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Obama’s Dangerous Gamble

February 7, 2011


How important is two percent? When it comes to the reduced rate employees are contributing to the federal coffers via payroll taxes this year, it can be very important to our wallets indeed.

This year as part of the compromise struck last year between Republicans and the uber left, lead by President Obama, we all are getting a reduction of two percent in the amount we contribute every paycheck to Social Security. The contribution rate has fallen from its standard 6.2% to 4.2%. On the flip side of the equation we lost the Making Work Pay credit which reduced our tax burden by up to $400 individually when we knelt at the altar of government and filed our tax returns each year. The net result of all this is that paychecks this year have gotten bigger. Yes, even if you did not get a raise from your employer.

I personally could not believe how easily Democrats rolled over and actually allowed a tax cut, of any sort, to go on through. I was even more amazed that said tax cut was for funds headed to Social Security. That program is one of their most prized possessions and which is now running in the red according to the Congressional Budget Office. Furthermore the Ponzi scheme that is Social Security is going to be whittled away until its reserves dry up by about 2037. Yeah, so I think I am clearly justified in being surprised at how easily this compromise got done with barely a moan from the liberal left who like to use Social Security as a club to beat seniors into submission every election cycle.

Of course the deal cutting these taxes is just for one year. This semi-holiday on the payroll tax is set to expire for 2012 and will take a bite back out of paychecks in another year. A year, by the way, that is an election year.

This is a dangerous gamble for President Obama and the left. And it is one that I struggled to wrap my brain around. Yes, I understand that with Republicans controlling the House of Representatives, the Senate and the White House were in a compromised position. But to agree to cut taxes on funds headed for Social Security even for one year? And then have to fight in 2012 against the Republican House, which would seemingly be very willing to keep this tax cut even longer if not permanently, and be seen as supporting a tax increase for all Americans in an election year? It is a chutzpah move to say the least.

But after talking to some insiders down in Washington I understand it a little more than just a few weeks ago. As it has been explained to me by people in the know the ploy is that President Obama and the left are putting stock in the fact that with Republicans in control of one of the houses of Congress confidence is going to improve and so too will the economy. Then, so the theory continues, if the economy improves this year employers will be willing to give out raises to their employees. Further, the hope is that these raises will be, on average, greater than the money now seen in the paychecks of workers from the decrease of two percent in the payroll tax. Finally, that when 2012 rolls around the left will be able to stonewall any extension of the payroll tax cut into further years. While there will be initial furor from the voters over a tax increase this anger will subside by Election Day 2012 because their raises will still allow them to have still a bigger paycheck in 2012 than in 2011.

Whew.

Yeah, I can buy into the fact that liberals would adopt this long and arduous strategy. Because it is so typical of their thinking. It's all about politics. Never about what is best for America, for liberty and for the citizens.

I, however, personally like the thought of having a little bit more of my own money to invest and provide for my own retirement. I like the thought of taking that money and earning much, much more for my own wallet than the current government program generates.

But then again I have never been much for the comforting embrace of the federal nanny that our government has become. I am also hoping that the majority of Americans will see things this way too and get really upset when, come the end of the year, liberals try to raise our taxes again.

Copyright ©2011 J.J. Jackson

J.J. Jackson is a libertarian conservative author from Pittsburgh, PA who has been writing and promoting individual liberty since 1993 and is President of Land of the Free Studios, Inc. He is the Pittsburgh Conservative Examiner for Examiner.com.  He is also the owner of The Right Things - Conservative T-shirts & Gifts. His weekly commentary along with exclusives not available anywhere else can be found at Liberty Reborn.

 


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