Thursday, January 3, 2013

Obama’s raid on Social Security ends with a whimper

Contrary to all the hype about “saving” the middle class from tax increases, taxes did go up on people making less than $400,000 per year, as part of the fiscal cliff deal. The primary vehicle for this tax increase is the end of the 2 percent “payroll tax cut” implemented in 2010. - John Hayward/Human Events @Doc_o

This was never a true “tax cut.” It was a raid of Social Security funding – a cut in the Social Security tax on employees from 6.2 percent to 4.2 percent. There was to be no corresponding loss of benefits to American workers who enjoyed this funding cut. Social Security doesn’t work that way anyway – it is falsely presented to the public as some kind of individual retirement account built up over a lifetime, but in fact it’s a straightforward welfare program, with current workers funding the benefits of current retirees. Congress ended up diverting funds from other areas to cover the shortfall, so those nervous about the solvency of Social Security – notably the AARP – tended to describe the payroll tax cut as a “threat” or “risk” to Social Security funding.

President Obama was strangely silent about the end of the payroll tax cut that he once defended so vigorously. In fact, he used to push for the extension of his tax cut with the same kind of overheated hyperbole and human stage props that he used during the fiscal cliff drama. In February 2012, he launched a Twitter hashtag called #40Dollars to whip up public support, named after the amount of money that would be taken from weekly paychecks if the tax cut expired. He marched a number of people who responded to his Twitter campaign on stage to declare, “This is a make-or-break moment for the middle class. The last thing we need is for Washington to stand in the way of America’s comeback… this is the least of what we should be doing for working Americans.”

...The noisy life, and bizarrely quiet death, of the payroll tax cut should serve as another lesson in the folly of “temporary” tax cuts. Early critics of the measure said it was a gimmick that distracted the public from effective, permanent pro-growth tax reform, and it couldn’t be left on the books as a threat to Social Security funding forever. We live in a world of invincible, permanently growing government programs that can’t even be trimmed back, let alone killed when they prove to be failures, coupled with “temporary” tax cuts we lose unless we fight like wildcats to keep them… turning against each other in a panicked frenzy of class warfare when we’re told we can’t keep all of them. Enjoy those lighter paychecks, middle class Americans!