FDR to Congress: don’t mess with the payroll tax

Altman said that by proposing the payroll tax cut extension, Democrats have essentially started playing on the Republicans field, because they have adopted the Republicans’ tax-cut mentality and abandoned the struggle to implement more effective and progressive measures.

“The Democrats are failing to appreciate the legacy of Social Security and what this means to the Democratic Party,” she said. “We absolutely need to be drawing a line in the sand.”

Ira Cohen, a spokesperson for Rep. Danny Davis (D-Ill.), who signed the letter to President Obama, said that Rep. Davis had concerns at the time about whether Republicans might try to exploit the tax cut to change Social Security, but that he had given up on trying to predict what the Republicans were going to do.

“It doesn’t make any difference whether we extend them or not,” he said. “The Republicans are still going to do anything they can to protect the interests of the wealthy, even if that means cutting Social Security. We might as well give the middle class some relief while we can.”
 

Protecting Social Security next year?

Despite his support for the existing payroll tax cut and the current Democratic proposal, Rep. Deutch said that he is concerned about what the debate over the payroll tax cut will look like next year, especially if Republicans gain power in Congress or take the White House. “That’s why I’m determined to have the discussion about protecting Social Security in the long-run before then,” he said.

Earlier this year, he introduced a bill called the “Preserving Our Promise to Seniors Act,” which would eliminate the program’s long-term shortfall by phasing out the payroll tax cap on high earners. Many Americans are not aware that there is a cap, he said, which means that there is no payroll tax on any wages over $106,800. A 2010 analysis by the Senate Committee on Aging showed that if the cap on payroll taxes were lifted while the cap on benefits were maintained, the 75-year shortfall would turn into a 75-year surplus of nearly $81 billion.

“If we’re going to set aside our worries about Social Security to provide middle class families with some relief, I hope that this becomes an opportunity next year to have a broader discussion about strengthening Social Security that could lead to a more broad-based, equitable system,” Rep. Deutch said.

“I hope that silver lining materializes,” Altman said, “because I think Roosevelt would pretty worried right now.”