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Ignoring Liberal Dems, Obama Endorses Longer Payroll-Tax Holiday Through 2012
President Obama on Wednesday reiterated his push to extend an existing payroll-tax holiday through 2012 – a move denounced by liberal Democrats who fear the reduction in revenues will undermine Social Security.
“I think that it makes perfect sense for us to take a look at, can we extend the payroll tax, for example, an additional year,” Obama said during a lengthy press conference at the White House.
The president said that strategy “puts money in people’s pockets at a time when they’re still struggling to dig themselves out of this recession."
The remarks ignore the warnings from many liberal Democrats, who have argued for months that cutting the payroll tax will drain Social Security coffers and threaten seniors' benefits.
Republicans backed the tax break when it was included in a December deal, but House Budget Committee Chairman Paul Ryan (R-Wis.) more recently has criticized it as a “sugar high” for the economy.
On Friday, Democratic Reps. Lloyd Doggett (Texas), Ted Deutch (Fla.) and Mark Critz (Penn.) sent a letter to all House Democrats saying the proposed payroll-tax extension “should trouble all who care about preserving” the funding stream for Social Security.
“Social Security’s popularity comes from the direct contributions of American workers, who pay into the system now and benefit when they retire or become disabled,” the lawmakers wrote. “Unless and until faith in Social Security has been restored to the American people through long-range solvency, short-sighted cuts to the program’s revenue stream must not be part of any debt ceiling or budget deal.”
The letter is also being distributed to select House Republicans, Deutch spokeswoman Ashley Mushnick said Wednesday. The Democrats are also readying a similar letter to send to Obama.
In December, the White House and Senate Republicans carved out a deal to cut workers' payroll taxes from 6.2 percent to 4.2 percent through 2011 – part of a larger package to extend the George W. Bush-era tax rates for all taxpayers.
The provision angered many liberal Democrats, however, who warned it set a dangerous precedent because taxes are easier to cut than they are to restore. The concern at the time was that anti-tax conservatives would lead the charge to extend the tax break beyond this year. Instead, Obama has adopted that position.
Sen. Charles Schumer (D-N.Y.) is also urging a one-year extension to the payroll tax holiday.
While the cut is just two percentage points – from 6.2 percent to 4.2 percent – it represents a real payroll tax reduction of 32 percent. For instance, a worker currently earning $100,000 should have paid $6,200 in payroll taxes for 2010 wages, but will pay only $4,200 for earnings this year.
The current tax holiday does not apply to employers, who continue to pay the 6.2 percent rate.
The Congressional Budget Office estimates the cut will reduce federal revenues by $112 billion over the next two years. Because the tax package is not offset by changes elsewhere in the budget, the government will have to borrow to fill that hole in the Social Security trust fund.
The president on Wednesday also endorsed “other tax breaks for business investment” he says would stimulate the economy and create “more jobs right now.” The White House has already floated the idea of extending the payroll tax holiday to employers, though it’s unclear whether Obama was referring to that strategy Wednesday.

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Thanks for the tip.
To think that payments or kickbacks to workers on an annual basis is a decent alternative to the Social Security system as currently defined puts you in the camp of the Ron Paulistas with their heads in the clouds and their feet in the mud. The purpose of SS is to assure that, upon reaching retirement age, there will be a guarantee of income regardless of the wise or unwise financial decisions one has made in h/her lifetime. This, in my own opinion, is a good thing. Perhaps you wish to punish the unwise by forcing them to eat catfood and sleep in alleys after their working lives are ended. I do not
Our SS system is perhaps the single most successful government run program in our nations history by the way, and, despite the said "looting" is solvent in its current form until 2034. The program ain't broke just in need of revision. Eliminate the cap on payments and the system would be solvent again for the foreseeable future.
As to the end of the Depression, well duh, full employment , million or so soldiers fighting and everyone else working to produce weapons of war may be a ghastly solution but it was such nevertheless.
Hey software guys, put down the joint and fix the damn system!
Bush's Wall St. bailouts continued, Bush's income-tax cuts for the rich extended, Bush's Iraq war extended, Bush's Afghanistan war doubled down, Bush's military spending increased, Bush's budget deficits increased, Bush's Minerals Management Service staff retained (while oil companies cut corners on environmental protection and job safety at off-shore drilling sites), Bush's labor policies continued, Bush's assault on Constitutional rights continued, Bush's imperial presidency doubled down.
Add Obama's "accomplishments" like Romney-care (private health insurance mandates) and hundreds of billions in financing and indemnification for the nuclear power industry (it's as "safe" as off-shore oil drilling), and no one should be surprised that privatization of Social Security is next on Obama's list.
Lest I forget, Obama also solicited bribes (campaign contributions) from Monsanto and other bio-tech companies by instructing federal agencies to ignore court rulings and safety concerns, and allow planting of genetically modified crops which are linked to cancer, birth defects, neurological disease and allergies, and which permanently contaminate and biologically alter other nearby crops.
What will kill us first? Terrorist retaliation for Obama's war atrocities, an Obama funded and indemnified nuclear plant disaster, Obamanomics devastation in our senior years, or Obama's toxic food?