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A (Tax) Holiday Only Scooge Could Enjoy - San Francisco Chronicle

December 21, 2010

Charles Dickens' Ebenezer Scrooge feared the Ghost of Christmas Future more than any other he'd met during his long Christmas Eve night. I can relate. After watching congressional passage of the White House-Republican negotiated tax deal, I, too, fear for the future. I fear this tax package is the first step toward radical changes to Social Security that will impact generations of working Americans.

While some elements in the tax package provide desperately needed stimulus for millions of Americans - including far too many who are suffering near-Dickensian levels of poverty and fear - this deal also diverts $112 billion in contributions from Social Security. A "tax holiday" may sound like a wonderful gift for workers now, however this one is wrapped in Washington promises that could turn out to be as thin as tissue paper.

As we've seen in Congress these days, it's easy to enact tax cuts but virtually impossible to allow them to expire. This payroll tax holiday proposal will be no different. Election year politics in 2012 will likely doom the expiration of this $112 billion tax cut because when this "tax holiday" is ready to expire next Christmas, restoring Social Security's funding will be portrayed by those opposed to the program as an enormous tax increase, rather than the legislated end of the "holiday."

Retirees and their families will watch helplessly as Social Security becomes dependent on general fund revenues rather than worker contributions, which have successfully funded the program for 75 years. Proposals like this threaten the program's independence at this time of unprecedented deficits, forcing Social Security to compete for limited federal dollars. If made permanent, this payroll tax cut would then double Social Security's 75-year projected shortfall, a gap denounced by the president's own fiscal commission.

Conservatives have long dreamed of a payroll tax holiday because it fulfills two ideological goals: lower taxes and weakening Social Security's finances. Former Bush presidential spokesman Dan Bartlett described the Republicans' tax cut trap this way: "We knew that, politically, once you get (a big tax cut) into law, it becomes almost impossible to remove it. That's not a bad legacy. The fact that we were able to lay the trap does feel pretty good, to tell you the truth."

Passage of this tax deal now sets the table for another round of "negotiations" that target Social Security for further cuts. Some fiscal hawks are prepared to oppose raising the debt ceiling next year if they don't get Social Security benefit cuts like those proposed by the fiscal commission. That means the new year will bring another opportunity for Social Security to be held hostage in another "Let's Make a Deal"-style "negotiation" in Washington.

The American people have made it clear they do not support trading the long-term prospects of our nation's premier retirement income program for short-term gains. Promises that the diversion of $112 billion in Social Security contributions will be temporary are promises the American people must ensure Congress keeps. Tax cuts for millionaires, reduced contributions to Social Security and benefit cuts for generations of Americans - it's no wonder so many look to Washington and say, "Bah, humbug."

The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing better-informed citizens and voters.


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