Why didn't Obama lower payroll tax rate but raise cap on income taxed by it?

[yurbud]

to make it revenue neutral?

That would have been more than acceptable, even positive, to progressives and in the past Obama himself has even said that SS has no problems that couldn't be fixed by raising the cap.

For those who don't know how the Social Security tax works, it's a flat tax on the first $109K or so of your income, so anything you make above that is not subject to the tax. A higher cap would mean you could lower the rate for everyone.

Did Obama even try for this?

If not, it seems like he or the GOP wanted it so they could later say that Social Security isn't taking in enough money and therefore benefits must be cut, undermining the public confidence in the program and weakening it to the point that fewer will protest the next time the push to privatize it is cranked up.

[TwilightGardener]

1. Would that pass the Senate? That's the only question.

[Dawgs]

5. Bullshit. The question that needs to be answered is if he tried it.

He certainly didn't say anything about this compromise to Democrats in Congress or the public, so who knows how it would have gone over.

The point is that this President folds behind closed doors while ONLY negotiating with the Republicans or private companies.

If he would have been able to raise the cap he could have saved SS forever and many liberals would have been okay with it. Instead, he does something that will make it worse because it was easy.

[TwilightGardener]

11. "He" wouldn't be able to raise the cap, unless the Senate votes that way.

Unless there's something I don't know in terms of executive power, but that's going beyond the discussion. His compromise tax deal revolves around two guys: Ben Nelson and Jim Webb. The whole argument really doesn't go beyond those two, and the Senate in general. So the question to always ask oneself, concerning one proposal or another, is: will it pass the Senate?

[Dawgs]

12. I'm sorry. But that argument is dumb.

The Senate is full of people. There minds can be changed. It should be up to the President to change their minds.

There is nothing we've seen that shows this President is willing to even try to change anyones mind. A bigger, stronger person would have at least tried.

[TwilightGardener]

14. It's not an argument, it's the way it is. A mythical bigger, stronger President

would be able to get Congress to pass all sorts of good things, I'm sure, but this is the guy we have, and there's no other. And this is the Senate we have--we do have conservative Democrats who absolutely refuse to raise anyone's taxes (Jim Webb is reportedly enthusiastic about the compromise plan). The thing I'd like to see is the filibuster go away, but I'm sure that would have unintended consequences in the future.

[yurbud]

17. DLCers seem oblivious to the value of making GOP vote against something

or they just don't care.

If the GOP is forced to vote or filibuster something that is clearly in the public interest, at least some people will see who they actually work for.

By not making them do so, Obama is showing he either works for or would like to work for the same people.

[Recursion]

22. The GOP voted against middle-class tax cuts only. Twice.

Barely a week ago.

DU doesn't even seem to remember that; where exactly are these "consequences" supposed to come from? You are the one saying this will help us but you don't even notice when it happens, even though it made all the newspapers and Sunday talk shows. Reid did what you are asking him to.

[yurbud]

28. good point and gets to another big obstacle: what gets play in the media and what doesn't

or in this case, replayed and spun negatively.

[Recursion]

29. It got a lot of play; our talking heads were out in force

It was on all the Sunday talk shows, all the editorials, and at least one op ed in each major paper.

[Dr.Phool]

23. Fuck the Senate. It's obsolete, and should be constitutionally abolished.

It may have made sense 230 years ago. Today, it's an obstacle.

[SteppingRazor]

2. Raise the cap? You mean (GASP!) More taxes for the rich?!

I don't think so, buddy. Those rich people need their money. You know, so that it will trickle down to the rest of us in ways that have never been properly explained.

[hughee99]

9. They'd get it back later, if you raise the cap, their total contributions will go way up

and their payout after retirement will also go way up. The amount you pay in is proportional to the amount you pay out. Unless you cap benefits in addition to raising or eliminating the cap on contributions, I don't know that they'll be a significant gain.

[Beetwasher]

3. Why Doesn't Congress Send Him A Bill Like That, He'll Sign It

n/t

[Dawgs]

6. Why not make it part of the "compromise"?

Tell the Republicans, 'hey, you want a fucking deal on extending Bush tax cuts, fine, but only if you eliminate the cap on the payroll tax'. My guess is that it was never considered.

[emulatorloo]

8. Why not call our Senators and ask them to propose an amendment?

[Beetwasher]

10. I Suggest You Push For That

Go for it!

[emulatorloo]

4. maybe Senate can fix that

"If not, it seems like he or the GOP wanted it so they could later say that Social Security isn't taking in enough money and therefore benefits must be cut, undermining the public confidence in the program and weakening it to the point that fewer will protest the next time the push to privatize it is cranked up."

I think that's a bit of a conceptual leap, I've seen reports that this one year "holiday" doesn't affect SS revenues. And no they were not written by republicans. Ezra Klein I think.

[dkf]

7. I saw a study on the progressivity of Social Security if analyzed as a retirement fund.

I'm not sure you want to make it less attractive for the higher earners, especially after we've defined the middle class up to a million dollars.

Here is the study done in 1999.

http://www.nber.org/chapters/c10923.pdf

According to the National Bureau of Economic Research, low earners earn a 5.19% internal rate of return on their contributions to Social Security, while high earners get just 0.54%. They also measure the effective Social Security tax rate—the tax which represents a pure tax rather than a claim on a future benefit. From that perspective Social Security taxes actually look fairly progressive. On average 67 cents of every Social Security tax dollar is a pure tax, but the pure tax rate is negative for low-income earners and 79 cents for high earners.

http://www.economist.com/blogs/freeexchange/2009/04/are_payroll_taxes_regressive

[yurbud]

20. thank you for a thoughtful, well-research reply

[frazzled]

13. Probably because the Republicans refused to accept that?

You have to remember that this was not "Obama's bill." It was a compromise reached with hostage takers. His position was and remains that the cap on income taxed for SS should be raised as the solution to solvency.

There are many things in the compromise that Obama did and still does oppose. (Corollary: there are also things that the Republicans oppose in it: earned-income credit expansion, unemployment extension, making the tax cuts for the wealthy extension only temporary not permanent). That's why they call it a "compromise."

[Recursion]

15. Why do you assume that wasn't put forward...

...and rejected by McConnell?

[yurbud]

21. why would I assume it was? If you have a source on it being on the table, I'd be glad to see it

it would be good news.

[Kweli4Real]

16. Probably ...

Because he knew that would have been a non-starter. I agree that doing so would have been a good move.

But how about this ...

How about we ask why did/hasn't/won't the congressional Democrats didn't offer a bill lowering the payroll taxrate but raising the cap on income taxed by it?

[Carolina]

18. because that would have been the left

thing to do.

[pnwmom]

19. It's more of a stimulus this way -- deficit spending actually helps stimulate.

I think the time to do that is a year from now when this would expire. Keep the lower rate but raise the income limit.

[Dr.Phool]

24. Yeah, $10 a week on a $500 salary is gonna make the economy take off.

It will wreck SS, but who cares?

[yurbud]

27. then the GOP could correctly call it a tax increase and it would be a harder sell

do it now as part of the payroll tax holiday, and since the higher income people get to keep their Bush tax cut, it won't seem like as much of a hardship to them.

[pnwmom]

31. I'd be fine with it happening now. n/t

[johnaries]

25. That's coming later. When they are forced to either increase the

tax (by letting it expire) or raise the cap.

[obxhead]

26. That would tax the nearly rich to help the poor.

We can't let that happen.

[stopbush]

30. Deleted by author.