Browsing the blog archivesfor the day Friday, December 10th, 2010.


Last Word, I Hope

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Obama Administration

Most of the blogosphere continues to argue about the tax cut compromise. I’ve said most of what I want to say, but most of the argument for me boils down to these points:

One, the argument is that the payroll tax holiday is bad because if the lower tax rates became permanent they would eventually de-fund Social Security. I am skeptical the Republicans will be eager to extend the lower payroll tax rates this time next year, however, because —

  • The payroll tax holiday doesn’t help the wealthy as much as it helps the working poor. Republicans don’t give a hoo haw about tax cuts for the poor. I’m not sure Republicans even count FICA taxes as real taxes. Reagan raised payroll taxes considerably to make up for the shortfall in revenue caused by his other tax cuts, and Republicans didn’t mind at all.
  • Economists agree the payroll tax holiday will stimulate economic growth as long as it is in effect. The Republicans do not want economic growth stimulated in 2012, because that helps Obama.
  • If I am wrong about that last bulleted item, and the payroll tax is extended another year, this will help the economy and help Democrats get elected. Worse things have happened.

Further,

  • If progressive Democrats actually ever have anything to say in Congress, they can revise the FICA tax code to make it more progressive while it funds future Social Security payments. Those taxes are a real burden on lower-income people.
  • If Republicans continue to call the shots in Congress for the next several congressional cycles, we’re screwed anyway. Losing Social Security will be the least of our problems.

And that’s all I have to say about that.

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