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TAXES: Payroll tax cut doesn’t make sense

Letter by Charles L. Allyn, Tacoma on Dec. 20, 2011 at 1:21 pm with 36 Comments »
December 20, 2011 1:21 pm

Reducing the payroll tax that goes to the Social Security Trust Fund doesn’t make sense, because the trust fund will have to go back to the general fund and cash in some of its $2.5 trillion in bonds – money borrowed from the trust funds – to have enough to pay recipients.

The general fund will have to raise taxes or reduce deductions to get enough money to pay off the bonds. What we really need to do is raise income taxes for everybody to have enough money to operate.

Leave a comment Comments → 36
  1. BigSwingingRichard says:

    The Obama administration is the only presidency to cut funding to the social security program. Why is no one complaining about this?

  2. old_benjamin says:

    What we really need to do is to cut spending on wasteful, repetitious, useless, stupid government programs. The government has no business taking fliers such as Solyndra. It clearly has not the competence to pick winners and losers, even if it had the lawful authority. To have enough money to operate, we need first to stop the waste. There is seemingly no one in government even able or willing to do that. As someone said, It’s important to know your limitations.

  3. Soundlife says:

    Social Security Trust Fund?
    Did he really say that???
    ROFLMAO, dude, get a clue…

  4. “Wasteful spending” is in the eye of the beholder. In all honesty, the reason the government is in debt is the average American voters fault. We demand massive military spending, refuse to give up social security and Medicare, and curse every and all forms of taxation. So government has listened: tax rates are currently the lowest they’ve ever been in decades, and spending on cherished programs grows by the day. It’s time for an “adult conversation”. There isn’t enough waste and corruption to cut that would balance the budget. There are only two options to balancing the budget: cut government spending (military, SS, Medicare/Medicaid) or raise taxes. The problem is, most Americans (tea partiers specifically) immaturely reject this truth and pretend the old triple bugaboo of fraud/waste/corruption is the cause of the deficit. Unfortunately, eliminating fraud/waste/corruption actually costs money too, and besides the Kingdom of God there are no human examples of a fraud/waste/corruption-free government.

  5. jmpurser says:

    I’d say that was the least of what’s wrong with the “payroll tax cut”.

    First it gives money to the people who already have jobs and spreads that out so far and thin it doesn’t have much of a stimulus effect.

    Second for the first time it creates a situation where the money has to be paid back from the general fund so for the first time SS will actually contribute to the deficit. This is giving aid and comfort to those who want to kill the program outright.

    Finally, the fact that we’re arguing over this thin broth means there will be no meat and potatoes for the economy. This program has no real hope of providing a solution. It’s just going to make the trip downhill slightly more comfortable for a few.

    The singular advantage to a payroll tax cut seems to be it’s handy for generating political talking points during an election cycle. Once again the nation needs REAL solutions but the problems are too profitable for those who own our political parties.

  6. menopaws says:

    the tax cut stimulates the economy….and it already has done that………No one in this Congress will pass a stimulus infrastructure bill that would provide actual jobs for people…..so put some cash in pockets for people to spend…….On a smaller scale that money does stimulate our economy…….I am enjoying watching the Tea Partiers being put in a corner by members of THEIR OWN PARTY. Everyone is tired of their “drama” and wants them to start behaving………I am a new fan of Senator McConnell—he and 38 other Senators threw those idiots under the bus!!!!

  7. taxedenoughintacoma says:

    I want the house GOP to ho;d strong. Extend the tax cut for 1 year and pay for it with bloated budget cuts.

    While at it the thing in the white house must approve the pipeline. He is only worried about missing his 17 day, $4 million dollar vacation.

  8. cwu_fan – when a group of Congresspeople have signed on for allegiance to a special interest and/or individual and hold that interest higher than their responsibility to the citizenry of the United States, the problem is obvious.

  9. concernedtacoma7 says:

    This tax cut will stimulate nothing except rhetoric.

    It will not make one job, but will make SS more insolvent.

    Menopause- does your computer have an ‘enter’ key?

    An 800 billion was spent on ‘stimulus’ by the Dems currently in power. 10% of it went to infrastructure. Stop waiting for govt to solve your problems. Ask govt to get out of the way

  10. LarryFine says:

    Contrast and compare … Bush proposed allowing people to take 2% of their s.s. deduction and invest it. There was major outcry from the lefties and many media people.
    Now, we are discussing removing some funding (4% ?) and the outcry is the exact opposite.
    One thing is for sure… these people have 2 rule books.

  11. menopaws says:

    Dear “concerned”—–Quit quoting Fox propaganda and read some economic data…….The first stimulus SAVED 2 million jobs—-that was available in the Republican Wall Street Journal 2 years ago……..We are working our way out of this recession and the economic data supports that……..Your good buddies hate Obama sooooo much that they are willing to throw 160 million American paychecks under the bus and trash the economy to get him out of office. Real patriots……..Don’t think you can intimidate me—I find the Tea Party to be a sad group of pathetic losers who got lucky—got elected and have now taken a healthy approval rating and flushed it down the toilet. THEY won’t be coming back to Congress…..and that won’t be something you can blame on Obama……Bunch of morons whose pledge to Grover means more than protecting the people of this country. You go hit your enter key………I can read—try it sometime.

  12. old_benjamin says:

    Waste, fraud, and abuse in Medicare alone may amount to as much as $100 billion annually. A hundred billion here and there eventually adds up to some real money. I wouldn’t mind a tax increase if I knew every penny of it wasn’t going down the federal rat hole. Until the guvment addresses it’s own complicty in and responsibility for our problem, I will oppose a tax increase. Adults don’t demand what they can’t pay for. If that hurts, tough. Starve the beast.

  13. “Waste, fraud, and abuse in Medicare alone may amount to as much as $100 billion annually.”

    Yeah, I’m sure that the doctors enjoying the windfall profits of Medicare fraudulent billings are crying in their designer martinis at the posh Country Club.

    The less oversight you have of the program, the more fraud will be committed.

    Republicans love to talk about stopping fraud, but consider who is the perpetrator when billing fraud is found with Medicare or the Pentagon, for instance. Is is a business that is run by a liberal or one that is known for Conservative and Republican ties? Ask Abramhoff.

  14. :::::applauds Menopaws::::::::

  15. old_benjamin says:

    Who care what doctors think.

    Waste fraud and abuse is an equally opportunity employer. That it is perpetrated by conservatives more than liberals is laughable, not to mention not supported by any evidence. Greed is a human failing.

    Get a clue.

  16. citizen65 says:

    Dear menopaws;
    You say the first stimu-less saved 2 million jobs. The first stimu-less cost 800 billion (almost as much as Pres Bush’s two wars spread over seven years). Dividing one by the other means that the federal government spent 400K to save each job. Do you see the problem there? The government takes $400,000 away from taxpayers to save one job. The tea party wants to reduce this waste.
    What good will taking two months out of troubling social-security do the country? It will force the SS administration to sell more bonds forcing the deficit/debt up. This will increase the amount the government has to borrow and subsequently pay in interest. Democrats talk about it costing 1000 per family. How many families pay 1000 in FICA over two months and how much do those families make? It’s a shame that it is the only way the Sen Reps could find to bribe the Dems in creating up to 100,000 high paying jobs.
    The problem with the tea party approved congress is that they have no power. Two thirds of legislation process still resides in the lets spend more mentality.

  17. citizen65 says:

    Dear rw98512,
    Meanwhile, a recent article documents a person that defrauded medicare by 100s of billions through the use of creating a few dozen paper companies taking the money without distributing services. Welcome to government oversight.

  18. menopaws says:

    Tea Party had enough power to get the credit rating of the United States lowered last August. They held everyone hostage for weeks just like they are doing now……….They have power they haven’t earned and what respect they did have has evaporated into thin air. John McCain said on CNN today that they are destroying the Republican party…….So, no one is going to give these bozos MORE power…….I am sick and tired of people whining about government spending. Talk to the victims of Hurricane Irene or the people of Joplin Mo.Tell them we shouldn’t spend tax $$ helping them……..Oh, wait—members of the Tea Party did try to defund FEMA payments, didn’t they? Get a clue—government is only a bad thing when the money isn’t being spent on your issue………..These people in Congress couldn’t balance a budget—walking and chewing gum at the same time is a challenge for them.

  19. citizen65 says:

    The credit rating was reduced because the US has no intent on paying it’s debt. The house produced a budget. Sen Reid (D) has refused to put up the bill for voting.
    The Democrats have been refusing to vote on a budget for years, not weeks.
    They have the power they have earned, you may have heard of a term called elections. Pres Obama famously stated (paraphrased) “You lost, get over it”
    Obviously you support millions spent in training Chineese prostitutes on how to deal with their alcoholism.
    Government is a bad thing when the money is spent on their issues (e.g. ensuring their continued reign of power).

  20. citizen65 says:

    How many Republicans do you see talking about a balanced budget amendment? How many Democrats? Fact is, it’s almost exclusively a Tea Party proposition.

  21. citizen65 – you speak of Tea Party as if they were mutually exclusive from the Republicans. If so, I’m wanting to know who their third party candidate for President is.

    As to fraud, maybe a few more inspectors, rather than gutting the agency, would be in order?

    Old Ben – are you saying the defense contractors that charge the Pentagon $500 for a hammer are liberals? I’d love to see your back up on that. We know that people toting the letters “MD” around are notoriously liberal also. Like I said, ask Abramhoff about fraud. Do a little research on Ralph Reed, Conservative Christian spokesman. Tom Delay?

  22. WASHINGTON — The Senate on Wednesday voted against changing the Constitution to require a balanced budget as Congress hit yet another dead end in its search for a way out of its fiscal morass.

    Two proposals for balanced budget amendments were doomed by the partisanship that dominates Congress. All but one Republican voted against a Democratic measure, and every Democrat opposed the GOP-backed version.

    According to the Washington Post, the TEA Party didn’t submit a balanced budget amendment, but the Democrats and Republicans did.

  23. menopaws says:

    Balance budget amendment—smoke and mirrors………Senate, House can pass it–but the Consititution requires passage by 2/3 of the States. Now, we can waste time and MONEY doing a symbolic gesture that will take years and probably not pass……or they can sit down and learn how compromise is what governing is all about…..One last thing–Chinese prostitues??? Some of the crap that Fox News puts out just convinces me that PT Barnum was right….there is a sucker born every minute!!!!! The Tea Party will be gone in November—people are tired of their temper tantrums. Most of my family lives in Joplin—and most of them are conservative Republicans……..or were………The FEMA mess ended that. So, let those losers spend Christmas alone in DC—my bet is no one invited them for dinner anyhow….Maybe Grover will feed them!!!!

  24. Extending the payroll tax cut makes no sense…..but neither did extending the Bush tax cuts. Neither Party is being fiscally responsible. Going back to Pay-Go is the only way.

  25. citizen – you got silent after I posted the article about the Dems’ and GOP’s balanced budget proposals. I was hoping you’d have proof that the TEA Party was the ONLY ones to support said amendment.

  26. Pacman33 says:

    The effectiveness of this extension for reduction of SS contributions (not a tax cut) is best described by Democrat Joe Manchin.;

    “I can’t find many people who even know that they’re getting it, okay?” said Sen. Joe Manchin, D-W.Va., who opposed both plans. “So with that being said, we’re going to double down on something that we thought should have worked that didn’t work.”

    These leftist mouth-breathers drama show to string this thing out was meant to provide distraction for their willingness to raising our debt, yet again. They’re also averting attention away from the Dumunist’s lazy alternative, which is the continued assault on small business. To ensure the bill doesn’t accomplish it’s intent, komukrats raising taxes on job creators in a facet of 0bama’s latest ‘jobs’ legislation. So, they resort to deplorable tactics such as claiming “republican senators are against a payrol tax deduction”.

    The people Know and recognize Dems same behavior that two years ago caused them to have their rears handed to them with a historic, TEA Party incited, 63 seat swing in the House of Reps. In turn empowering the “Party of Know” to halt 0bama’s destructive agenda of force fed, $1 trillion, unread, spending crisis legislation, during a recession, circus it’s tracks.

  27. The bottom line: at 1.6 million wageearns, and an average $1,000 tax reduction we are talking a $1.6 trillion dollar stimulus package.

    All in favor say “Yeah”.

    All opposed say “I’m a teapot”

  28. citizen65 says:

    xring:
    A 2% continued reduction for two month’s equals a 1000 dollars for the average american? Do the math. For one month that means $500. A family earning $300K per year will save $500 per month (or a thousand in two). Are you saying the average American family earns $300K per year?

    All in favor say “I’m a liberal quoter”

    All opposed say “I think for myself”

    ps. the money saved takes away from the already troubled social security program.

  29. citizen65 says:

    rw98512:
    Sorry, I have a job, a family, friends that all take time. I don’t spend more than an hour refreshing after commenting. I noticed you waited three hours before responding. I assume you had better things to do than press f5 every 5 minutes. Please allow me the same courtesy.
    I never said the TP is the only ones to support a balanced budget. PS their are many ways to have a balanced budget. Would you believe California has a balanced budget law. By weird government accounting, debts occurred only reflect negatives in the years payments are paid. Income from borrowing occur immediately. You borrow a million with a 100K payment every year (ignoring interest) means a $900K surplus.

  30. citizen65 says:

    Beerboy:
    You are absolutely correct in saying extending payroll cuts makes no sense. FICA payments go to the social security administration (SSA). The SSA makes payments to recipients out of those. With a surplus, they buy federal bonds. With a deficit, they sell federal bonds. Reducing payroll cuts means less income to the SSA without reducing their payments. This means the SSA will be selling bonds. The feds currently pay about $450 billion in ‘interest’. This will go up, reducing the money available for things like medicare, medicaid, defense, etc. All for a two month extension that means nothing to the average tax payer.

  31. Pacman33 says:

    xring displays an acute honesty deficiency –
    “we are talking a $1.6 trillion dollar stimulus package”.

    $1.6 trillion? You lefties feel no shame. The Economic Policy Institute is a compilation of self-admitted communists with the other half liberal activists who research policy. They come up with $120 billion with a ‘B’.

    “Extending that tax cut for another year would provide roughly $118 billion in stimulus through increases in employees’ take-home pay.”

    What does that make you? A Stalinist Extremist? Or just plain dishonest?

    http://www.politifact.com/oregon/statements/2011/aug/19/jeff-merkley/jeff-merkley-says-letting-payroll-tax-holiday-expi/

  32. citizen65 says:

    A family making 50K per year earns just over 4K per month. 2% of that per month equals just over $83 each month. This deal is for two months. That means just over $166 saved. In this day and age of job uncertainty, you have to ask yourself how many of those families will spend their 83 dollars. If you multiply the $166 throughout the year, you will reach $1000. This deal is not for a year though. Meanwhile, it reduces money into the SSA and will cause fewer purchases of US debt. Both parties are throwing seniors over the cliff.

  33. citizen65 says:

    Pacman33:
    I sent the following off to the oregonian fact checker:

    Ma’am/Sir,
    I just read the fact checker at http://www.politifact.com/oregon/statements/2011/aug/19/jeff-merkley/jeff-merkley-says-letting-payroll-tax-holiday-expi/.
    It leaves a few things out.
    – The $1000 mentioned assumes the continued reduction will continue throughout the year. This bill is for two months only. Future bills may extend it, but this is not guarenteed. A family making $50K will save $83 per month. That’s 166 from this bill. In this day and age of job nervousness, how many of those families will spend their $83?
    – The article ignores the impact on the Social Security Agency (SSA). Normally, the SSA spends excess dollars on federal bonds. Deficits mean selling more bonds than buying. Reducing the money flowing into the SSA means that fewer bonds will be purchased restricting the amount of money available for federal spending. If we accept the assumption that federal spending has a multiplier, the reduced availability caused by this bill will cost jobs.

  34. Pacman33 says:

    citizen65 –

    I’m with you partner, but does it surprise you that if the Dems were ever to support a tax cut(which this technically isn’t a ‘tax cut’)it would be of this nature? Minimal if any impact and adds to the unsustainable nature of an entitlement.

    As for the 2 months issue, it’s not even sufficient time to implement the plan. Maybe the most asinine aspect of the political ploy by Reid and the Senate Dems.

    http://abcnews.go.com/blogs/politics/2011/12/two-month-payroll-tax-holiday-passed-by-senate-pushed-by-president-cannot-be-implemented-properly-experts-say/

    Reports and studies will have be done based one a 1 year extension because that’s what should have and will eventually be passed. This 2 months jive comes from Senate Dems, in an attempt to politicize the bill further. They like to tell the American people that the GOP doesn’t support middle-class tax cuts. Most Americans are very aware that Republicans made a pact with the people years ago not to increase taxes in the recession. Their disagreement is with the Dems mindless proposals to pay for it; slap it on the ole’ debt and raise taxes on small business and other job creators. Only these clowns could find a way to kill jobs with a jobs bill. The party of Know will not accept those pitiful terms and rightfully so.

    As for that link, DO NOT mistake the Economic Policy Institute (EPI) as a credible source. It is a ‘Think-Tank’ created by Labor Goons and Communists to pitch their ‘Progressive’ agenda. It would be hard to find a more partisan organization despite their deceptively innocent appearing name. I was only attempting to display how radical xring’s fable was left on Dec. 25, 2011 at 8:13 pm.

    Ultra-Partisan Org. = $120 billion / xring = $1.6 trillion

  35. citizen65 says:

    Pacman33,
    I know several people that believe the hype of Bush tax cuts for the rich. Even after I point out the revenue share payed by the rich. Even after I point out that pres. Obama himself said he wanted to extend the Bush tax cuts for the middle class but not the rich. They always say their taxes did not go down, despite evidence. I’m not convinced that most Americans believe Republicans made a pact with the people. MSM hypes the party line.
    I also believe a one-year extension is a bad idea. SS is in trouble and needs reforming (starting with a look at the Peruvian model and the age issue). Starving it is not the solution.

  36. Pacman33 says:

    I believe SS should be scrapped altogether.

    If the left didn’t get offended and dismissive when you try to “scare” them with math and if the rest of us could block out the Progressive’s deception. Most would be surprised, following some basic calculations, to find out even the lower incomes on the scale would benefit if our ‘contributions’ were instead put into a personal savings account.

    Further, many would be outraged to discover how much SS steals from the average earner after a comparison of SS to our ‘contributions’ put toward a legit, no risk retirement fund.

    It is unconstitutional and blatant thievery. It is also an act of tyranny to force those who have nothing left to put toward a legit retirement plan, after SS pilfers their chunk, to be slaves of the state. For no fault of their own, forced to live their golden years dependent on the Govt.

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