Letter on the Social Security Payroll Tax Cut

* a copy of this letter was sent to Minority Leader Nancy Pelosi, Congressman Steny Hoyer, Congressman James Clyburn, Congressman Sander Levin, Congressman Xavier Becerra, Senator Richard Durbin, Senator Charles Schumer, and Senator Max Baucus

December 8, 2011

The Honorable Harry Reid
Majority Leader
522 Hart Senate Office Building
United States Senate
Washington , D.C. 20510

Dear Mr. Leader:

On behalf of the millions of members and supporters of the National Committee to PreserveSocial Security and Medicare, I am writing to express our concerns about legislation to extend the Social Security payroll tax cut.

The National Committee is particularly troubled by the insistence of some lawmakers to use cuts to Medicare to help pay for the payroll tax cut. If this occurs, Medicare beneficiaries would help pay for a tax cut from which most recipients would receive no relief.

While we agree that providing tax relief to middle class Americans is likely to help our economic recovery continue, we do not believe that extending or expanding cuts to Social Security's revenue funding is the best way to accomplish this goal. In fact, the payroll tax cut, coupled with legislation that substitutes the trust funds' lost revenue with general fund transfers, would leave Social Security increasingly dependent on both general revenue and the actions of Congress for its funding. Such a funding mechanism would be a dramatic and dangerous departure from relying on workers' contributions, which have so successfully funded the program since its inception in 1935. Extending and expanding the payroll tax cut further endangers Social Security's financial integrity and could undermine our efforts to defend the program from benefit cuts or privatization.

As an alternative, we agree with the Center on Budget and Policy Priorities and the Center on Economic and Policy Research that extending the "Making Work Pay" tax credits would do more to boost the economy than extending or expanding payroll tax cut. What is more, it is a less complex and more progressive method of stimulating the economy that does not threaten Social Security's integrity.

Social Security is paid for, earned by and promised to American workers. We call on you to reaffirm the fact that Social Security has been, is, and will continue to be, a self-financed insurance program. It should be clear that temporary payroll tax cuts do not constitute a precedent that would erode this tried and true principle.

For these reasons, the National Committee opposes the extension of the payroll tax cut. However, if the Social Security payroll tax cut is extended, we urge you to provide guarantees that the payroll tax cut will not be extended again and that general funds will be automatically transferred to the Trust Fund to replace lost payroll tax revenue. We especially urge you to assure Americans that the extension of the payroll tax cut will not undercut the financial integrity of Social Security or provide justification for benefit cuts or privatization. This program should be protected - now, and forever.

Sincerely,

Max Richtman
President & CEO