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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsPaul Krugman, Robert Reich, Jim DeMint and Rand Paul on the Payroll Tax Cut
http://mediamatters.org/research/201109080024September 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 dont think its 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 theyre already $6 trillion short. So it doesnt really make any sense and it really argues that hes going to bankrupt Social Security even quicker by reducing its funding.
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Out of these four guys which ones do you tend to give the most credibility to?
dawg
(10,595 posts)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
(16,646 posts)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
(110,916 posts)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
(16,646 posts)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
(52,589 posts)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
(135,588 posts)trumad
(41,692 posts)is like debating with this.
matmar
(593 posts)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
(67,190 posts)And that Jim DeMint and Rand Paul are both right?
Don
matmar
(593 posts)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.
"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
(593 posts)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
(1,024 posts)To him, the payroll tax was sacrosanct.
Chef Eric
(1,024 posts)This will embolden the Alan Simpsons of the world, and that is the last thing we need.
ProSense
(116,464 posts)rgbecker
(4,804 posts)kentuck
(110,916 posts)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
(1,773 posts)I have increasing respect for him now.
abelenkpe
(9,933 posts)Is so very sad.
Robert Reich is a smart man and yes, giving more money to the middle-class would help. Doing it the rightwing way sucks.
abelenkpe
(9,933 posts)NNN0LHI
(67,190 posts)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
(593 posts)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
(67,190 posts)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
(593 posts)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
(67,190 posts)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
(9,933 posts)And those who read Reich's blog know that is what he supports.
matmar
(593 posts)cherokeeprogressive
(24,853 posts)"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
(67,190 posts)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
(52,426 posts)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
(1,773 posts)Cutting the payroll tax could stabalize our situation and they cant afford that.
Wow.
Just wow.