Thursday, December 22, 2011
The two-month tax cut
Lest there is even a shred of doubt, a two-month extension of the payroll tax holiday is asinine, and any politician who proposes it, votes for it, or supports it, of either party, is a moron with something less than the best interest of the country at heart. MORE: Zerohedge expresses more or less the same sentiment, only with facts and reason.
9 Comments:
By 
, at
Thu Dec 22, 12:46:00 PM:
The two-month extension was an Obama statagem. So far, it's working.
Pelosi-Reid helped make it happen. McConnell and the Senate Repubs fucked up by letting it happen.
Obama has been working "$40 more a week in your paycheck" for awhile now. He wants to hang the Republicans with "$40 less" at the start of the year.
$40 a week actually matters to a lot of people. Expect Obama to remind us, a lot.
In actuality, it's $40 less going into Social Security. Somebody will have to cover that someday, someway.
This is another dangerous precedent right out of game theory: Voting majorities stealing from the rest. There's no end to it once you start.
So the Republicans may be forced to a year's extension -- with no offsetting concessions -- come January.
Or be open to attack that they're only against taxes on the 1%.
@ Obama: Well played, sir.
By 
TigerHawk, at
Thu Dec 22, 12:49:00 PM:
The whole concept of a separate payroll tax to support Social Security and Medicare is a fraud, designed to confuse people in to believing that these are "pensions" and "insurance," respectively. Better to abolish both such taxes, and raise income taxes to accommodate the considerable gap. That would at least allow for some honesty in the discussion about entitlements.
By , at
Thu Dec 22, 01:06:00 PM:
Bam is going to use "real Americans" to show the impact that a $40 decrease will have on individuals. That's good news in that it will represent a paying gig for a bunch of SEIU shills and Occupiers with master's in fine arts or gender studies.
By , at
Thu Dec 22, 01:09:00 PM:
This SS tax cut is not resulting in a loss to SS. The treasury has been cutting a check to SS to cover the losses from the SS tax cut. So for better or worse, this is actually the first step onto the slippery slope of transferring SS obligations to the general fund. Bruce Krasting covers this in detail on ZeroHedge.
Expect SS tax reductions to continue and expand, eventually supported by both parties.
--Anon Attorney
By Viking Kaj, at
Thu Dec 22, 01:33:00 PM:
It seems to me that you have summarized the 112th Congress and the 44th President in a nutshell: asinine morons who do not have the best interest of the country at heart.
By , at
Thu Dec 22, 02:17:00 PM:
"this is actually the first step onto the slippery slope of transferring SS obligations to the general fund"
Agreed.
Until now having a dedicated payroll tax wasn't necessarily a sham so long as it was kept in actuarial balance so that SS worked as forced savings, of a kind. Now that SS no longer contributes to the general fund but has instead become a drag (as SS inflows are no longer greater than outflows), the accounting fiction of the lockbox no longer works.
But the slippery slope means that SS will be exposed as a welfare fund with no vested rights. We can expect means testing and other tricks to keep it "solvent". Preserving the "rights of the many" at the "expense of the few" is a way to buy votes.
Obama & Co have been "war gaming" socialism through tax policy for years.
By , at
Fri Dec 23, 08:35:00 AM:
@TH,
In a timely post, here is Krasting's latest little missive about how Congress is paying for the 2 month extension. Nutshell: fees are being tacked onto mortgages originated by the two FMs.
http://www.zerohedge.com/contributed/bad-laws-and-hard-rain
--Anon Attorney
By E Hines, at
Fri Dec 23, 11:01:00 AM:
What's irritating to me about this whole sorry charade, even more than the self-serving idiocy of the Senate RINOs is this:
1) The Progressives are on record saying that a 2% (payroll) tax cut is good for Americans; Obama initially wanted a 3% cut on both employees and employers.
2) The Progressives have said the two-month extension is only a stop-gap; they "really do" want the stability and predictability of a year-long extension.
2) Anon Attorney's and Ignoramus' comments notwithstanding, the payroll tax cut reduces funding for an already failing SS system.
3) The Progressives are on record as refusing to allow reform to SS.
So why aren't the Repubs in the House (and the RINOs in the Senate, if they can find their stones and their principles) pushing a 2% (3%) permanent income tax cut on both individuals and businesses? Why aren't the Repubs and RINOs hammering the Progressives for defunding a SS system that they also refuse to allow to be reformed?
Why aren't the Repubs and RINOs hammering the Progressives for holding out for the expiration of the Bush tax cuts next year instead of agreeing to their permanence?
Eric Hines
By , at
Fri Dec 23, 11:34:00 AM:
We just reached escape velocity. US Debt is now officially larger than US GDP. The Payroll Tax Holiday kerfuffle shows there's insufficient countervailing political force against runaway spending. On current trajectory debt-funded spending is more likely to accelerate than to slow.
We'd be over 120% Debt to GDP if Fannie/Freddie were put on balance sheet. We've made lots of other guaranties and unfunded commitments. Our balance sheet is actually worse than Italy's, except that Big Ben has a better printing press.
Silly me, I thought spending bills were supposed to come from the House. The Senate ignored the House bill, wrote its own Payroll Tax Holiday and then got out of Dodge for Christmas. Senate Republicans went along with this. Boehner was left to hold the bag. What it did -- not for the first time -- was to isolate Tea Partiers in the House, who are being painted as irresponsible crazies by ... Senate Republicans!
It's not $40 per week. Obama conveniently misspoke by saying "week" not "paycheck". Simple math: It's more like an average of $20 per week, less if you use median. "What could you do with $17.33 more per week" doesn't work as well.
Further to Anon Attorney's point: What just got passed will give your average American family a Domino's pizza delivery once a week for two months, and be paid for with ten years of fees on new mortgages.
***
E. Hines appears to misquote me. The Payroll Tax Holiday will now likely become permanent. This will hurt SS. Ron Paul doesn't have a time machine to go back to the 1930s to stop SS. It's now a big fact on the ground. Too many people have paid in and now rely on it. SS can be fixed and made actuarially solvent. It's government healthcare spending that will break the bank, not SS.
I agree with E. Hines: The Republicans are missing a big chance here. The Democrats are actually gutting SS and should be called on it. Right now, the Republican candidates are too busy beating on each other. Ron Paul, a closet Nazi! Who knew!
