Congress passed an extension of the payroll tax cut on Friday in a package deal. The bill enjoyed widespread but not universal support among both Republicans and Democrats. I see this package as election year defense so it’s probably not worth going through it item by item. Suffice to say that it does nothing to address the fundamental fiscal problems we currently face.
The conventional wisdom is that “conservatives” always support tax cuts, but I’m opposed to this one. A cut in Social Security taxes when the program is rapidly headed toward insolvency hardly seems responsible. If Social Security is supposed to be self-supporting with a “lockbox” guarding the contributions, cutting the tax and “paying for it” somewhere else in the budget is mere smoke and mirrors. As a matter of principle, Social Security payments should come from Social Security receipts; tax cuts should be on the income side because discretionary government spending should come from tax receipts. Blurring this distinction moves us even closer to the notion of Social Security and Medicare as entitlements independent of taxes originally intended to fund their existence.
We should be moving in the opposite direction. Consider transportation funding. Highways and bridges should be financed solely through fuel taxes, and all fuel taxes should fund road projects. Doing so creates a modicum of fiscal responsibility because we can actually see what we’re paying and where it’s going. It also makes sound economic sense because costs associated with transportation are borne proportionally by those who benefit from it. The more you drive and the more (transported) goods you purchase, the more you pay for the infrastructure.
The problem I see with this bill is bigger than the tax cuts. This legislation is further evidence that we are actually politicizing the tax code even further when we should be moving toward transparency and simplicity. It’s difficult to imagine how a Congress that supported this recent bill could favor anything resembling flat or fair tax proposal stripped of political favors and social engineering.
the Republicans totally caved on this deal
The fault I find with Boehner and the Republican “leadership” is not so much their inability to stand firmly on princinple, but rather their abject refusal to fight false premises. When you refuse to combat a false premise, it is no different than tacitly accepting it.
There is also some wholly irrational notion on their part that if they can just soft-shoe their fiscal conservative message, the media will somehow portray them as “well-meaning,” or at least “not EXACTLY evil.” That idea is nonsense. The MSU media, equipped with their Energizer arrogance (it keeps going, and going, and going), will never provide an ounce of cover for any GOP’er. Ever. Given that fact alone, it only makes sense for the GOP to lay out the facts, sans sugar coating, and trust the average American’s abillity to recognize the truth. Spoon-feeding us a somewhat rosy scenario is no less arrogant and immoral tthan the Proglodytes’ outright hatred of human nature and natural rights.
Also, tiny touch-screen keyboards on Android devices are a breeding ground for typos. 😉
Agree with your point Parnell but why isn’t any tax cut a good deal?
John: The problem is both economic (as explained in my post) and political. Tax cuts are only politically popular when they favor the “working man” and tax hikes are only politically popular when they hit “the rich.” Over time, a series of cuts and hikes can skew the tax burden to a point where only the top half pay the income taxes and many in the bottom half actually get money back. This is (partly) why we are in the current situation. The entire process is fuels by a complicated tax system; transparency and simplicity would make this more difficult.
We should get rid of all the loopholes and have a flat tax. period.
Social Security is being devastated right before our eyes. The “tax cut” is the only way cuts can be accomplished for people who don’t pay income taxes. So a creation of the Democratic party is being savaged by the Federal Govt.
Social Security doesn’t need fixing, the Federal Government does. The lockbox has $2.5 trillion, all of which is loaned to the Feds at low interest. For the first time, contributions are now less than disbursements, so where does the money come from when the U.S. Government is broke? They have to pay it back but how?
We not going to fix this crisis by tweaking retirement ages. The U.S. Govt is about getting money anyway it can. SS is ripe for the picking, or was, since that has turned around on them. Politicians don’t want to talk about the real crisis, which is always financial mismanagment. Seniors should not be wworried about getting their checks, but about them not being worth anything when the dollar collapses.
Sorry for this late post.