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Senate Vote on Tax Cuts – 3pm

The Senate is expected to vote this afternoon to end debate on the bill that extends the Bush tax cuts for the wealthy and cuts $120 billion in payroll contributions to Social Security.  The vote for passage could then come as early as tomorrow.    Email your Senator today.  NOW is the time for seniors and working Americans to say enough is enough.  There are other ways to stimulate the economy without extending tax cuts for the rich combined with cuts to Social Security’s funding.  Some of those other ways?  Seniors advocates have proposed extending, or even expanding, the “Making Work Pay” tax credit or reducing employees income tax liability.  However, as economist and IWPR President, Heidi Hartmann,  explains the White House has shown no interest in alternatives: 
What is most troubling now is that even though the risk to Social Security has been pointed out to the White House, these same staffers continue to insist that the rebate must take the form of a payroll tax cut delivered in every paycheck in 2011 and that other alternatives won’t do. For example, Congressman Brad Sherman has suggested issuing a rebate check to each worker early in 2011 for 2 percentage points of the 6.2 percent FICA tax each paid in 2010. Dollar-wise, that’s essentially the same as giving workers 2 percentage points in 2011. Sure, there will be more workers in 2011 (if we’re lucky and get some employment growth), but they could be included by issuing rebate checks early in 2012 based on what they earned in 2011. Also, even though research shows that lump sums aren’t spent as readily as smaller amounts, the portion spent after 3-6 months is quite substantial. And since we will need stimulus all through 2011, the difference between these two distribution systems can’t be so great as to make the Sherman alternative totally unacceptable to the White House — when it has the very important advantage of never reducing the payroll tax rate to 4.2 percent and so never having to figure out how to get it back up to 6.2 percent. While Sherman’s proposal virtually mimics the payroll tax cut, Nancy Altman, co-chair of Social Security Works and a leading advocate against the payroll tax rate cut, suggests a more progressive alternative, one that would likely increase the stimulative value of the tax cut — an identical lump sum to every worker who paid FICA tax. Such a method would direct more dollars toward lower earners (the average benefits would be on the order of $800) and therefore generate more spending.
 Social Security Works  has created a graph which clearly shows how this Payroll Tax cut benefits higher earners.  While the President and members of Congress would receive $0 under the "Making Work Pay" tax credit extension, they will receive $2,136 in tax cuts under this payroll tax proposal.  A minimum wage earner received $400 from "Making Work Pay" in 2010 and could receive $800 if extended again.  However, under this payroll tax plan that same worker receives $302.   Under this flawed payroll tax plane, millions of state, local and federal workers who are not covered by Social Security receive absolutely nothing.  The American people understand that cutting funding to Social Security makes no sense and it’s not even the most effective way to provide stimulus to working Americans.      Call your Senator and member of Congress TODAY.  We’ve created a number of easy one-step ways for you to connect with your Senator and Congressional representatives.  To phone them…call our Legislative Hotline at:

800-998-0180 

Would you rather send an email?  Go to our Leg Action Center where you can use our sample Payroll Tax Holiday letter or, even better, write your own.

Legislative Action Center

Social Security Payroll Tax “Holiday” is No Gift to Americans

Briefing reporters today, National Committee President Barbara Kennelly, Social Security Works Co-Director Nancy Altman and CEPR Co-Director Dean Baker warned that passage of a payroll tax holiday could have devastating effects on Social Security’s long-term financing. 

“As we’ve seen in Washington 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 doom the repeal of this $120 billion dollar cut and Social Security beneficiaries will then pay the price. The American people understand we’re in an economic crisis yet they don’t want to trade their future security for a short-term benefit. They didn’t ask Congress to cut their Social Security contributions, in fact, poll after poll shows they’d pay more to preserve Social Security. I salute the House for saying we need to give this deal another look because this payroll tax provision is no deal at all.”…Barbara B. Kennelly, President/CEO National Committee to Preserve Social Security and Medicare  
While the White House promises there will be no long term impact to Social Security because this is a one year “holiday”, clearly Republicans have a very different idea.  Consider this quote from President Bush’s spokesman Dan Bartlett, who gleefully describes their strategy which saddled our nation with billions in tax cuts for the wealthy: 
“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." 
Clearly, GOP Senators also agree with the “temporary means permanent” tax trap: 
"Once you bring a rate down, if it goes back up, people will feel that. They'll feel their paycheck being less and that argument" -- that letting it expire amounts to a tax hike -- "eventually is bound to be made," said Sen. Mike Johanns (R-Neb.).  "There's always a tendency to continue those things... Once something comes in, it's very difficult to change it," said Sen. George Voinovich (R-Ohio.) He then volunteered, without prompting, that "It would be detrimental to the Social Security system, especially when it's in bad shape."  HuffPost noted that some of his colleagues would likely treat the deprivation of Social Security funds as a benefit of such a circumstance rather than a drawback. "I suspect so, yes," agreed Voinovich.  
Conservatives have long dreamed of a payroll tax holiday specifically because it fulfills two ideological goals, lower taxes and weakening Social Security’s finances.  Worker contributions have successfully funded the program for 75 years and that critical linkage between contributions and benefits is what keeps Social Security a self-funded program.  Proposals like this threaten the program’s independence, 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. 
"While the payroll tax cut is sure to be a welcome increase of income for workers, it is also likely to deepen the public’s distrust of Congress and the President, and reinforce the belief held by much of the public that Congress is raiding Social Security.   Past Congresses have worked hard to maintain a wall between Social Security’s funds, which, by law, must be used only for Social Security, and the government’s general fund, which can be used for any purpose, limited only by the Constitution.  The proposal, if enacted, will reinforce the public perception that Congress is cavalier with their contributions, intermingling them at will and substituting general revenue for dedicated workers’ contributions -- because that is just what the proposal does. " Nancy Altman, Social Security Works Co-Director
We agree there is a need for more stimulus; however, this payroll tax holiday isn’t the most effective way to provide that economic boost. According to The Center for Budget and Policy Priorities, extending the “Making Work Pay Tax Credit” is a much better and targeted stimulus. 
If the point is to provide a boost to the economy the quickest, fairest, and most effective way would be to simply extend and expand the Make Work Pay tax credit. This has about 10 percent more bang per buck than the payroll tax holiday and would go to all workers, including the state and local government employees not covered by Social Security."Dean Baker, Co-Director Center for Economic and Policy Research
Senator Bernie Sanders (D-VT) understands how important this issue is to seniors.  Not only has he repeatedly sponsored COLA relief legislation and fought that fight multiple times, he’s now on the floor of the Senate filibustering in the hope that Senators will go back to the table and negotiate a deal that doesn’t trade short term stimulus for long-term pain. You can watch him in action streaming live from his website or on CSPAN. You also can read details on this issue in the National Committee's Policy Review of the Payroll Tax “Holiday”. NOW is the time for seniors to say enough is enough.  Tax cuts for the rich combined with threats that weaken Social Security's funding is not the answer. We've created a number of easy one-step ways for you to connect with your Senator and Congressional representatives.  To phone them...call our Legislative Hotline at:

800-998-0180

  Would you rather send an email?  Go to our Leg Action Center where you can use our sample Payroll Tax Holiday letter or, even better, write your own.

Legislative Action Center

 

Washington needs to hear from you TODAY!

House Democrats “Get It”

The House Democratic caucus has voted against consideration of the White House negotiated tax deal unless changes can be made.   There is so much not to like about this “deal” including the so-called payroll tax “holiday” which GOP Senators have now acknowledged is no holiday at all and they fully intend to keep these cuts in place…draining $120 billion dollars a year from Social Security. Ryan Grim reports:
Republicans acknowledged that the expiration of the tax holiday will be treated as a tax increase. "Once something like this goes into place, a year from now, when it expires, it'll be portrayed as a tax increase," said Sen. Bob Corker (R-Tenn.). So in a body like Congress, precedents matter and this is setting a precedent. I think that certainly is going to create some problems down the road if it passes." Given that Congress, under Democratic control, can't gather itself to let tax cuts for the wealthiest Americans expire, members of both parties are convinced that letting the payroll tax rate revert back to its current spot will be near impossible. "Once you bring a rate down, if it goes back up, people will feel that. They'll feel their paycheck being less and that argument" -- that letting it expire amounts to a tax hike -- "eventually is bound to be made," said Sen. Mike Johanns (R-Neb.). "There's always a tendency to continue those things... Once something comes in, it's very difficult to change it," said Sen. George Voinovich (R-Ohio.) He then volunteered, without prompting, that "It would be detrimental to the Social Security system, especially when it's in bad shape." HuffPost noted that some of his colleagues would likely treat the deprivation of Social Security funds as a benefit of such a circumstance rather than a drawback. "I suspect so, yes," agreed Voinovich.
This is "starve the beast" politics all over again, taking $120 billion a year from Social Security’s funding knowing that fiscal hawks won't replace it...forcing massive benefit cuts instead.   Thank goodness House Democrats have put the brakes on.  Now, hopefully they’ll ensure this flawed payroll tax plan is not included in any final tax plan.    So, what about the Senate?  The National Journal reports some Democrats have already expressed their opposition but others are on the fence: 
“While some Senate Democrats, including Bernie Sanders, Tom Harkin of Iowa, Mark Udall of Colorado, Patrick Leahy of Vermont, and Russ Feingold of Wisconsin, have indicated they plan to oppose the package or are leaning toward doing so, they are outnumbered by Democratic supporters. Harkin was among Democrats who emerged from their Wednesday meeting sounding like he was more likely to back the deal. 
Senate Democratic leaders have scheduled debate to begin as soon as today. Now’s the time to wake up your Senator…do they really understand what this proposal will do to Social Security?  Send them an email from our Legislative Action Center and tell them the payroll tax “holiday” is anything but for millions of American retirees and their families.

America’s Seniors Face 2nd Year Without a COLA Increase

Congressional Votes Reject One-Time Payment for Seniors

“The cruel irony of Washington’s priorities continues to hit home for America’s seniors.  While Congress and the White House negotiate a tax deal which extends trillions of dollars of tax cuts for wealthy Americans, today we’re told that providing $250 for America’s seniors and their families is considered too generous. The House and Senate have  ignored the reality that despite a relatively low rate of general inflation, seniors' costs are going up.  Health care costs especially are rising, and the elderly on fixed incomes spend a significantly larger share of their income on health care.  This economy has only made the situation worse. For the millions of seniors who rely upon Social Security as their only source of income, and millions more who rely upon it for at least half of their income, a cost of living adjustment in their Social Security benefits is not a luxury, it’s a necessity.  We also know that money in the hands of seniors is successful stimulus.  The 2009 Social Security payment in the stimulus bill translated to about 125,000 jobs created or saved due to these payments. No cost of living increase for two years in a row – no one-time relief for seniors – and promises of benefit cuts ahead.  It’s no wonder so many middle-class seniors’ and their families feel such a disconnect with some in Washington. ...Barbara B. Kennelly, President/CEO See how your Congressional representatives voted here: Senate House

Cutting contributions to Social Security Signals the Beginning of the End

Payroll Tax “Holiday” is Anything But

 “Even though Social Security contributed nothing to the current economic crisis, it has been bartered in a deal that provides deficit busting tax cuts for the wealthy.  Diverting $120 billion in Social Security contributions for a so-called ‘tax holiday’ may sound like a good deal for workers now but it’s bad business for the program that a majority of middle-class seniors will rely upon in the future.”… Barbara B. Kennelly, President/CEO    Conservatives have long dreamed of a payroll tax holiday because it fulfills two ideological goals, lower taxes and weakening Social Security’s finances.  The White House claims the 2% payroll tax cut won’t impact Social Security; however, we disagree. 
• There’s no such thing as a “temporary” tax Cut. If Congress is unwilling to allow tax cuts for wealthy Americans to expire in the midst of economic crisis now, then why would it allow this so-called “holiday” to end in one year? The short answer--it wouldn’t. Americans should expect that when this tax “holiday” ends, restoring Social Security’s funding will be portrayed by those opposed to the program as a massive tax hike, rather than the legislated end of the “holiday”. That leaves Social Security permanently dependent on general fund revenues rather than worker contributions which have successfully funded the program for 75 years. If extended, this payroll tax cut would then double Social Security’s 75 year projected shortfall. • This 2% payroll tax cut is the beginning of the end of Social Security as we know it. Worker contributions have successfully funded the program for 75 years and that critical linkage between contributions and benefits is what keeps Social Security a self-funded program. Proposals like this threaten the program’s independence, forcing Social Security to compete for limited federal dollars.  • Cutting contributions to Social Security isn’t the best way to stimulate the economy. The Tax Policy Center reports the wealthiest 40% of households benefit most from a payroll tax cut. According to The Center for Budget and Policy Priorities, extending the “Making Work Pay Tax Credit” is a much better and targeted stimulus.
For all of these reasons, the National Committee does not support proposals to cut the payroll tax.  America’s seniors understand the vital role Social Security plays during these difficult economic times and they’re not willing to trade promises of possible short-term economic gains for real and measurable damage to this vital program which would impact generations of Americans to come.



   

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