The Tax Deal and the ApocalypseDean Baker - Co-Director of the Center for Economic and Policy Research
Posted: December 13, 2010 02:01 PM
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At the end of the 2011, the unemployment rate is virtually certain to be well above 8.0 percent and quite likely above 9.0 percent. In this context, does anyone seriously believe that President Obama will refuse to go along with efforts by the Republicans in Congress to continue the
(Payroll) tax cut beyond the scheduled deadline?
If the payroll tax is indefinitely lowered by 2.0 percentage points, then Social Security's finances will appear much more shaky. As it stands, Social Security is fully funded through the year 2037, but that doesn't keep the Washington Post and National Public Radio from running endless scare stories about the program's funding crisis.
If the payroll tax is permanently reduced by 2.0 percentage points, it would double the program's projected 75-year shortfall. This would give far more ammunition to the Social Security fear mongers.While Obama's deal ostensibly provides for general revenue to be placed into the trust fund to make up the lost payroll tax revenue, there is little reason to believe that this funding would persist beyond the first year. Again, does anyone believe that President Obama will stand up for Social Security on this point?
In short, this deal is a very large first step toward cutting and/or privatizing Social Security. If the president wants to remove this risk, he can simply arrange to have the exact same tax cut given to workers from general revenue. There is no legitimate reason for the Republicans to reject this change in structure, unless their intent is to destroy Social Security. It's really that simple. The structure of the deal would be changed unless the point is to undermine Social Security....
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More:
http://www.huffingtonpost.com/dean-baker/the-tax-deal-and-the-apoc_b_795989.html:kick:
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