It’s getting to look a lot like Christmas. President Obama is parading around in his Santa outfit as a “tax cutter” and champion of the middle class, and the seasonably spirited Senate on Saturday passed a package of goodies, including a two-month extension of the so-called payroll-tax holiday.
It’s a poisoned gift. This unreturnable little holiday bauble — a truncated version of a measure already passed by the House — comes with a very steep hidden price tag: the complete exposure of the Social Security “retirement system” as nothing more than a welfare program.
First, some background. The “payroll tax” — better known as the FICA, or Social Security tax — was “temporarily” reduced last year by 2 percent, giving workers an illusory free lunch. Although their share of Social Security’s “contributions” was reduced (employers continue to kick in “their” full 6.2 percent, which also comes out of an employee’s total compensation), folks were told that the government would magnanimously make up in the missing funds in order to keep the system solvent.
In other words, no pain and as much as a thousand-bucks-a -year gain in the paycheck. Only a Grinch could object to that. Or to the $105 billion in borrowed money to “pay for” this year’s “holiday.”
It was a clever move by the Democrats. Smarting from their well-deserved reputation as tax-and-spend liberals, they turned the tables on the Republicans and dared them to “raise taxes” on the middle class by letting the “temporary” measure expire come Jan. 1.
Naturally, the Republicans immediately caved. Speaker John Boehner got the House to approve a full-year extension and was blindsided when the Senate could approve only a two-month extension.
Criticizing the Senate for, in the shopworn Washington phrase, “kicking the can down the road,” Boehner yesterday threatened either to amend the Senate bill or delay Congress’ getaway by calling a conference committee to reconcile the two versions.
But a year from now is just a bit further down the road than two months. The Senate was right, even if for the wrong reason. America needs to start facing the truth about Social Security before the next election.
The fact is the program is broke — its own trustees estimate that its “trust fund” will run out of money in 2036 — and the “payroll-tax holiday” is only making it broker. That “trust” holds nothing but federal IOUs; the government’s been spending the money for decades.
This wasn’t obvious until last year, when Social Security started paying out more than it took in. Bookkeeping legerdemain can disguise the fact, but even the trustees know the jig is up. Says Republican Charles Blahous, one of the six trustees for Social Security and the even-more-broke Medicare: “This could be the beginning of the end of the idea that [Social Security] is an earned benefit.”
Adds Nancy Altman, the Democrat co-director of a Social Security advocacy group: “To have a Democratic president proposing to undo the dedicated revenue . . . it’s a fundamental change.”
It sure is. But it gets worse. Obama not only wants to extend the 2 percent holiday; he also wants to increase the “tax break,” fully halving the employee’s share to 3.1 percent, all in the name of “tax relief.”
Yet unlinking Social Security from its dedicated funding turns it into a welfare program. After all, the Supreme Court ruled in 1960 that recipients have no inherent right to their Social Security benefits and that Congress can change or rescind them at any time. Imagine what they can do when it’s just another federal giveaway.
The president evidently doesn’t care, so mark this down as another late-year victory for him. He’ll get his extension, at the negligible cost of having to accept a 60-day decision window on the Keystone XL oil pipeline. Meanwhile, he’s off on his taxpayer-funded, $4 million Hawaiian vacation, thanks very much.
Bad things happen when Congress acts in haste late in the year. Two years ago, in a rush of parliamentary flim-flam, the Patient Protection and Affordable Care act — ObamaCare — nosed through the Senate on the night before Christmas.
We’re still trying to return that “gift” — and we haven’t even started paying for it yet.