'Payroll Tax Holiday' Came Into Obama's Tax Plan Via Republicans

I've written that the use of a payroll tax holiday plays perfectly into the hands of the Grover Norquist/Tea Party plans to destroy the viability of of Social Security. Jennifer Rubin reminds us that it was their proposal in 2009 and was

I've written that the use of a payroll tax holiday plays perfectly into the hands of the Grover Norquist/Tea Party plans to destroy the viability of of Social Security. Jennifer Rubin reminds us that it was their proposal in 2009 and was rejected.

You may recall that a payroll tax break or "holiday" was a Republican proposal back in 2009. Conservatives liked the idea then in lieu of a tax credit. The Weekly Standard's Matt Continetti explained the reasoning...

Today, President Summers also held a conference call and admitted that Republicans introduced the payroll tax holiday into President Obama's Tax Cut deal:

Digby writes:

Dear God. Some of these people must be either criminally inept or crudely malevolent. There is no other choice:

Q So the only reason that the payroll tax holiday will provide more stimulus is because it’s twice as large. Making Work Pay was capped. Why didn’t you preserve Making Work Pay? Is it because, as the President said some months ago, it’s just a kind of invisible tax cut and didn’t provide any political benefit for the White House?

MR. SUMMERS: No, it came out of the process of compromise with the Republicans who were more attracted to the payroll tax holiday concept, and that was a proposal that, as had been coming out of here, we had been giving considerable thought to in the context of the President’s budget.

I find it hard to believe that such smart people didn't know that this was a landmine. If stupid hippie bloggers understand that it's going to be nearly impossible to reinstate that tax, then surely world class intellectuals and political professionals do. They had to know that this was going to weaken Social Security and one can only assume at this point that they did it in service of their stated goal of "saving it" by cutting it --- and being rewarded as big heroes by the people (and Wall Street.)

Somehow, I don't think their clever plan is going to go the way they think it will.

Republicans will do anything to attack the revenue stream of Social Security so they can slowly chip away at it until they can ultimately privitize it. Once there is a "holiday," then Republicans will say that you must keep extending the cuts or Democrats will be raising your taxes. it's a simple plan, but one that it seems only DFH bloggers understand.
The Huffington Post has the details of their plan:

Democrats have never allowed the rate to be cut, even temporarily, in the history of the program, because payroll taxes feed the Social Security trust fund and create the political base of support for the program, said Nancy Altman, author of "The Battle For Social Security", a history of the program, and head of the advocacy group Social Security Works. Republicans have won a long-sought victory, even as President Obama hails it as a win for his party.

Republicans acknowledged that the expiration of the tax holiday will be treated as a tax increase. "Once something like this goes into place, a year from now, when it expires, it'll be portrayed as a tax increase," said Sen. Bob Corker (R-Tenn.). So in a body like Congress, precedents matter and this is setting a precedent. I think that certainly is going to create some problems down the road if it passes."

Given that Congress, under Democratic control, can't gather itself to let tax cuts for the wealthiest Americans expire, members of both parties are convinced that letting the payroll tax rate revert back to its current spot will be near impossible.

"Once you bring a rate down, if it goes back up, people will feel that. They'll feel their paycheck being less and that argument" -- that letting it expire amounts to a tax hike -- "eventually is bound to be made," said Sen. Mike Johanns (R-Neb.).

"There's always a tendency to continue those things... Once something comes in, it's very difficult to change it," said Sen. George Voinovich (R-Ohio.) He then volunteered, without prompting, that "It would be detrimental to the Social Security system, especially when it's in bad shape."

And that's the gist of it. The President told us at the Blogger Meeting at the White House that he wanted to raise the cap higher on the payroll tax so that more revenue will come into Social Security, which is the proper way to indeed raise more revenues, but by getting into bed with Republicans on a payroll tax holiday, that would almost certainly end any chance of that happening for a very long time.

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