Going around in circles
by digby
Since it’s clear that this economic problem is a demand problem (likely exacerbated by the non-stop deficit scare mongering of both parties)the administration should probably push a tax cut right now since it’s the only kind of stimulus he’s likely to be able to get. It hasn’t worked all that well up to now, but then again, people may have paid down their debt sufficiently by this time that they are willing to go out and buy a big ticket item they’ve been putting off now. I guess it’s worth a try.
But why does it have to be the payroll tax, which will play right into the hands of the safety net shredders? Why not just push through a traditional federal income tax cut for middle and lower income people to go spend?
Social Security Works has this to say:
White House advisors are reportedly considering relieving employers from their obligation to contribute to Social Security. This proposal, if enacted, would eliminate billions of dollars of revenue dedicated to Social Security at a time when some members of Congress argue that Social Security’s benefits should be cut because the program may have insufficient revenue after 2036.
Nancy Altman, Co-Director of Social Security Works issued the following statement on the Administration’s idea:
“That the White House would even consider cutting Social Security’s funding is enormously alarming. It indicates that the White House does not take seriously the dedicated nature of worker and employer contributions to Social Security. Those contributions belong to American workers and their families. Social Security should not be treated as a piggybank or raided by politicians in Washington.
“The supposed reason for the proposal is to further stimulate the economy, but there are a number of more efficient and effective ways to do so. Those other measures would boost the economy more without giving ammunition to those who want to cut or even privatize Social Security.
“Even if the lost income were made up from general revenue, great harm would be done. If the proposal became law, those arguing to cut Social Security’s benefits would then point out that Social Security has a huge shortfall and is contributing to the deficit, and so must be cut.
Social Security provides vital economic security to millions of seniors, women, people with disabilities, children, families of soldiers killed in Iraq and Afghanistan, and others. The government should do all it can to spur job growth, but not at the expense of Social Security.”
Oh sure, they say that they will “replace” the dedicated payroll tax money from general funds. The same general fund everyone is bleating about ruthlessly cutting to the bone. Trust ’em?
That they’re contemplating cutting the employer portion is also mystifying. Companies are already sitting on cash and aren’t hiring. Giving them more cash is likely to do nothing more than make those cash rserves larger. They aren’t hiring because they don’t need the help. And that’s because customers aren’t buying.
Although the policy goals of all this are quite clear, I’m no longer able to discern a coherent political strategy. They probably want to be able to make the argument again that they are the greatest spending cutters in history, thus giving the confidence fairy a goose and convincing all those Independents that they are … Republicans? I don’t know. It appears to still be “give the bankers what they want and cross your fingers.” I guess they don’t buy the aphorism that insanity is doing the same thing over and over and expecting a different result.
.