REFLECTIONS

Posted on January 8, 2012

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S.S. TAX BREAK WRONG

NATION WILL SUFFER LATER ON

The Democrats win, the Republicans lose, the Social Security 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.

My point is hardly that politics had nothing to do with what happened; the White House easily outsmarted the Republicans, many of whom were likewise playing games. The White House also outsmarted the national good for retirees, and this month games will continue to extend the payroll tax for 12 months.

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 trillions of dollars owned to retirees will require some combination of exorbitant taxes and ruinous debt increases. In fact, to pay into the Social Security system the payroll reduction for 2011 should be made, and this payment would come from borrowed money.

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 macro economic management recession rescue.

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