Switching Sides on Social Security

Look who’s getting rid of the payroll tax

What to do about those FICA contributions, aka payroll taxes, now that the supercommittee has blown up? Last Christmas the Obama administration handed workers a special gift—a one-year holiday from paying their payroll taxes, which as most workers know fund their Social Security retirement benefits and disability and survivor’s benefits, should they need them later on. The year is up. Chris Wallace’s interview on Fox News Sunday with the Senate’s second-ranking members, Dick Durbin for the Democrats and Jon Kyl for the GOP, produced a huge news nugget for campaign reporters to contemplate.

The Republicans, represented by Kyl, seem to be saying that they want to keep Social Security strong, while the Dems, represented by Durbin, appear to advocate a policy that could end up jeopardizing the program. Kyl told Wallace:

The problem here is that the payroll tax doesn’t go into general revenue, it supports Social Security. And you can’t keep extending the payroll tax holiday and secure Social Security.

That’s what Social Security supporters argued last year when the Obama team proposed the holiday. Nancy Altman, co-director of the progressive group Strengthen Social Security, told NPR that the tax holiday “could eventually lead to the unraveling of Social Security. If Republicans make this permanent, it could spell real trouble for Social Security.” Even though last year’s deal required a transfer of general revenue funds to keep the Social Security trust funds whole, the danger, Altman and others noted, is that eventually Social Security will contribute to the deficit because the government will have to borrow to cover benefits. That will subject the system to the same fiscal pressures and politics as other federal programs vying for a piece of the budget. She also predicted it would be hard to get the payroll tax reinstated once it was gone. No politician would want to be seen “raising” taxes on workers, even if that meant assuring their benefits years later.

But now, according Fox News, it’s the Dems who want to keep the tax holiday. Said Durbin:

I can’t believe that at a time when working families in this country are struggling paycheck to paycheck, when we need them to have the resources to buy things in our economy, to create wealth and profitability and more jobs, that the Republican position is, they’ll raise the payroll tax on working families? I think that just defies logic.

Democrats wanting to imperil the solvency of Social Security? Republicans trying to protect it? What’s going on here? Was the Wallace interview signaling each party’s Social Security campaign strategy? The Dems are positioning themselves on the side of working men and women by relieving them of an extra tax burden. Republicans seem to be doing the same by finding a way to clobber the Dems for ultimately killing off Social Security as a social insurance program—a message that resonates with voters.

Wallace didn’t explore any of this in his in-the-weeds discussion of taxes, job creation, growth, and the “doc fix,” as if his viewers knew what that was. But then the campaign is just unfolding, and maybe he will go back to all this next time around. There’s a lot for journos to mine in the comments of Durbin and Kyl.

Click here for more from Trudy Lieberman on Social Security and entitlement reform.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , , , ,