President Obama announced a tentative deal with Congressional Republicans a week ago today to extend the Bush-era tax cuts at all income levels for two years. The package would reduce the 6.2% Social Security payroll tax on all wage earners by two percentage points, to 4.2%, for one year. However, the package would cost about $900 billion over the next two years, and would be financed entirely by adding to the national debt. The deal would also extend unemployment benefits at their current level for 13 months, through the end of 2011.
The Social Security payroll tax cut is estimated to cost $120 billion per year, and is a provision that Senate Democrats say could ultimately be the undoing of Social Security. Allowing the payroll tax to expire in a year will mean that workers will see a nearly 50% jump in payroll taxes as the rate reverts back -- an event that is likely to be described as a tax hike. According to The Huffington Post, reducing a person's responsibility to contribute to Social Security also deprives the program of the political and moral capital that has kept the program intact despite fierce opposition from a determined investor class. In arguing against the deal, Nancy Altman, head of the group Social Security Works, noted that such responsibility was put into place by FDR for just that purpose. To see more from FDR on the topic, Click Here
Altman said that dividing the stimulus evenly by simply sending an equal check to every worker would be far more desirable. Both the Senate and the House are expected to debate and vote on the proposal early this week.
A proposal to provide seniors an emergency payment of $250 was blocked last Wednesday by Republican-led opposition in the House and Senate. The measure would have provided the one-time payment to 58 million Social Security recipients in lieu of an annual cost-of-living adjustment (COLA). This is the second consecutive year that Social Security beneficiaries did not receive a COLA. Senior advocates note that the Consumer Price Index in Social Security, which measures the rate of inflation, does not accurately reflect the rate of inflation faced by seniors who spend a huge amount of their income on health care. Alliance for Retired American members sent more than 5,400 e-mails letting their representative and senators know that they were counting on them to vote in favor of the payment. The bill, S. 3985, required 60 votes to shut off a filibuster in the Senate, but failed 53-45. No Senate Republicans voted for it. To see how your Senators voted, go HERE.
The proposal also failed in the House for passage under House Suspension Calendar rules. There, the measure came up short, 254-153, with 141 Republicans voting against it. Under those rules, two-thirds of members present and voting were necessary for the bill, H.R. 5987, to pass. To see how your representative voted, go HERE.
In arguing for the $250, Rep. Earl Pomeroy (D-ND) mentioned the Alliance for Retired American's support on the House floor. “This legislation is critical to retirees, but unfortunately, congressional Republicans overwhelmingly chose to oppose it,” said Edward F. Coyle, Executive Director of the Alliance.