Payroll Tax Cut Debaucle

Once again, it is a political move. People dependant on the government go out to vote.

 

Couldn't agree more. Which is why I'm so baffled by everyone's acceptance of this three-ring circus over a lousy twenty bucks a week in people's pockets. Don't they have bigger fish to fry????

I know there's more to it than that... extending unemp and more ill-advised spending.

"Must do it because we need the votes."

Makes me sick. That's all.

 

Huh? The 15% Capital Gains tax rate doesn't expire until the end of 2012.

 

Always good when others agree with our opinions. This is what I'm saying... let the dang thing expire. Not like it did all that much good to begin with. Enough of the politics... let's get serious about cutting spending in the Land of Oz! Next -- eliminate a few of those pork projects that are draining us dry!

12/21/2011
Don't Extend The Ill-Conceived, Evil Payroll Tax Cut

On December 20, the House of Representatives refused to pass the Senate’s 2-month Social Security payroll tax cut extension. This created the genuine possibility that this temporary 2.0 percentage point cut in the 6.2% Social Security tax normally paid by employees would expire at the end of this year.

It became clear before the financial markets opened in New York on December 20 that the tax cut extension would be defeated. The Dow Jones Industrial Average (DJI) opened sharply higher and ended the day up 2.9%. The action in the European markets suggested that it was the news of the tax cut defeat, not the earlier news of larger-than-expected ECB loans to European banks, that caused the surge in equity prices in both the U.S. and Europe.

Why would the markets soar in response to the defeat of a tax cut extension? Because this one of the very few tax cuts that is actually bad for economic growth.

The one-year, 2.0 percentage point Social Security tax cut was enacted a year ago as part of a package that also extended 99-week unemployment benefits for a year, and postponed the expiration of the Bush income tax cuts for two years. Interestingly enough, opinion polls taken at the time showed that the Social Security tax cut was the only part of the package that the public did not support.

That this temporary cut in the Social Security payroll tax enjoyed bipartisan support a year ago shows the extent to which the Keynesian Superstition pervades both of our political parties. Members on both sides of the aisle bought into the fantasy that “putting money into people’s pockets” would increase demand. It didn’t. Economic growth slowed markedly at the exact moment that the payroll tax cut was enacted.

Real GDP growth plunged to 0.36% in 1Q2011 after coming in at 2.33% in 4Q2010 and averaging 3.14% for all of 2010 (4Q over 4Q). This result left the Keynesians with nothing to say other than, “Without the stimulus, things would have been even worse”. This is the same nonsense that they have been peddling ever since their massive $762 billion stimulus program resulted in unemployment shooting up to 10.1%, rather than peaking at 8.0% as the proponents of the stimulus program had promised.

Why didn’t the (approximately) $27 billion per calendar quarter tax cut spur demand? Well, let’s look at what actually happened in 1Q2011.

First, the Treasury borrowed $27 billion additional dollars. Then the $27 billion was (incrementally) distributed to workers via the payroll tax cut. What did those people do with the money? They saved it. Saved it how? On the margin, they saved it by buying the bonds that had been issued so that they could have the payroll tax cut. Who will ultimately have to pay off the bonds? The same people who got the tax cut. Isn’t Keynesianism clever?

But don’t “supply-siders” also believe in tax cuts? Supply-siders believe that permanent cuts in marginal tax rates (particularly on savings and investment) will increase economic growth. The payroll tax cut that was defeated by the House yesterday was none of these things.

***

In all fairness, many on the Forbes site disagree with this op-ed. I'm not buying all of it either... esp the part about folks 'saving' that extra $20 a week. My point is -- it cost us $27 billion in SS funds to give each American a lousy twenty bucks. Big friggin deal.

 

Obama Launches “$40″ Payroll Tax Cut Campaign
December 22, 2011, 8:46 am

President Obama is stepping up his PR war against House Republicans with a just-scheduled 12:15 pm ET appearance at the White House to tout a new campaign highlighting the tax break families will lose if the partial payroll tax holiday is not extended.

From the White House:

Obama will point people to a new section of the White House website where they can “share what a $40 paycheck means to them.” In addition, he’ll urge them to make use of a new Twitter hashtag, #40dollars.

The White House has also rounded up a group of citizens “who would see their taxes go up” to appear alongside Obama. Unclear if they’ll recite their assuredly heart-rending tales of prospective woe.

Obama has been demanding that House Republicans move a two-month payroll tax cut extension approved by the Senate.

Obama today will leave unsaid, of course, that everyone’s taxes will also go up if the Senate fails to return and act on the House-passed year-long payroll tax cut extension.

###

 

The dear CIC never misses an opportunity to campaign anything, even if deep down he opposes it. LOL Anything for more air time. He is the all time media whore for a President

 

All the better when he can prop his feet on the desk and twitter his message. Heaven forbid he address congress face-to-face.

 

Here comes Obama's parade of stooges:

'Waa, No Pizza Night': Sad Stories Roll In at Request of Obama White House
December 22, 2011

(CNSNews.com) - The White House says it's been flooded with responses to the question it posed Wednesday: "What does $40 mean to you?"

One day after the White House asked "working" people to "tell us what your family will give up if your (payroll) taxes increase," the stories are rolling in, including one from a person who worried about not having enough to pay the cable bill -- or continue family pizza nights.

"Our cable internet bill is $49 per month. If we lose this payroll tax cut then we will have to give up either (our) internet access or possibly our 'Friday Family Pizza' night. Either way, we will lose something that brings us together as a family," wrote "K.Z" from Frederick, Maryland.

Another person wrote that $40 will "buy lunch from the cafeteria for almost a whole month for my twins."

Someone else who "can barely get by now" said taking $40 out of his paycheck "would just about put me under."

A person from New Mexico said "$40 less a paycheck means I will have to pick between my insulin and the water bill. It means never being able to see my doctor -- even though I have insurance."

Many of the responders said they need the money to pay for medicine, medical bills, a tank of gas, or groceries.

The White House said it received over 18,000 submissions through a form on Whitehouse.gov, averaging over 1,000 an hour and coming in from every state in the nation. It also is accepting Twitter submissions.

An extension of the payroll tax cut will save a "typical" family earning $50,000 around $40 a paycheck, the White House says. It also will reduce the only dedicated funding source for Social Security benefits, but only a few people in Washington are talking about that.

'Raid on Social Security'

President Obama and his fellow Democrats are blaming House Republicans for the current stalemate over extending the payroll tax cut. The House bill calls for a year-long extension; but the Senate passed a bill extending it for two months. Unless the two bills are reconciled by the end of the year, the payroll tax will go up.

Some conservative Republicans say the payroll tax cut extension is a bad idea, period, because it siphons money from the Social Security Trust Fund.

Rep. Frank Wolf (R-Va.) is among the conservatives who voted against extending the payroll tax cut. "While I support comprehensive tax reform, I do not support the flawed legislation presently before us," Wolf said on Dec. 13.

"The issue today, as defined by both political parties and the president, is whether or not a temporary – and costly – one-year payroll tax “holiday” should expire at the end of the month. The real issue is whether it is responsible for Washington to further shortchange the Social Security Trust Fund at a time when it is already on an unsustainable path."

Wolf called the payroll tax extension a "raid on Social Security, which is already going broke," and he noted that the money paid into the system now -- through payroll taxes -- pays benefits for existing retirees.

"Granting another tax holiday is unwise. It puts the existing benefits of those 55 million Americans who currently receive Social Security at risk to continue a failed 'stimulus' policy," Wolf said.

 

I actually heard the President use that Pizza example in a speech a few minutes ago. It sounds ridiculous, but as long as the media nod sagely at his "wisdom," he will continue to say dumb things.

 

Reminds me of all those 'doctors' he rolled out in identical labcoats for an Obamacare rally. Anybody who buys this crap has gotta be braindead.

 

Well, Badmutha, the debate is over. Congress is currently finalizing a deal that will be announced at 5 PM EST.

http://www.cnn.com/2011/12/22/politics/congress-payroll-tax-cut/index.html?hpt=hp_t1

 

Good deal.... I'm gonna take an around-the-world cruise with my twenty bucks... whatcha doing with yours?

 

You better put your $20 in the bank....you might need it to retire on, since SS may be broke.

 

The payroll tax cut extension was necessary. However, so is Social Security reform. A tax increase is not the way to ensure future solvency. There are simple reforms to SS that can save hundreds of billions of dollars over the next ten years.

 

All they need to do is turn Social Security/Medicare in to a budgeted item. It would eliminate $4.5 trillion in debt and stop any confusion on whether the system is going to be solvent or not.

 

All that will do is change the type of debt. Instead of SS/Medicare debt being considered intragovernmental holdings, it will be considered debt held by the public, both are components of the national debt.

 

One hell of a lot more. He could start b y showing leadership instead of giving orders and going golfing.

A true leader would have had everyone involved over to the White House for sandwiches and beer and find a compromise.

Frankly, if he had given in to the Republicans on the super committee he would have taken all the wind out of their sails...

Instead he has too much ego and had to make a fight of his....for his purposes, and screw the nation.

 

$400 isn't going to help someone making $20k?

My guess is you've never had to live on $20k.

 

Sure, dear!
That "sandwich and beer" sounds very much like something President Obama tried almost 3 years ago. . .and several times since then!

And all he got from the GOP were declines to attend and from your kind insults and derisions!

I think Boehner just got the wind taken out of HIS (and his friend's) sails! But the American workers are happy. . .for now! How great that the GOP will have TWO opportunities to show that they work AGAINST the American workers and FOR the wealthy!

 

I personally don't get a payroll tax cut anymore, and still I think the workers deserved that tax cut.

But. . .as so many of your friends say, if you don't want the payroll tax cut, or if you think you should pay more tax. . .you can always send it to the IRS as a gift, contribute it to your favorite GOP loser campaign, or . . .a novel idea. . .give it to charity!

 

Sure, $400 would help... in a lump sum. $20 a week is a quarter tank of gasoline and pack of smokes. Hardly worth putting our country $27 billion deeper in debt.

 

I'd be willing to bet you just got a 3.6% increase in SS though, huh? Let's just all keep sucking off that govt teat til the country goes under. As long as we get ours, who cares about our grandchildren's future, right???

 

No it won't. That is absolutely not what would happen. There is no debt that exists. It's just stupid pieces of paper that the Govt claims is an investment. The debt would incur as SS payments were made more than receipts.

 

Explain how there is no debt. Your outlandish economic theories are startling to most posters, including myself.

 

It's an asset and a liability to the Government. They take SS receipts that exceed payments and they invest in themselves. As in one arm of the Govt gives the other arm our SS money. That arm of the Govt gives the other arm a piece of paper and spends our money through the general fund.

So the Govt owes themselves whatever value those pieces of paper are worth. So for the Govt to pay themselves back they have to actually go in to real debt, auction off treasuries to the public, then they take that money, give it to themselves then pay any excess SS expenditures.

Those pieces of paper are just markers, they aren't actual debt that the Govt has to pay back. The debt occurs when they actually have to pay more SS payments than they get in receipts. Those papers are an allowance or markers, not really debt.

When intragovernmental debt matures the Govt doesn't have to pay it off, they just roll it over by replacing it with another piece of paper that adjusts the interest rate based off inflation expectations that they themselves come up with. It is nothing more than a number with a addon that the Govt keeps track of and makes people who give them their SS money feel like they are actually investing in to something real.