Today, Congressman Ted Deutch (FL-19) expressed concern over a provision in the recently unveiled tax cut compromise that would jeopardize Social Security's independent revenue stream and make the budget responsible for $120 billion per year towards Social Security. The temporary 2 percent payroll tax cut included in the compromise would have the unprecedented consequence of forcing the hard-earned retirement benefits of America's workers to compete with defense spending, child nutrition programs, physician payments, and other items for a share of funding from general budget revenues.
"Working Americans deserve tax relief, but they also deserve retirement security. We can have both," said Congressman Deutch. "I agree with President Obama that giving American workers extra money in their paychecks will help grow our economy. However, if the recent debate on the Bush tax cuts has taught us anything, it is that the expiration of temporary tax cuts can be quickly mischaracterized into an impending tax increase. If this temporary payroll tax cut is made permanent, it will double Social Security's long term funding gap. A more stimulative alternative is an across-the-board, refundable tax credit like the Making Work Pay initiative. A $120 billion refundable tax credit would money in the pockets of people who need it most without jeopardizing Social Security."
Congressman Deutch's letter to colleagues is available below. A member of the Seniors Task Force and author of the Preserving our Promise to Seniors Act, Congressman Deutch is a fierce advocate for strengthening Social Security. His proposal to bolster Social Security's solvency and improve benefits for all retirees was featured in the New York Times and has been lauded by national seniors' advocacy groups.
The temporary payroll tax cut included in the recently announced tax cut compromise will weaken Social Security's revenue stream - making the general fund responsible for $120 billion per year towards Social Security. Under current law, Social Security does not add to the deficit because of its independent revenue stream.
This proposal would set a dangerous precedent by forcing Social Security benefits to compete for funding in the general budget, which will likely be drafted by Members of Congress with extreme hostilities to this stalwart program. This scenario is largely why Social Security was taken off-budget in the first place. We must not let the politics of the day obliterate the wisdom of the past.
The debate around the expiration of the Bush tax cuts has taught us that the end of any so-called temporary tax cut can easily be mischaracterized as an impending tax hike that must be stopped. We cannot afford to be shortsighted. We must anticipate the compromises that could be made in December 2011 to prevent a tax hike on working families in January 2012.
Whether this tax cut costs $120 billion or $120 billion annually, Social Security will no longer be self-reliant as a result of this compromise. The bottom line is that a 2 percent reduction in payroll taxes would more than double Social Security's long term projected shortfall.
Congress can easily put money into the pockets of American families without jeopardizing Social Security. For $120 billion, an across-the-board tax credit like the Making Work Pay initiative could be doubled and have a more powerful impact on our economic recovery.
Good ideas should be on the table. Jeopardizing Social Security should not.
Please join me on this letter to leadership expressing this concerning aspect of the tax cut compromise.
Member of Congress