Cross posted from Rational Resistance.
In my post earlier this week I mentioned one of the real problems in Obama's tax capitulation: the payroll tax cut.
If you recall, one of the biggest victories we had during the Bush administration was the defeat of Bush's plan to kill off Social Security by privatizing it. Hint: aren't you glad the Social Security trust fund wasn't in the market at the time of the 2008 crash? It was a hard fight because the Republicans have opposed Social Security from FDR's time, but for decades Social Security was considered the third rail of American politics. Now it's lost that status, giving Republicans free rein to attack the most effective anti-poverty program in our history.
But why is Obama going over to their side and trying to undermine Social Security? And trying to convince us it's a good deal for working people?
Make no mistake, the proposed deal shortchanges Social Security by cutting the FICA tax. For years, Republicans have been attacking Social Security, mainly by claiming that it's about to run out of money. How does it make sense to make their argument by taking money out of the fund?
As this story on yesterday's All Things Considered points out, the plan is actually to replace the lost FICA money with general fund revenues. In my view that doesn't make it a better deal; if anything, it weakens the support that people have had for Social Security from the beginning. It's just a bad idea. Even if the deal had nothing else wrong with it, this in itself would be enough to say we should fight it.
Someone else has characterized this shift (from FICA taxes to general fund revenues) as changing Social Security from a pension program (you pay $ in and get $ out) to something more akin to welfare, dependent on the budget vagaries of Congress, cuttable at whim or need. It’s the difference between a trust fund and a checking account.
A better deal would lift the income cap for FICA taxes – that is, everyone would pay in on every payroll dollar earned. Currently anything a person earns over 106,800 is not subject to Social Security taxes.
NanuqFC
In a Time of Universal Deceit, TELLING the TRUTH Is a Revolutionary Act. ~ George Orwell
Getting rid of the FICA tax annual ceiling would help balance the Social Security fund by bringing in more taxes.
The maximum annual FICA tax cut-off for top earners is another unwarranted tax break for the wealthy. It would be as if the income tax tables said you are taxed only on the first $X thousand of earnings. Above that, all earnings are tax free for the rest of the year. Most workers never reach the annual limit.
How long until the GOP proposes extending that tax break to all income, not just Social Security? After that the next logical step is to have only the poor pay taxes.The deserving rich should not pay; it is a privilege to have them amongst us.
For me the details (all degrees of bad to worse)can almost be set aside for the unmistakable impression that Obama walked into this mess(chock full of Republican time bombs)with his eyes wide-shut and afterward proceeded to lash out at many of those supporters that brought him to the dance.
Obama was NEVER on OUR side!
Obama was NEVER a Democrat, he never was on the side of the Democratic Party, ever. Just because people register as Democrats and caucus with the Dems in Congress does not make them Democrats! Just look at the ‘Blue Dog’ Dems, which were merely moderate Republicans pretending to be Democrats in order to weaken the Party. Obama and the Clintons are Fake Dems.
Obama was NEVER on OUR side! I knew that in 2007! Anyone that thought Obama was actually going to fight against the far-right extremists and for the principles of the Democratic Party had pre-fooled themselves in to believing in the fairy-tales of the GOP. That’s why I voted for Real Democrats in the primary and the General elections. (Which means I don’t vote for either Clinton either.)
How did I know Obama was a moderate Republican that hated the Democratic Party and would sell us all out to the GOP as soon as he took office? Simple. Go look at his Senate record. Go look at who he hung out with in Chicago. Go look at his record in Illinois.
Obama is exactly like Clinton: fake Democrats that only side with the GOP when it really matters. I knew that long before November 2008, and if you did not, you were not paying close enough attention.
The plan offers a tax break on Social Security collection, and then replaces it with general revenue funds for a short period of time. When the change sunsets it’ll be presented as a tax hike, and the Republicans will argue for making the old rate permanent. It’s real tough to sunset a tax break because it’s presented as a tax hike…we’ve seen that play before!