Paul Krugman, Robert Reich, Jim DeMint and Rand Paul on the Payroll Tax Cut

[NNN0LHI]

http://mediamatters.org/research/201109080024

September 08, 2011 1:28 pm ET

Memo To Gretchen Carlson: Economists Say Cutting Payroll Tax Would Boost Employment, Economy

<snip>Krugman: Payroll Tax Cut Would Give Money To People "Who Might Very Well Spend It."

An August 30, 2010, CNBC article quoted Nobel Prize winning economist Paul Krugman as saying:

"If you give a temporary tax cut to wealthy people who are likely to be highly liquid, they are not going to spend very much of it at all," Krugam {sic} said. "Give a temporary tax cut to corporations, who are sitting on piles of cash, they are not going to spend any of it."

A payroll tax cut would be better, since it would put money in the hands of people "who might very well spend it," he added. "But basically, I would take whatever we can, except that those high end tax cuts, corporate tax cuts, are going where the problem isn't; it's just a waste of money," Krugman said. {CNBC, 8/30/10}

Reich: Eliminating Payroll Tax Would "Get The Economy Moving Again."

In an August 25, 2010, interview on America Public Media's Marketplace, former Secretary of Labor Robert Reich noted that eliminating payroll taxes would "get the economy moving again." From Marketplace:

But here's an idea that might command everyone's support: Eliminate payroll taxes on the first $20,000 of income. Payroll taxes, you recall, include Social Security, Medicare and unemployment insurance. Make up the revenue loss by applying the payroll tax to incomes above $250,000.

This would immediately stimulate spending by adding to the paychecks of just about every working American. Right now, 80 percent of Americans pay more in payroll taxes than they do in income taxes. And lower-income workers, who would receive the largest proportion of the benefits, are more likely to spend the extra cash than are people with high incomes.

...

So how to get the economy moving again? Eliminate the payroll tax on the first $20,000 of income and apply it to income over $250,000 for two years.

How to keep the economy moving? Do this permanently. {American Public Media, Marketplace, 8/25/10}

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http://thinkprogress.org/economy/2011/12/07/383989/republicans-payroll-tax-undermine-social-security/

Republican Senators Push False Argument That Payroll Tax Cut Will Undermine Social Security

By Travis Waldron on Dec 7, 2011 at 2:10 pm

As some Republicans, including Majority Leader Eric Cantor (VA), are growing worried that opposing a payroll tax cut extension will undercut their message as anti-tax zealots, other Republicans have opposed the extension at every turn. Despite their staunch opposition to raising taxes on millionaires, these Republicans have cycled through the reasons to avoid providing a tax cut to the middle class that would allow the average family to pocket an extra $1,000 a year.

The latest argument to emerge from the GOP has been that extending the payroll tax cut would undermine Social Security, since payroll tax revenue goes directly into the Social Security Trust Fund. Multiple Congressional Republicans have adopted that theory of late, including South Carolina Sen. Jim DeMint (R), who put it to use on CNBC last night:

DEMINT: Republicans are always ready to cut taxes, as you know. We don’t think it’s a good idea to do it by raiding Social Security.

Kentucky Sen. Rand Paul (R) made the same argument on Fox News earlier in the day:

PAUL: Well, you know, Social Security is $6 trillion short of money. So the president is advocating reducing the amount of funding to Social Security when they’re already $6 trillion short. So it doesn’t really make any sense and it really argues that he’s going to bankrupt Social Security even quicker by reducing it’s funding.

-------------------------------------------------------------

Out of these four guys which ones do you tend to give the most credibility to?

[dawg]

1. The payroll tax cut is the best stimulus we can get.

Direct government spending on infrastucture would be better, as would direct aid to state and local governments. But I don't think it's possible to pass anything like that right now.

This payroll tax cut is the best we can hope for.

[zipplewrath]

3. Exactly, it is stimulus by "stealth"

You can't pass a stimulus bill in the current congressional environment. So the best that can be achieved is passing low efficiency efforts like this particular tax cut. As Krugman suggested, the down side is it goes into the hands of many folks that WON'T spend it (such as I). Unemployment benefits, food stamps, or direct employment of the unemployed by the government would be significantly more effective. Too much of the original stimulus was in a form of a tax cut. The Bush tax cuts are still killing us.

It's about the only card Obama has left, and the GOP knows it. They also know it is a really good card for him to be playing because it is a tax cut, and it is having some effect, how ever small. Our economy is in a very delicate position and very small effects will still have a net positive outcome.

[kentuck]

18. It appears to me...

that President Obama believes in tax cuts as a stimulus more than he believes in the other options you mention. I do recall that he said there would be no WPA type programs under his watch. In other words....

[zipplewrath]

19. Only ones possible

Not sure it is so much "belief" as it is a political calculation. They are more easily passed, and they are more easily sustained over time. Spending efforts can be cut, jobs programs can be canceled, relief programs can be scaled back. Tax cuts are hard to cancel.

[mmonk]

2. It is a direct stimulus that will go into the economy.

It is also a reduction of the funding mechanism for social security. It comes down to if you trust politicians enough to do the right thing when it comes time to reinstate the rate or to use it as a political football in social security actuary statements.

[spanone]

4. as is the republicans were concerned about social security

[trumad]

5. Debating with Gretchen Carlson

is like debating with this.

[matmar]

6. it's a bad idea.

It plays into the rightwing thought virus that tax-cuts create jobs.

It gives ammunition to radicals in the future to attack Social Security by making it harder to reinstate the original tax rate.

Why not articulate a Democratic strategy for putting money in the pockets of the middle-class like raising the minimum wage?

Why are the Democrats always playing ball as the visiting team even when playing in their own stadium?

From Bernie Sanders-

It's not just Republicans raising red flags about Social Security, either. Bernie Sanders, the Vermont Independent who caucuses with Senate Democrats, says he agrees with Obama that middle class families and the working poor need tax relief to weather tough economic times.

My concern is diverting hundreds of billions of dollars from the Social Security trust fund into that immediate tax relief ... I would love to see tax relief, but done in a different way.

[NNN0LHI]

8. Are you saying Paul Krugman and Robert Reich are both wrong?

And that Jim DeMint and Rand Paul are both right?

Don

[matmar]

10. I'm saying Bernie Sanders and Peter De Fazio are both right.

Jim DeMint and Rand Paul? A stopped clock is right twice a day that doesn't mean I use it to tell what time it is.

[ProSense]

11. Wait,

"I'm saying Bernie Sanders and Peter De Fazio are both right."

...De Fazio voted against the stimulus and the People's Budget. What makes him right over Krugman (and every credible economists)?

[matmar]

12. to answer your question with a question....

are you saying Franklin D. Roosevelt was wrong?.....(from the article in the link down-thread)

Franklin D. Roosevelt is famously quoted in the papers of one of his aides as saying the dedicated FICA revenue source was critical, because it meant "no damn politician can ever scrap my social security program."

Paul Krugman is a great economist, no doubt. However keep in mind he is a "free-trader" which is part of the problem of why we have NO DAMN JOBS FOR THE MIDDLE CLASS THAT PAY A LIVING WAGE.

[Chef Eric]

26. Are you saying that Franklin Delano Roosevelt was wrong?

To him, the payroll tax was sacrosanct.

[Chef Eric]

17. You're right. The short-term advantages will have a price, and that price will be TOO STEEP.

This will embolden the Alan Simpsons of the world, and that is the last thing we need.

[ProSense]

7. Thanks for posting. n/t

[rgbecker]

9. Another iteration of the arguments for the cuts. SS not affected.

http://www.reuters.com/article/2011/12/07/us-usa-taxes-payroll-idUSTRE7B61IB20111207

[kentuck]

13. Robbin Peter to pay Paul...

unless you have confidence that the money will come out of the general fund, which would only point out the fact that a broken clock is right twice a day...

[aletier_v]

31. I dont. I thought Reich was an idiot in 1992 but

I have increasing respect for him now.

[abelenkpe]

14. That people on this board think Robert reich is wrong

Is so very sad.

[matmar]

15. Wrong.

Robert Reich is a smart man and yes, giving more money to the middle-class would help. Doing it the rightwing way sucks.

[abelenkpe]

24. You have a problem comprehending the op?

[NNN0LHI]

16. Almost seems like when Krugman or Reich say something even slightly critical of Obama they are smart

They are treated like the smartest people in the world then. But when they say something that isn't critical of Obama the Sidewalk Superintendents appear and Krugman and Reich don't know what the hell they are talking about.

Almost.

Don

[matmar]

20. Give me a scenario....

of how in the future, if the Social Security tax rate is cut, either party will be arguing to raise the rate back to its original state and not be destroyed for wanting to raise taxes on working people?

Once you cut the tax it's virtually impossible to raise it back up.

Once you've done that, you've given credence to the rightwing and their goal of privatizing Social Security.

[NNN0LHI]

21. Far as I am concerned we can let the wealthy pay for it all

That is what Robert Reich suggested doing in the OP I posted above.

The wealthy are the ones who shipped all of our jobs overseas and now they can pay to fund our SS and Medicare. Every damn penny of it.

Do you not like that idea?

I like that idea.

Don

[matmar]

22. I like the idea of eliminating the cap on SS

and applying the FICA tax to capital gains and re-implementing the STET tax but I don' t see my President advocating for any of that. I see him advocating for tax cuts- the righting playbook.

Are the Republicans any better? Obviously not

So I guess I'm SOL.

[NNN0LHI]

23. No one is suggesting we could only do one and not the other

Why can't we do both? Eliminate the cap and do what Reich was suggesting about permanently eliminating payroll taxes on the first $20,000?

What about that?

Don

[abelenkpe]

25. That is what we should do

And those who read Reich's blog know that is what he supports.

[matmar]

27. I'm all for it.

[cherokeeprogressive]

28. You can like that idea all you want. Trying to get it implemented is another story.

"now they can pay to fund our SS and Medicare. Every damn penny of it."

By what mechanism? You see this being implemented how? OWS?

[NNN0LHI]

32. I am an ideas guy

The nuts and bolts end of it will need to figured out by someone much smarter than me.

Do you have any suggestions how we could get this implemented?

Don

[opihimoimoi]

29. Ya can see why Rand has been quiet lately...his comments are crap ,,,prolly was told to STFU awhile

ago

He spews lies as his GOPer Buddies....they have no real answers ..

only whine,

as they of porky pickings dine

all the while sniffing them corks from fine wine...

[aletier_v]

30. OMG. Its true. Tea Party is trying to wreck the economy to win 2012.

Cutting the payroll tax could stabalize our situation and they cant afford that.

Wow.
Just wow.