With public attention focused on President Obama’s compromise with Republican leaders to extend the Bush tax cuts for the wealthy, there has been less discussion about a feature of the deal that could have enormous long-term consequences: the payroll tax holiday. Under the plan, which still must be approved by the House and Senate, the payroll tax would be cut by 2 percentage points for all wage-earners — meaning that a worker making $40,000 would receive an extra $800 in his or her paycheck over the course of a year. The White House and its defenders are touting this as a way to boost the stalled economy, and it might just do that. But they’re also playing with fire.
Once more Obama distorts the FDR-era history of Social Security. The first time was here, during the famous Progressive Bloggers interview, when he passed as fact a blatant and false Republican smear about FDR and Hoover.
And he’s at it again. In his recent press conference, Obama said this during his anti-progressive rant:
This is why FDR, when he started Social Security, it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people. When Medicare was started, it was a small program. It grew.
Which is just flat false, not in any history of the era I studied. Krugman calls him out:
This is all wrong: both programs were huge from the start. From the beginning, Social Security applied to all private-sector workers, except those in agriculture, domestic service, or casual employment — and yes, those exceptions happened to exclude the majority of African-Americans. Still, it was by no means a small program that grew big. Medicare covered everyone 65 and older right from the beginning, although initially it only provided hospital insurance.
It is, as Rosenberg says, odd that Obama doesn’t know this history.
I included the last sentence to contrast the Professor’s characteristic politeness with my own opposite thought. No, it’s not odd at all; he passes on Republican talking points because … (your turn).
From The Progress Report:
President Obama’s $900 billion tax deal with congressional Republicans gained “a wave of new Democratic support” yesterday, signaling that the measure will make it through Congress, provided most Republicans support it. Senate Majority Leader Harry Reid (D-NV) said the Senate could vote on the package as soon as today or tomorrow, suggesting he is confident of its prospects in the upper chamber. Congressional Democrats have been largely displeased with the deal — which will extend for two years the Bush tax cuts for all income brackets, including the wealthiest two percent of Americans, in exchange for extending unemployment benefits and middle-class tax breaks — but many appear to be coming around. Democrats strongly objected to extending the bonus cuts for “millionaires and billionaires” because it will greatly increase the deficit while providing little stimulus for the economy or the middle class. A large number of Democrats had threatened to vote against the package, and, calling the deal an “absolute disaster,” Sen. Bernie Sanders (I-VT) has even threatened to filibuster it. But their most strenuous objection to the compromise was directed at the estate tax provision, which sets a 35 percent tax rate on estates worth more than $5 million. The White House has lobbied aggressively to win support for the deal in the last few days, sending Vice President Biden to Capitol Hill and other administration officials across Washington “to press their case.” And White House economic adviser Larry Summers delivered a grave warning to members of Congress yesterday, saying, “If they don’t pass this bill in the next couple of weeks, it would materially increase the risk the economy would stall out and we would have a double dip [recession].” But despite the fact that many in the party support the measure, and that the compromise appears poised to pass, some “Democrats in the House and Senate were still seething with anger — both about the substance of the deal…and the way they were iced out of the negotiations,” the New York Times reported yesterday. In a non-binding vote within the House Democratic caucus today, the caucus voted to reject the tax cut deal.
From The Raw Story:
Wednesday, December 8th, 2010 — 5:50 pm
Quarter of tax savings will go to richest one percent
The plan to extend Bush-era tax cuts that President Barack Obama struck with the Senate Republican leadership will result in lower taxes for wealthy and middle-class Americans but will mean a tax hike for the very poorest earners.
According to an analysis in the New York Times, the Obama-GOP deal will mean that individuals earning less than $20,000 and families earning less than $40,000 will see a small tax hike.
“It will come to a few dollars a week,” Roberton Williams, an analyst at the Tax Policy Center told the Times. “But it is an increase.”
As part of the deal, Obama agreed to drop the Making Work Pay credit that was created as part of the stimulus package, and replace it with a lower payroll tax. That lost credit — of $400 or $800 — is greater than the amount low-income earners will save from the lower payroll tax, meaning, in total, they will pay more.
Of the estimated $900 billion in new and continued tax breaks in the deal, about one-quarter — $225 billion — is expected to go to the top one percent of earners.