 levels, 4.2%. The payroll tax is now 6.2% and has been for twenty years. The theory is this "will add about a thousand dollars to the take-home pay of a typical family."

Under the one-year deal hatched by Obama and Republican lawmakers, Social Security's long-term financial problems would not worsen. That's because the retirement program's trust fund would be reimbursed for its lost tax receipts. The money would come out of general revenues, the same pot that pays for food stamps and defense.

This is about $120 billion that will not longer go into the Social Security Trust Fund.

Why not just skip messing with Social Security? Why not just take the money directly from the general revenues and hand it out to taxpayers? This administration is setting a dangerous precedent.

Thanks to Vermont Senator Bernie Sanders for his 8 1/2 hour arguments against this bill. A hat tip to Mary Landrieu for also opposing the bill and giving Senator Sanders a break.

WhitesCreek's picture

How about this idea? Take the

How about this idea?

Take the 2% FICA reduction and end the salary cap. I would even go along with the rest of the plan if they would do that.

My biggest problem with all this is that the argument for taxing high incomes at higher rates is not being made. High incomes are the ones that divert the higher levels of government to their own use. Ever know a poor person to start a war? How many lobbyists does the middle class have to redirect the efforts of government into their own pocket? Let's help them be patriotic, shall we?

R. Neal's picture

I might consider taking the

I might consider taking the 2% reduction and ending the salary cap if it increased net payments into Social Security and Medicare.

The problem here is that once we "temporarily" reduce the payroll tax it will be nearly impossible to restore it. That's the plan, I'm sure. And this proposal comes at the same time the same people tell us Social Security is broke.

I'm for keeping the current rate and eliminating the cap or raising it to $1 million or something.

And I agree with the Mrs. that if it's supposed to be some kind of stimulus move just cut everybody a one-time check as a credit.

Factchecker's picture

I agree totally except NPR

I agree totally except NPR explained last night that this part does call for a reimbursement to the S.S. trust fund from general revenues so that it won't affect Social Security. Nonetheless it's just a borrow from Peter to pay Paul gimmick. And it just sets up the eventual removal of this temporary cut to be depicted as a tax increase later, just like the way the immoral Bush tax cuts are being portrayed now, virtually guaranteeing that this will be a permanent cut.

Factchecker's picture

Oops, I see we were typing at

Oops, I see we were typing at the same time re the "temp" aspect.

WhitesCreek's picture

I get everything it's just that...

I like the poetry of having 2% off the top of Dick Ceheny's income go to Old age Insurance and Disability for lower income Americans. It's a pipe dream anyway.

Sylvia Woods's picture

What about the employer's part of S.S.

Employers pay at the same rate as the employee on their wages for Social Security. Does that mean employees stop paying that 2% into S.S. and the employer also saves that 2%? If so 4% less would be going into your S.S. retirement/disability/survivor benefits. Don't you think that will affect you when you get ready to retire? Taking it out of one pot to put it in the other seems like a way to undermine Social Security. Seems that if the big guys can't privitize S. S. now, they will find some other way to do it in.

Midori Barstow's picture

Potential Medicare Dangers

Saul Friedman
GRAY MATTERS: Potential Medicare Dangers

(link...)

R. Neal's picture

Social Security advocates

bizgrrl's picture

From that article: The

From that article:

The payroll tax credit would be more generous to individuals making more than $20,000 and married couples making more than $40,000. For those making less, the payroll tax cut would be less than the Making Work Pay credit.

Making Work Pay, which expires at the end of the year, gives workers a tax credit of 6.2 percent of their wages, but it is capped at $400 for individuals and $800 for couples. The credit is phased out for individuals making more than $75,000 and couples making more than $150,000.

Sounds like they should have extended the Making Work Pay credit.

Andy Axel's picture

They're laying the groundwork

They're laying the groundwork for slashing SS benefits, counting on the power of collective amnesia.

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