Advocacy / AMAC In The Media

Tactical Desire Supplants Strategic Good in Payroll Tax Cut Debate

AMAC’s Founder, Dan Weber

– From The Hill 1/26/12 – Prior to the December 1941 attack on Pearl Harbor, Japanese Admiral Yamamoto – the architect of the assault on Pearl – held serious reservations about his ability to continue pressure against the United States, even if Japan scored an early tactical victory. In fact, Yamamoto expressed his anxiety by declaring, “I can run wild for six months … after that, I have no expectation of success.” The rest, of course, is history.

Critical to remember though, is the real lesson of Yamamoto’s prophetic stance: There is always danger in valuing short-term tactical victories over long-term strategic imperatives. Unfortunately, this warning recently went unheeded in Washington DC, whereupon Congress and the administration agreed to extend the Social Security payroll tax cut for two months. Despite the ways in which the tax cut threatens Social Security and despite larger concerns about fiscal responsibility, elected officials passed the extension anyway, basically allowing a short-term gain to overrule the long-term good.

While many argue that extending the Social Security payroll tax cut is essential to promoting economic vigor, doing so is not without significant cost. In fact, for the first time ever in the history of Social Security, roughly $110 billion from the U.S. Treasury will be transferred to the Social Security trust fund to finance the first payroll tax cut from 2011. An additional $19 billion is now required to cover the two-month extension just passed. What is more, 20 members of a bipartisan conference committee have been chosen to determine how to pay for a potential year-long extension in February when the current two-month vehicle expires.

Beyond the limited, temporary reduction in taxes, there is really no reason not to let the Social Security tax cut expire. Simply, reducing income to the Social Security trust fund – given that the program is already facing insolvency – is a perilous plan from the get-go. And let’s face it, the Social Security tax holiday does not really give extended relief, build consumer confidence, or promote sustainable growth when it is extended for only two months!

Certainly, raising taxes – or restoring higher tax rates – in a stagnant economy is risky policy. But there are other solutions. For example, rather than a modest 2% payroll tax cut that subjects a major entitlement to sizeable risk, why not consider a 4% across-the-board income tax reduction? Not only providing substantive tax relief, this would be a more responsible measure, particularly since tax decreases should originate from general revenue sources, and not be finagled from Social Security.

There is growing support for substantive and responsible reform. In fact, the 250,000 member Association of Mature Americans (AMAC), recently conducted a poll on this very issue; when asked whether members thought the Social Security tax cut should be extended, 95% of the 2,000 respondents said eliminate the break! Clearly, AMAC members are worried that repeatedly passing last-minute, economic band-aids should not trump the solvency of Social Security. AMAC’s poll results are especially notable given that slightly more than half of AMAC’s membership are still working and would directly benefit from a continued payroll tax cut.

That being said, there are leaders in Washington who have indicated similar concern. Of note, Senate Minority Leader Mitch McConnell (R-Ky.) recently articulated the need for greater over-the-horizon thinking: “As we move into the new year, it’s crucial for everyone to realize that, once this temporary extension is behind us, the larger goal is to move beyond a discussion of temporary assistance and toward a bipartisan plan to get our economy moving again, reform the tax code and preserve and protect entitlement programs for future generations.” Indeed, a clearer set of priorities could not be stated.

The key question remains, will Congress and the administration follow the path of Imperial Japan and swap long-term stability for convenient tactical gain? Or will they truly do what is needed for the enduring interest of the country?

Weber is the founder of the Association of Mature American Citizens (AMAC), an organization that advocates for seniors by promoting commonsense government and offering discounts on insurance hotels, car rentals and other products and services.

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8 years ago

i agree with you, but you should add that the tax raise that would fix Social Security nmtuaos to an average of 20 cents per week per year while incomes are going up 10 dollars per week per year. The money would be needed to pay for the longer life expectancy of the people paying the tax.This is so tiny that no one would notice it. But for some reason the amount is never discussed, while the cumulative shortfall without the tax raise is used to scare people into doing something stupid, like cutting benefits or raising the retirement age.There… Read more »

8 years ago

Whole lotta talk and not much action… What ya gonna do ’bout it succa?

8 years ago

I believe all of the commentators have missed the true intent of the liberals regarding this “tax break”. For years when liberals were confronted with the fact that nearly half of the population pays no income tax, they have responded, that’s only income tax. When you add in the social security tax, gasoline taxes, lottery tickets and other use and excise taxes, the “poor” are taxed at a much higher rate than the middle “earning” class. By eliminating the social security contribution, they are insuring that those who do not pay income tax including illegals, also pay less in use… Read more »

8 years ago

I don’t know if this thought is too gloomy or crazy but have you ever posed the question of why the establishment politicians both Republican and Democrat and especially this administration are so bent on destroying social security and establishing medical rationing through Obama care? Consider this. Until everyone with the memory of true freedom and the true history and purpose of the Constitution is gone, it will be difficult for them to completely issue in the kind of rule they desire. The establishment Republicans and Democrats are two heads on the same progressive dragon. The only difference between them… Read more »

8 years ago

Mark on 1/29/12, you are absolutely right. May God have mercy on us all.

Pastor Tom
8 years ago

If the Republicans were driven by principle instead by re-election hopes, they would have voted against this turkey. Virtually NO ONE in Congress has any courage. They think that voters are too stupid to understand why this “payroll tax cut” is a bad, bad idea. Of course, that raises the question, “Are they right?”

Doug Nicholson
8 years ago

There is something that nobody is talking about. The dollar amount of a S.S. recipient’s check each month is determined by how much was paid in. Therefore, the amount of each recipient’s monthly benefit check will be less and less as long as this so-called “tax cut” remains in effect.

concerned citizen
8 years ago

Doesn’t anyone understand, this has nothing to do with fiscal responsibility. Obama’s whole term has been about buying votes and gaining more power. He has so much power now that I am not sure he can be voted out of office. By the end of another term, I believe he will be in total control of our country. I believe we are soon to see the end of the United States as we now know it and there will not be anything anyone can do to stop it. Any riots will be put down by our own military and the… Read more »

8 years ago

The choices and actions approved by our politicians make no sense for our well being. They make short term decisions as a distraction to avoid the reality of the long term decision ramifications that they have made for years. Still, it is a sad fact that many American voters continued to re-elect those same politicians back into office for decades where the politicians act in their personal best interest without regard for the general and the overall best interests of the American citizens that voted them into office. That we, the voters, have permitted them to hold us hostage from… Read more »

8 years ago

Mr. Weber,

Please quote to me the actual wording in the Constitution that authorizes the congress to pass any welfare legislation.

Do not attempt to misconstrue the adjective “general” to mean “any”. It does not. it means “NOT SPECIFIC”. therefore any program with specificity is NOT constitutional.

8 years ago

Perhaps the time gained will be used to draft a complete constitutionally legal replacement for the current unconstitutional Social (IN)Security.

This can be done by means testing S.S. limiting the maximum payout to the level determined to be “poverty” and making IRAs real by opening the amount of funding that can be placed into them and a few additional minor tweaks.

Howard Last
8 years ago

I am still waiting for someone to show me which section of the Constitution authorizes Joe Stalin’s best friend’s,FDR, scheme, social security. I was self employed and put away approximately the same amount as FICA in my retirement plan. I am getting back an order of magnitude greater than what I am getting from social security. The only Constitutional action is to abolish social security outright. The problem is how to make whole all our citizens that had their funds stolen for all these many years. The only way I see to do it, is to abolish or repeal all… Read more »

Earl Gordon
8 years ago

For a beneficial tax relief program, look into the FAIR TAX. Google it and become educated.

Glenn Shannon
8 years ago

The truth is folks is only the people that pay into the system get screwed not the medicaid recipients who pay in nothing but many draw for a lifetime. This will not change as those have always been Democratic votes since Johnson was in. So many are on the government dole that Obama will be almost impossible to defeat. He has the black, mexican, welfare, the 47% who pay no taxes and the college students are still in love with him. Now add in the fact all those that vote from the grave, those that vote several times and other… Read more »

John Hicks
8 years ago

Congress talks. Congress acts only to benefit its members. Congress solves nothing. Congressional members do not work for you and I. Congress manipulates whatever best benefits the members through insider trading. The rest of us would go to prison if we were caught insider trading. Yet Congress exempts itself. (See Nancy Pelosi recent comment). I believe and urge all to vote against every incumbent no matter what. This will give us term limits which Congress will not and hold the members accountable. I have suffered under “Tenny Shoe” Patti Murray too long. There is a reason she was appointed to… Read more »

Jacquie Doty
8 years ago

This whole payroll tax thing essentially gives Social Security recipients, who have paid in for years, the status of welfare recipients. We have been, (as my spouse would say so colorfully), screwed, rued and tattooed since the first time the gov’t dipped its glommies into the trust fund and left its first I.O.U. It became easier each time until there was nothing left except to borrow from China. We can expect means testing next. That’s fine for those who can afford it, but that’s not a lot of the population of elderly. Medicare? We will all be considered better off… Read more »

8 years ago

Right on Chris.
I am still employed and do not understand why they want to reduce social security withholding when social security is in trouble now. It didn’t make sense to me last year either. And how does that affect employer’s hiring people? The withholding reduction is from the employee and does not affect the portion that the employer pays. It doesn’t save the employer a penny! But passing this will encourage businesses to hire more people?

cj houston texas
8 years ago

I agre with everything Jim says, I paid into SS from age 15 when the Dow Jones average was at 600 now it is over 12,000 what would my pay – in be worth now? Stop using Social Security and Medicare for Welfare programs and call welfare what it is. Stop Unemployment compensation and many more will go back to work.

8 years ago

I agree that the social security payroll tax cut is a token political gesture of absolutely no benefit in stimulating our economy. More importantly, AMAC and other such organizations should be shouting from the rooftops the fact that the only real problem with social security is that the federal government has stolen the money, which should have been held in trust and invested to create a reliable retirement income stream for its participants. Instead, we have a drawer full of worthless IOU’s at a 0% interest rate. Meanwhile, the congressional squandrels from all parties keep branding social security as an… Read more »

8 years ago

I do not like to hear Social Security referred to as an entitlement program, and Mitch McConnell did so. I paid into the system from age 16 to age 67 when I retired. Had I been putting my contribution and my employer’s contribution into the stock market, and now drawing from that account would that be an entitlement program. I think not. I’m guessing I would also recieve more from that account than I am from Social Security. Also had I dropped dead before ever receiving a penny from my account, it would be a part of my estate. Social… Read more »

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