I know my timing couldn't be worse, considering all the recent attention from Rush & his trolls

[apples and oranges]

but in the past few days I've had to correct a lot of people about the payroll tax holiday. I know most DUers already understand the need for FICA taxes to sustain Social Security, but a lot of people who aren't as informed just see a smaller check and feel screwed. There is a lot of anger and confusion surrounding it and many people think it was President Obama's idea to end it, when in fact it was congress that decided to let the tax holiday expire. President Obama actually wanted to keep the payroll tax holiday in place, but both republicans and democrats had their own reasons for not extending it:

The change, affecting the largest number of taxpayers, follows the expiration of a temporary 2 percent reduction in the Social Security payroll tax. President Obama had requested that the lower 4.2 percent rate be extended, but lawmakers declined.

http://www.bostonglobe.com/business/2013/01/03/higher-earners-mass-due-pay-more/30AuICI5nI3Wn7A6j5w8ZN/story.html

Most media outlets are doing nothing to help Americans understand what's really going on, and why ending the tax holiday is important. Instead, they're using sensational headlines like "Obama's wrong: This 'cliff' deal still raises taxes on the middle class" or "Democrats Raise Taxes on Poor to Subsidize Millionaires."

I think it's time for another speech. Obama can't let all the confusion hang out there especially when we need to keep our momentum for 2014. You can call me "concerned," but there is no way unlikely/swing voters will vote democratic in 2014 if they feel their checks being cut are a direct consequence of voting for Obama. I hope I'm wrong. I hope that people barely making ends meat will understand that the increase is for their own good, but I can't help but think this will lead to a fresh new wave of fresh teabaggers.

[plethoro]

1. The Republicans wanted the payroll tax increase because it showed Obama raising taxes

on the middle class, who control what's left of our economy. Obama wanted to sustain the 2% reduction in personal FICA withholding for completely different reasons, which if I stated my opinion would result in me getting flamed. We will all know more in March when we learn how important that $250,000.00 income tax threshold for the rich was. But let's enjoy the relative bliss until then while plotting new strategies against the attack on social programs. If we do it right, we may capture the House in 2014. If not, the reverse.

[JaneyVee]

2. Yeah, and maybe Obama could remind the GOP that Reagan raised taxes 11x, 9x on the middle class.

[SunSeeker]

3. K&R

[Freddie]

4. Agree he should address the nation about this

Everyone will see it in their paycheck soon and the other side is blasting away about how Obama raised everyone's taxes. He needs to emphasize what the FICA tax is about and why it's important to keep funding the program. Also the temporary nature of the tax holiday. I agree with many posters here it was not a good idea in the first place as you could predict what the wingers would do when it ended.

[2naSalit]

5. Here's an interesting take on how the Rs are portaying this:

http://www.msnbc.msn.com/id/45755822/ns/msnbc-the_ed_show/#50359141

Worth watching and seeing who's clueless and/or flat out lying... notice the brainchild Cynthis Lummis from the highly educated state of Cheney, I mean Wyoming.

[hfojvt]

6. I've had to corrrect a lot of people

who think the accursed payroll tax holiday didn't favor the rich.

So why am I not surprised that Obama wanted to keep it?

[Fumesucker]

7. Roughly as predictable as gravity..

Tides come in tides go out you can't explain that.

[xtraxritical]

15. Oh Really? (O'Rielly get it?)

[warrprayer]

8. good idea

why give the rethugs a freebee? Let Obama speak on it and put it to bed.

[TheKentuckian]

9. It was an extremely bad idea that can't be explained in sound bites

without easy distortion.

I don't know how to pitch it. Sometimes those that avoid messes have little clue on getting out of them.
My best advice on the subject was never to do it.

[humbled_opinion]

18. Well here is the bottom line

People are going to see their paychecks shrink and of course gas and milk and grocery prices are going to go up they are going to realize that Congress and the President are debating fiscal matters and not understanding it is going to make it look like Obama is to blame.... The right will most likely show a lower middleclass person lamenting their check and going to the grocery store pointing to the prices and asking how could Obama screw her over so bad....

[IowaGuy]

10. We paid more in FICA 10 years ago than we do today.

I went back through my old pay check stubs....ten years ago I earned about 2/3 of what I earn now, yet I paid more in FICA taxes than I do now, even after the expiration of the payroll tax holiday.

This shell game w/ FICA started back in the 80's with Reagan. He cuts taxes on income, capital gains, etc.....raises payroll taxes, and then borrows against the excess money raised for FICA to fund the shortfall in revenues caused by his other so-called "TAX CUTS".

Taking money from the middle class and the poor and shifting it to the rich. Class warfare and income redistribution, indeed!!

As baby boomers get into retirement age, we are now left w/ the connundrum of trying to pay ourselves back, to be able to pay ourselves what we paid in. Reagan and his other trickle-down cultist disciples basically screwed us and people are just now waking up to that.

[former9thward]

19. You did not pay more.

This is the table from the SS administration and it shows rates have never gone down (thru 2010), they have always gone up since the beginning of the program. http://www.ssa.gov/policy/docs/statcomps/supplement/2010/2a1-2a7.html#table2.a3

[JDPriestly]

34. Obama and Congress gave those who pay payroll taxes a 2-year or so holiday during which

working people were excused from paying about 2% of the taxes. The payroll tax rate rose during the Reagan administration. I remember it very clearly. It was raised to save money for the retirement of the baby boomers. I paid the higher rates.

[former9thward]

39. Here is what the poster said:

I went back through my old pay check stubs....ten years ago I earned about 2/3 of what I earn now, yet I paid more in FICA taxes than I do now, even after the expiration of the payroll tax holiday.


I posted the link from the SS website which shows what the rates have been since the beginning. The poster did not pay more 10 years ago than now. Did you even look at the link?

[JDPriestly]

40. I know that I paid the full amount and that President Obama, as part of the most recent stimulus

gave those now working a two-year vacation from about 2% of the tax.

The Social Security website may show that the tax has not changed because the 2% was made up out of the general fund. I think that is the wrong way to do it.

Putting aside the amount of the payroll tax for your fall-back retirement and Medicare and for other social programs is absolutely minimal. Every one of us should squeeze our belts to do it.

No one can live just for today.

[klyon]

11. to bad we couldn't have a discussion about making the 2% permanent and getting even by

raising the cap a little
that 2% is going to hurt a lot of people

[humbled_opinion]

16. WOW your post makes too much sense for some here.... n/t

[NCTraveler]

22. +1

I posted similar sentiments down thread.

[plethoro]

30. If you makes the 2% permanent, employers would want their shared matched and that would officially

end Social Security. They are NOT going to raise the cap as long as the Fascists are in charge, which now probably can never be reversed.

[JDPriestly]

35. We should raise the cap.

Those of us now retired paid the whole amount of Social Security taxes. We weren't earning more than those working now earn.

[dkf]

12. Media outlets don't explain anything about any of our programs, whether its SS or Medicare or

Projections of health costs or projections of spending and revenue.

Even here, where there is discussion galore, too many people don't understand how Medicare is funded or how health costs are the major driver of projected increases in spending.

President Obama makes a factual statement about Medicare spending and he is attacked for it because the public doesn't have a clue.

Our politicians can't fix our problems because the public doesn't have the foundation of understanding and sometimes I wonder if they don't keep people deliberately ignorant to keep things as is.

[JDPriestly]

13. No. Obama should never have given the holiday in the first place.

People need to be reassured that the money will come back them, that it is, considering the record of the US government in reliably repaying debt since the beginning of our country, safer in the Social Security Trust Fund than it is on Wall Street -- far safer.

We should be pointing out how bosses have robbed their employees of pension funds that the bosses promised and claimed to have set aside by selling those funds along with a part of their companies to "investment" vultures like Romney.

In contrast with the pension funds we entrusted with Wall Street and our employers, the Social Security Trust Fund has not yet given out on us. The government has always paid the money back to people who lived long enough to become eligible.

Based on the record, the government is far more likely to pay back the payroll taxes to those who survive until retirement than is a private life insurance companies. Life insurance companies have been known to go broke. The government has not yet done that.

Obama is too young and too right-wing to make the argument well. That is why we have to explain it here on DU.

Doesn't mean I hate Obama. I love him, but he is young and he would call it centrist, but compared to Democrats like Truman and Johnson and FDR and Kennedy, he is right-wing.

[abelenkpe]

14. He shouldn't have given the holiday

But the op is correct. People see more taken out of their check and wonder what's up. So a better explanation is a good idea. 


However, read this article the other day and (it's crazy long) but now I'm rethinking a lot! Check it out if you have the time. 

http://www.nakedcapitalism.com/2013/01/michael-hudson-americas-deceptive-2012-fiscal-cliff-part-iv-why-financial-and-tax-reform-should-go-together.html

[JDPriestly]

33. Michael Hudson is, of course, right. But the political will to, for example, fund Social Security

and Medicare entirely from the general fund, does not exist in our country.

And if you ended the payroll taxes, the 1% would just leave the poor to die in misery. So that is why we have to pay payroll taxes.

We and I mean, you and I, abelenkpe, have the responsibility to do what we can to help people understand more and to change the nation's political will. But that will not happen today or tomorrow. We have to just keep talking, writing and thinking.

Until then, the payroll tax holiday was a terrible idea.

I'm glad it isn't there any more.

[greiner3]

28. Enjoy your stay;

Oh, wait......

[bread_and_roses]

17. Justifying it might be a lot easier if we didn't still have massive tax breaks for the 1%

As in the $500,000 level, the estate tax, the big breaks to Corps, etc.

[shrdlu]

20. Restoring FICA is the right thing to do...

...but like apples and oranges, "I can't help but think this will lead to a fresh new wave of fresh teabaggers." The fools will probably be moaning about how social security is bankrupt. It isn't, it wasn't, and it won't be but it makes a popular yammering point.

[NCTraveler]

21. Good and informative post.

I would really like to see the fight for eliminating the cap take place. If the cap was to be removed, the burden on those struggling could be lowered, and it would become more progressive.

Those are the terms where Obama should START the negotiations. Then the end game would be to raise the cap.

[JaneyVee]

36. Are you aware that RUSH LIMBAUGH used your post on his show?

[NCTraveler]

41. Yes. Do you have anything to say about the post you are replying to? nt.

[hay rick]

23. Nobody could have seen this coming...

Excerpt from my e-mail to my representatives in December, 2010 (http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9749051)...

The Obama-McConnell compromise proposal is catastrophically flawed.

The worst element is the payroll "tax holiday" which is obviously intended as an assault on Social Security. A year from now, restoring normal contributions will be attacked as a tax hike. The $120 billion stimulus effect (actually only $60 billion from current levels when you deduct Making Work Pay which it replaces) is simply not worth it. Any "compromise" which includes this element should be opposed on that basis alone.

Obama's response to the "hostage" situation on middle class tax cuts and unemployment benefit extensions is to offer the kidnappers yet another hostage to strengthen their future ransom demands.

Eliminating the payroll tax holiday entirely still leaves a very bad bill which should be opposed. We can not afford to be handing the extremely rich money they don't need and that we can't afford to spend on them. The real class warfare issue here is the increased share of income that the richest 1% have annexed over the last 30 years or so. In 1971, the top 1% received about 8% of all income, and by 2007, that number had increased to 23%. Meanwhile, since 1999, median household income has gone DOWN. Among other reforms, we need a vastly more progressive tax system as the first step in correcting this obscene and poisonous imbalance.

One year turned into two but otherwise the preordained outcome should surprise nobody. As the OP notes: "Most media outlets are doing nothing to help Americans understand what's really going on, and why ending the tax holiday is important."

[shrdlu]

25. Too bad others, self included, weren't as astute.

Question: What do we do now?

[OldDem2012]

24. Just a few quick points and you may not like them....

1. The 2% "increase" in FICA taxes is because the "FICA tax holiday" declared two years ago is now over....we are now paying our fair share into Social Security.

2. Again, and it is worth repeating, the 2% FICA increase goes directly to funding Social Security....which is a good thing, IMHO.

3. Any member of the GOP Tea-Nazis trying to blame the President for "raising taxes" is full of crap....Congress, and therefore by default, the GOP Tea-Nazis, is responsible for the bill that contained the elimination of the "2% FICA tax holiday".

Yes, we meet your standards for "barely making ends meat(sic)". My family has been and continues to be in dire straits. I have been unemployed for the last four years and we have been taking food stamps for the same amount of time. We have sold every earthly asset to meet as many of our obligations as we possibly can. We no longer have a second car, savings, jewelry, or any other assets we once owned. We do not have health/medical coverage, and we have no life insurance policies of any kind...we simply can't afford to pay for them. But, we still have one car and we still live in our house. We have recently been approved for a loan modification because we were unable to pay our mortgage for four months over the summer. My wife works two jobs to make ends meet which usually leaves us with $10-$20 dollars left in checking at the end of each month even after paying the much lower trial loan modification payments for the last three months.

But, we understand perfectly well without a Presidential press conference why the FICA taxes have "increased" to return us to the rightful levels and we understand why it was necessary.

One last point....I'll be damned to Hell if we will EVER vote for a GOP Tea-Nazi for anything but a ticket to leave the country on a slow freighter to Antarctica! We're not the only people "barely making ends meat(sic)" who feel the exact same way as we do because WE KNOW WHO GOT US INTO THIS SITUATION AND IT WASN'T THE PRESIDENT!!

[plethoro]

31. I wish you the very best of luck in this new year, sir. Your post rings with a certain

understanding and a lack of selfishness. Had that FICA tax decrease not been restored for another year, it would have been made permanent and employers would be demanding the same rate. Then SS, which has no money except T-Bills, would be gone in a matter of ten or so years, and all the people under 50 would get nothing but chump change. If we can take the House we may get the cap increased. If we do a cut now or a chained CPI we'll lose the 2014 House to Republicans decidedly. Additionally, we will lose the Senate and the Presidency in 2016. Think of the ads.... Anyway, good luck to you. I sincerely hope your situation improves.

[OldDem2012]

32. Thanks, and I sincerely hope that YOU become decidedly more optimistic. nt.

[bluestate10]

38. There are ways of having a 4.2% rate for lower wage workers and paying into Social Security.

You just have to get out of the corner that you have painted yourself into. The only issue that you seem to be right on is teabaggers are treasonous assholes and that the President fought to keep the payroll tax holiday. What you and many others on DU are wrong on is that the payroll tax holiday, unemployment benefits and stimulus can ALL be gotten out a fucking psycho republican House and Senate.

The upcoming fight over sequestration, the debt ceiling and the next budget is going to be brutal. The President needs democrats covering his fucking back instead of aiming knives at it. The man mean well and is fighting for the right things, the purist here on DU and other sites just need to stand back and STFU.

[patrice]

26. "Most media outlets are doing nothing to help Americans understand what's really going on," nt

[patrice]

27. And lost in all of this is the fact that PO apparently didn't think that we NEED to end the holiday.

[wandy]

29. You're timing couldn't be better.....

Of course in right wing reality this is just another excuse to scream Obama Bad! Obama BAD!
Some "GOP co." propaganda peddlers have even pointed to DU in order to promote this weeks meme.
M$M isn't about to risk their jobs by presenting facts.

Speaking the truth of "what is" is never bad timing.

[bluestate10]

37. Obama still has the upper hand on the debt ceiling and sequestration.

That advantage can be used to shift the burden of the payroll tax to people that can afford to pay more.

One approach that may work is to use a reduction of the payroll tax for everyone to 4.2%, but eliminate the payroll tax salary cap. The highest rate would be 4.2% and decrease as salaries increase above the current cap, with the condition that higher salaried people will end up paying more in payroll tax over a year than they are paying now, enough to make up for and surpass that amount that will be lost by having lower salaried people pay the 4.2% rate instead of the 6.2% rate. The changes can be made retroactive to January 1.

The payroll tax action can be exchanged for consideration on some of the loophole changes that republicans are going to have to work their asses off to blunt the impact of sequestration on industries and expenditures that they love.

[JoePhilly]

42. This isn't going to be a problem ... and this is why ...

Back in the 2010 lame duck, Obama had to extend the Bush tax cuts. As a candidate he had made 2 promises on taxes.

1) Not to raise taxes on those under 250k.
2) End the tax cuts for those in the top 2%, above 250k.

At the end of the 2010 lame duck, if Obama let all the Bus tax cuts expire, he'd have broken promise #1. And the media would have crucified him for doing so. It would have been his "red my lips" moment. They would have played clips of Obama and Bush #1 making that "no new taxes" promise, and then they'd be outraged he broke it. That song would have played endlessly. And Obama would have been a 1 term President.

So Obama extended the tax cuts so they expired at the end of 2012. This was very smart for a number of reasons.

1) He kept promise #1, and seemed to break promise #2. Most Americans would have liked to see taxes go up on those OVER 250k, but they would have been angry if, to get that tax increase, their own taxes would also go up. This was obvious in the polls. Some on DU howled, but it was a smart move. The average American didn't care just so long as their own taxes didn't go up.

2) In the deal Obama got some concessions including the payroll tax holiday and the extensions of UE. Both of these are stimulative. And at the end of 2010, we needed some additional stimulus, and these were helpful. Again, many here on DU howled, concerned about the potential impact on Social Security. In particular, the loudest of those outraged were SURE that the tax holiday (and the Bush tax cuts) would never expire.

By moving the expiration of these to the end of 2012, Obama ensured that HE would get to make the decision of what happened next REGARDLESS of the 2012 election outcome. And then, he kept promise #1, and he also kept about 95% of promise #2 (losing about 5% of promise kept for raising the limit to 400k, which helps some Dems from high income parts of the country). And he allowed the tax holiday to expire (again, something the howlers on DU predicted would become permanent as part of Obama's evil secret plan to kill Social Security).

So now, the GOP is spinning. They claim THEY didn't just vote to raise taxes. They claim they actually voted to lower taxes. And no one believes them. Even Andrea Mitchell, usually spouting right wing talking points, laughed in Grover's face when he tried to claim that the GOP didn't vote to raise taxes.

But we will see some howling from the right ... "Obama raised your taxes 2%!!!!"

Its not going to work because Obama can't run for President again. That was the critical issue in 2010. And its now moot. The media can't juxtapose this event with Bush #1 clips. They really have no way to promote the meme.

Finally, when questioned by a howler about this 2% tax increase, you don't need to go through everything I just described, the response is a rather simple one.

Obama givith, and Obama takith away. In 2010, Obama gave you a temporary 2% cut to help keep the economy keep moving forward, and it has now expired, just as scheduled, just as Obama said it would. It is not a tax increase. Its simply a return to the prior rate from 2010. Which is what Obama said he'd do.

I do expect that Obama will talk about this down the road, but I don't think he needs to rush forward. Better to let the GOP continue to scream about it. A pivot to cabinet positions, gun control, or immigration may provide other more immediate venues in which the GOP can act like angry toddlers prior to the debt ceiling fight.

Their tantrums now overshadow almost any other point they might try to make.