*A copy of this letter was also sent to the House of Representatives
October 22, 2012
United States Senate
Washington, DC 20510
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I want to state our continued opposition to any extension of the Social Security “payroll tax holiday,” which is due to expire at the end of 2012.
While we agree that providing tax relief to middle class Americans has been important to our continued economic recovery, we do not believe that extending cuts to Social Security’s revenue funding is the best way to accomplish this goal. The payroll tax cut, coupled with legislation that substitutes the trust funds’ lost revenue with general fund transfers, leaves Social Security increasingly dependent on both general revenue and the actions of Congress for its funding. Such a funding mechanism is a dramatic and dangerous departure from relying on workers’ contributions, which have so successfully funded the program since its inception in 1935. Extending the payroll tax cut another year would threaten Social Security’s financial integrity and could make it incredibly vulnerable to benefit cuts or privatization.
Using general revenues to pay benefits, even if done only in part, weakens the earned-right nature of Social Security. This is a fundamental aspect of the program, and accounts very substantially for its enduring popularity. Workers pay into the program in the belief that, when the time comes, they will receive benefits in return for the contributions they have made during their working lives. Using general revenues to fund Social Security weakens this essential feature of the program.
While continuing the payroll tax cut for another year may appeal to some as an easy way to stimulate the economy, it is a bad deal for Social Security—the program that most Americans will rely on in the future. We are encouraged by positive economic data reflecting reduced unemployment and increased housing starts, but if policymakers reach the conclusion that additional measures are necessary, we believe that the “Making Work Pay” tax credits would do more to boost the economy than extending or expanding payroll tax cut. The Center on Budget and Policy Priorities and the Center on Economic and Policy Research support this as a less complex, 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, and will continue to be, a self-financed insurance program. The temporary payroll tax cuts should be just that: temporary. It should not constitute a precedent that would erode this principle. For these reasons, the National Committee urges you to oppose any extension of the Social Security payroll tax cut.
President and CEO