Tuesday, August 23, 2011

Obama's Payroll Tax Break-- Right In The Crappy Middle


Wall Street, cognizant of the damage George W. Bush and the Republicans had done to the economy, gave obscene amounts to help elect Barack Obama in 2008. Despite giving Wall Street pretty much everything they could have wanted-- starting with one of their own, Timothy Geithner, as Secretary of the Treasury-- Wall Street has abandoned Obama for the even more compliant Willard "Mitt" Romney. "It's not healthy for rich people to feel maligned," said one ex-Obama supporter who is now donating to Romney. They may not have anything to cry about in regard to Obama's policies, which certainly favor the rich, but they don't like how he "maligns" them rhetorically.

That's the thanks Obama gets for extending the Bush taxcuts for the rich cocksuckers! But now Obama wants to extend a payroll tax cut for wage-earners, a tax break for the middle class. Republicans only favor tax cuts from their rich supporters, not for ordinary Americans. They want to raise taxes on working people.
“We should extend the payroll tax cut as soon as possible, so that workers have more money in their paychecks next year and businesses have more customers next year,” Obama said at the White House on Monday.

The president wants the tax cut extended along with unemployment insurance benefits, and has warned that if Congress fails to do so, “it could mean 1 million fewer jobs and half a percent less growth.”

The administration says the two-percentage-point reduction in the payroll tax put in place for 2011 has cut tax bills by about $1,000.

Right-wing corporate shills Dave Camp (R-MI) and Paul Ryan (R-WI), respectively chairmen of the House Ways and Means Committee and the House Budget Committee have come out against it. "I'm not in favor of that. I don't think that's a good idea,” said Camp. "We need a more overarching approach to our tax policy. Ryan was even more of a hypocrite, dismissing the proposed payroll tax cut as “sugar-high economics.” And Jeb Hensarling, a senior far right shill on the House Financial Services Committee (and on the new SuperCommittee) also came out against it: "It's always a net positive to let taxpayers keep more of what they earn but not all tax relief is created equal for the purposes of helping to get the economy moving again." Hensarling, like Ryan and Camp, only agrees to tax relief for the wealthiest Americans, not for working stiffs.

Obsessed with preventing Obama from putting through any of his even mild remedies to fight unemployment, the Republican Party is apparently in full bore class warfare against American workers. What I don't ever "get" about Obama-- although it was well explained last week by Michael Tomasky in The Untransformational President-- is how his brand of civic republicanism always means giving away the store and avoiding a fight with his sworn enemies and, much worse, the sworn enemies of the American people, the domestic fascists and terrorists who run the Republican Party.

Everything always starts with a compromise with Obama. By scuttling single-payer or even a public option, he didn't win over any Republicans-- he just made the bill so bad that it will probably be overturned by the fascist-dominated Supreme Court. And this is the hallmark of everything he does! Now he hopes to rally progressives to help him fight for a flawed payroll tax cut. Andrew Fieldhouse explains what progressives should be fighting for instead:
A targeted, partially refundable tax rebate would be more effective than the current payroll tax cut that President Obama endorsed extending in his speech Monday night, a new Economic Policy Institute/The Century Foundation Issue Brief finds. In A bigger and better economic boost, Federal Budget Policy Analyst Andrew Fieldhouse explains that a modified version of the lump-sum tax rebates that were part of the 2008 Economic Stimulus Act (ESA) would cost the government roughly the same amount as the payroll tax cut but would generate more economic activity while doing more to alleviate poverty and help working families.

Enacted in December, the payroll tax cut reduced employees’ share of Social Security payroll taxes from 6.2% to 4.2%. The payroll tax cut replaced the Making Work Pay tax credit that had been implemented as part of the 2009 Recovery Act.

Because the payroll tax cut was not targeted to low- and middle-income workers-- the workers most likely to spend it-- it was not as effective in generating economic activity as a lump-sum tax rebate would have been. Multipliers developed by Moody’s Analytics chief economist Mark Zandi suggest a refundable lump-sum tax rebate would result in roughly 12% more jobs created per dollar than the payroll tax cut.

Furthermore, the payroll tax cut actually increased taxes for all individuals making less than $20,000 annually. Tens of millions of the lowest-income workers had more disposable income under Making Work Pay than they did under the payroll tax cut.

Finally, the payroll tax cut exposed Social Security to greater political risk by reducing payroll tax receipts and making the program partially dependent on general revenue. Social Security is designed to have a dedicated funding source; a lump-sum tax rebate would leave this funding source intact.

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At 6:05 AM, Anonymous Anonymous said...

Finally, the payroll tax cut exposed Social Security to greater political risk by reducing payroll tax receipts and making the program partially dependent on general revenue.

We all really, really want to believe this is a middle-class tax cut and not neo-liberal ideology weakening our greatest safety net.
Really we do.


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