Jay Ambrose: Payroll tax cut deal guarantees exorbitant taxes and huge debt

By Jay Ambrose

Scripps Howard News Service

Published: Friday, Dec. 30 2011 12:00 a.m. MST

President Barack Obama signs the payroll tax cut extension, Friday, Dec. 23, 2011, in the White House Oval Office in Washington.

Haraz N. Ghanbari, Associated Press

Enlarge photo»

The Democrats win, the Republicans lose, the payroll tax is reduced for a couple of months, unemployment benefits are extended, and you'd be better off avoiding many of the commentators on the subject.

They are caught up in the petty politics of the drama, and wouldn't recognize substance if it bit them on their yapping mouths or typing fingers.

My point is hardly that politics had nothing to do with what happened; the wily White House, taking advantage of the shallow focus of some news outlets on the fun stuff, easily outsmarted Republicans, many of whom were likewise playing games. My point is that the White House also outsmarted the national good.

What the national good demanded was that the payroll tax be restored to full strength unless long-term, meaningful cuts in Social Security transpired. Minus restructuring of this program and other entitlements, it is absolutely guaranteed that paying off the trillions of dollars owed to them will require some combination of exorbitant taxes and ruinous debt increases.

Reducing a tax already insufficient for its purposes only worsens a horrific situation, with no comparable offsetting benefit.

Yes, the extension of the tax cut will put about $20 a week in the average worker's pocket, but this does not then translate into macroeconomic rescue. Temporary tax cuts have only very slight temporary pluses, as recent and past experiences demonstrate.

When President Barack Obama tells you "most economists" say differently, you have to figure the ones he actually checked just wiggled out of their straitjackets moments earlier.

A worthy Social Security adjustment would require no effect whatsoever on anyone immediately, and no serious hurt to anyone in the long run. It would simply require some fixes in a formula slowing the growth in initial benefits, additional means testing, a higher cap on contributions and perhaps some retirement-age changes.

The problem is political. Demagogic miscreants make it sound as if any change that will save the system — and less than parenthetically help save the nation — will abuse the elderly. It's a cruel lie.

The House Republicans passed a plan that would lower the payroll tax by 2 percentage points for a year along with some relatively meager decreases in federal spending. The Senate Democrats originally wanted a tax hike that would further slow job growth for a 12-month payroll tax decrease.

The Senate Democrats then made a deal with Senate Republicans for a two-month payroll tax decrease. The Republican demand was that Obama would have to decide on whether we can have a harmless, job-providing pipeline helping to answer our energy needs. He's held off for fear of offending environmentalists or unions.

When the House Republicans did not want to go along with the bargain, it seemed like almost everyone — including one prestigious newspaper in a supposedly impartial front-page story — said they just didn't know how to compromise. Yes, they did. The usual procedure in a case like this is for the House and Senate bills to go to a conference committee that tries to work out something agreeable to one and all.

Instead, it was Obama and Senate Majority Leader Harry Reid who said it was the two-month bargain or nothing, which hardly kept some commentators from yelling loud and hard about the proletariat-despising, tea party plutocrats in the House. Even Senate Republicans grew obnoxious. The House gave up half-hearted adherence to doing what at least had some spending relief merit and instead went along with a plan that would open the way to more American wreckage down the road.

What happens next is that the White House and Senate Democrats will call for a 10-month extension with anti-job tax hikes once more as the cost, and Republicans will be made to look like they favor the rich over average folks.

Hear this, average folks. The only real justification for any temporary reduction of the payroll tax would be significant, long-term, courageous adjustments in Social Security, and minus that, you are being endangered and treated like fools.

Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a columnist living in Colorado. He can be reached at SpeaktoJay@aol.com.

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