The Republican House and the Democrat Senate recently had a fight over taxes. The House wanted to extend the social security tax “holiday” for a year, the Senate bill ended the tax holiday after two months. When the House declined to go along with the two month holiday in favor of the 12 month holiday, the Democrats accused to Republicans of wanting to raise taxes. The MSM, the print and broadcast arm of the Democrat Party, trumpeted the charge that lowering taxes for two months was better for hard pressed workers than a 12 month cut. Let me repeat that: a two month cut in the payroll tax means that you are a tax cutter and love the working class, a 12 month cut in the payroll tax means that you are a tax raiser and hate the working class. Rarely has George Orwell’s “Newspeak” been so evident.
All of this obscures the fact that the payroll tax holiday is a bad idea. It’s bad for two reasons. First, the “payroll tax” is actually a worker’s contribution to the Social Security system. It’s what the government collects to pay current social security recipients. Social Security was designed to be self-funding. It’s what distinguishes it from a welfare system. It has a “trust fund” invested in government bonds that are theoretically there to pay recipients when social security pays out more than it takes in. That time has arrived, and the system is going broke. The “payroll tax holiday” brings the collapse of the social security system closer.
Second, the “payroll tax holiday” was sold last year as a jobs program. The theory was that leaving more money in the pockets of workers would stimulate the economy and lead to job growth. It didn’t work; job growth did not occur. Why? One theory is that the average family is deleveraging, which is a fancy word for paying off its debts and saving for a rainy day. Or perhaps the extra $20 per week went into the family car's gas tank, thanks to the rise in fuel prices. Whatever the reason, it’s foolish to pursue a failed strategy while accelerating the collapse of social security.
The motivations of actors in this farce are only to be guessed. They probably run the gamut from economic illiteracy to partisan blindness to cynicism all the way to a desire to create a crisis (the Cloward Piven approach). Which brings me to my original point: by what mechanism did the Republicans manage to get portrayed as tax raisers? Is it solely the fault of Republican leadership incapable of providing its side of the argument? Is the MSM so far in the tank for the Democrats that it is willing to tell people that a two month tax holiday is better for them than a 12 month holiday? The answers are not mutually exclusive.