Payroll Tax Extension
December 23, 2011
I am not sure how you feel about Republicans caving on the two month payroll “tax” extension, but I was very disappointed. All along, the House GOP has been on the right side of this issue (including the Keystone Pipeline) even though Conservative talk show hosts, most of them substitutes this week, thought the House blew it politically.
Unfortunately, because Democrats run the Senate along with some squishy RINOS, we are in this mess. (Remember when Republican strategists said it would actually be a good thing that we did not take the Senate in 2010? Bah, humbug.) Yet even Obama himself recently said the extension needed to be for a year, but you will not hear that reported anywhere.
Once again, we are being led by people who base their decisions on polls not conviction. This is what finally got Republicans thrown out after taking the House and Senate in 1995. After several years of not doing what they were sent to do, people had enough and gave Congress back to the Democrats.
The optics must have been bad for Boehner, a career politician, so he decided to cave. Instead we got two more months of lower payroll “taxes” before they have to deal with the issue again. That’s about $40 a week for most people. Wouldn’t it have been better to extend it for a year like House Republicans wanted? That’s $320 ($40 times 8 weeks) the Senate passed versus $2,080 ($40 times 52 weeks)that the House wanted. Why can’t this case be made?
Yet there is a bigger issue that has not been addressed. One of our astute members who runs a business and actually has a payroll pointed something out. The money we are talking about is coming from the EMPLOYEE’s portion of FICA (Federal Insurance Compensation Act, government’s name for Social Security “tax”). Traditionally, employers have matched the amount that employees get deducted from their checks. But as our member explained, even though his employees’ FICA amounts have been reduced (for almost a year already), his employer’s portion has actually gone UP. By his calculations there is a dollar for dollar correlation to the reduction of the employee amount with an increase in the employer amount.
Of course, it makes sense that the money for Social Security needs to come from somewhere. Other than this payroll tax there is no mechanism for funding Social Security. If employees are not paying in then it would make sense Congress would deem that the employer must make up the difference. After all, if the money runs out, the game is up, right? The program would be shown to be the Ponzi scheme that it is.
This legislation can only hurt the long term employment outlook since it is costing more to hire employees. It will also hurt Republicans as people start to feel the 2010 elections were for naught. Therefore, it will be even more important that we elect Tea Party types to take over the Senate whether we win the Presidency or not.
So while it may look like the small increase in people’s paychecks is a good thing, it probably is not whether it’s two months or a year. Make no mistake. The future of our country is at stake in 2012!
FedUpEditor
