What’s Happening With Seniors Benefits
By Art Kelly
By a vote of 234 to 193, the House passed a bill to extend the temporary reduction in the payroll tax, thereby adding almost a quarter of a Trillion dollars to the national debt.
A year ago, President Obama proposed, and the Congress subsequently passed, legislation to provide a one-year reduction in the payroll tax, which funds Social Security, from 6.2% to 4.2%. Money was transferred from the Treasury to the Social Security Trust Fund to make up the shortfall caused by the tax reduction.
Now, Obama wants to extend this payroll tax reduction for another year.
In a recent appearance on Fox News Sunday, Michele Bachmann expressed her opposition to this proposal:
"This is Barack Obama's idea. He said that we would create millions of jobs if we lower the payroll tax. That's not true. It didn't happen. And his administration admits it didn't work. So why would you continue a policy that doesn't work?"
In the most recent presidential debate, Jeffrey Rendall of ConservativeHQ.com reports that Bachmann reiterated her opposition to a reduction in the payroll tax. She was joined in opposing this unwise plan by Rick Perry and Rick Santorum. However, Mitt Romney, Newt Gingrich, and Ron Paul supported the Obama proposal.
Last week's issue of this newsletter stated that "key staff members for Senate Minority Leader Mitch McConnell (R-KY) and Speaker of the House John Boehner (R-OH) were adamant that, if the payroll tax cut were extended, it would be paid for through equivalent reductions in the Fiscal Year (FY) 2012 budget."
Two days later, Boehner unveiled HR 3630, a proposal to keep the payroll tax at 4.2% for another year through massive deficit spending. The bill is officially sponsored by Congressman Dave Camp (R-MI), the Chairman of the House Ways and Means Committee.
According to figures provided by Boehner's own office, his legislation would increase the deficit by $166.759 Billion in FY 2012, by an additional $70.281 Billion in FY 2013, and $6.915 Billion more in FY 2014.
In theory, Speaker Boehner's bill would net a $5.834 Billion reduction in the deficit through projected spending cuts over a decade. Even if, by some miracle, these spending cuts actually materialized, the nation is facing dangerous deficits right now, which must be reduced (or, better yet, eliminated!) to prevent economic calamity.
As of December 13, 2011, the national debt was more than $15.060 Trillion.
Not including the new deficits the Boehner Bill would produce, an estimated $956.455 Billion will be added to the national debt in FY 2012. Much of this debt is financed by borrowing from foreign countries like China, which raises national security concerns.
In addtion to the irresponsible deficit spending HR 3630 produces, there are important reasons the bill should not be passed.
Charles Blahous, former Executive Director of President Bush's Commission to Strengthen Social Security and now one of the two public trustees of the Social Security system, writes in CNS News that continuing the payroll tax cut "could eventually end Social Security as we know it."
He explained, "It's really basically a conversion of the system from payroll-tax financing to partial income-tax financing. Down the line, you probably have a greater risk of benefit cuts because of the fact that benefits have less protection when they are subsidized by the general fund."
Alan Reynolds, a senior fellow at the Cato Institute, refuted the Obama claim that the reduction in the payroll tax helps the middle class. In an article originally published in the New York Daily News, he wrote:
"Borrowing from Peter to lend Paul a temporary tax cut doesn't 'put more money in people's pockets.' It puts more IOUs in their pockets. That is, it puts Paul even deeper in debt to Peter, and therefore obligated to pay more taxes in the future to repay that loan with interest. The best way to pay for another temporary cut in the payroll tax is to not pass it."
But the House did pass it, with only 14 Republicans voting against it:
Justin Amash (MI)
Joe Barton (TX)
Mo Brooks (AL)
John Campbell (CA)
Jeff Flake (AZ)
Jeff Fortenberry (NE)
Scott Garrett (NJ)
Timothy Johnson (IL)
Cynthia Lummis (WY)
Tom McClintock (CA)
David McKinley (WV)
Randy Neugebauer (TX)
Frank Wolf (VA)
Rob Woodall (GA)
There were three Republicans who did not vote:
Michele Bachmann (MN)
Howard Coble (NC)
Ron Paul (TX)
The Washington Times reported that one of the Republican House members who voted against it, Jeff Flake of Arizona, objected to using spending cuts spaced out over 10 years to pay for a one-year tax cut, saying he fears
future Congresses will undo the spending cuts and deepen the deficit.
"There's nothing to ensure that this extension is paid for in the future," he said.
The newspaper commented, "His fear may be well-founded."
The Democrats who voted against the Boehner Bill did not object to its big deficits. Rather, they opposed the mandate in the legislation to speed up construction of the Keystone XL Pipeline to transport synthetic crude oil from Alberta, Canada to multiple destinations in the U.S. The Obama Administration is opposed to the pipeline because of environmental concerns.
It is hard to see how anyone who voted for the massive deficit spending in HR 3640 can ever again be described as a fiscal conservative.
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