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 increaseof 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 thepublic 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 andsubstituting 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?.NOWis 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 whereyou 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/CEOSee how your Congressional representatives voted here:SenateHouse
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.
Social Security COLA Vote Coming Up-Call Congress Today!
Congressional leaders have put emergency COLA legislation on the calendar?with a vote expected as early as tomorrow. Unfortunately, its passage is far from certain.Which makes it more than just ironic (you could say it?s actually infuriating) is that many of the same fiscal hawks who fought hard to keep $4 trillion dollars in tax cuts for the wealthy, will blithely argue on the floor of the Senate and House this week that America can?t afford to give seniors–who will go without a cost of living increase for two consecutive years–$250.Contrary to the ?greedy geezer? mythology preferred by these Washington?s fiscal hawks, the truth about this COLA legislation has absolutely nothing to do their us-versus-them, young-versus-old propaganda. In fact, these $250 one-time payments have been proven to be effective economic stimulus and a job creator, as was the case in 2009:While its share of the overall Recovery Act spending was very small, this lump-sum payment was one of the quickest-acting components of the overall package?the majority of payments were received just months after the Act was passed (by the end of May 2009). This Social Security and SSI payment by itself likely boosted GDP by roughly 0.5% in the second quarter of 2009, which would roughly translate to about 125,000 jobs created or saved due to these payments.?? ?Downpayment on Economic Recovery,? September 2010Ask your representatives in Congress?
?Where do you stand on COLA relief legislation for millions of retirees??
and then
?Where do you stand on extending $4 billion in tax cuts to the wealthy??
The answers to these questions will tell you a lot about Washington?s current fiscal priorities.Pushing tax cuts for the wealthy while rejecting any COLA relief and even proposing benefit cuts in Social Security are not America?s fiscal priorities. This Washington disconnect is not good for our nation or our economic recovery and it?s time we deliver that message loud and clear.Use our 24-hour Legislative Hotline to connect directly to your members:
800-998-0180
Or send an email from our Legislative Action Center. You can see a sample email message there and personalize it with your own message to Congress.
Tell Congress ? it?s time to get their priorities straight!
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 increaseof 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 thepublic 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 andsubstituting 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?.NOWis 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 whereyou 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/CEOSee how your Congressional representatives voted here:SenateHouse
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.
Social Security COLA Vote Coming Up-Call Congress Today!
Congressional leaders have put emergency COLA legislation on the calendar?with a vote expected as early as tomorrow. Unfortunately, its passage is far from certain.Which makes it more than just ironic (you could say it?s actually infuriating) is that many of the same fiscal hawks who fought hard to keep $4 trillion dollars in tax cuts for the wealthy, will blithely argue on the floor of the Senate and House this week that America can?t afford to give seniors–who will go without a cost of living increase for two consecutive years–$250.Contrary to the ?greedy geezer? mythology preferred by these Washington?s fiscal hawks, the truth about this COLA legislation has absolutely nothing to do their us-versus-them, young-versus-old propaganda. In fact, these $250 one-time payments have been proven to be effective economic stimulus and a job creator, as was the case in 2009:While its share of the overall Recovery Act spending was very small, this lump-sum payment was one of the quickest-acting components of the overall package?the majority of payments were received just months after the Act was passed (by the end of May 2009). This Social Security and SSI payment by itself likely boosted GDP by roughly 0.5% in the second quarter of 2009, which would roughly translate to about 125,000 jobs created or saved due to these payments.?? ?Downpayment on Economic Recovery,? September 2010Ask your representatives in Congress?
?Where do you stand on COLA relief legislation for millions of retirees??
and then
?Where do you stand on extending $4 billion in tax cuts to the wealthy??
The answers to these questions will tell you a lot about Washington?s current fiscal priorities.Pushing tax cuts for the wealthy while rejecting any COLA relief and even proposing benefit cuts in Social Security are not America?s fiscal priorities. This Washington disconnect is not good for our nation or our economic recovery and it?s time we deliver that message loud and clear.Use our 24-hour Legislative Hotline to connect directly to your members:
800-998-0180
Or send an email from our Legislative Action Center. You can see a sample email message there and personalize it with your own message to Congress.