The Payroll Tax Trap
The Hill is reporting that “President Obama’s push to extend a payroll tax cut has united a rare combination of conservative Republicans and liberal Democrats in opposition." In particular, Pete Sessions (R-TX), chairman of the NRCC, is suggests that a payroll tax cut risks the solvency of Social Security.
This is the wrong argument and Republicans are falling into a trap by accepting it.
The case against extending the tax break due to impact on the “trust fund” is misleading at best. There is no trust fund, at least not in a way that anyone other than a politician would understand one, because Congress has spent 100% of the prior decades’ Social Security surpluses rather than actually saving the money.
In other words, the Social Security system’s operating deficit, which occurred in 2010 for the first time since 1983 and is likely to occur every year in perpetuity, will require the gap to be filled in by any tax revenue the government collects, such as federal income tax, corporate income tax, estate tax, etc. The so-called “trust fund” simply holds government bonds which the government will have to tax citizens (again) to convert into actual cash. (This is why you should disagree vociferously when a Democrat tells you that a government bond is the same as cash.)
Please read the entirety of my article for the American Spectator here:
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