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In 2010, when Democrats agreed to a temporary reduction to the Social Security payroll tax withholding, in order to provide a stimulus to the economy, we made a devil's bargain that we should now renounce and correct. There is no doubt that this stimulus plan works by putting an extra $1,000 a year into the pockets of the average household. But, as the AARP points out, it would be better to achieve this stimulation with larger cuts to the income tax rate beyond the Bush levels rather than jeopardize the psychological connection people have with the direct, continuous funding of the Social Security Trust Fund. An additional advantage is that this approach may substantially improve our BATNA, or best alternative to a negotiated outcome, as an alternative to a "grand bargain."

The plan the Obama administration presented to House Republicans last week called for the continuation of the payroll tax cut or a replacement by a tax cut of similar size and design. The White House is attempting to navigate a potentially tricky political situation of its own. Some progressive members of the Democratic Party, as well as groups lobbying for seniors, have called for the payroll tax cut to expire, out of concern that its continuation would deplete or endanger the Social Security trust fund.

AARP, the powerful lobbying group for seniors that has loudly opposed continuing the cut past this year, reacted to the White House offer by praising the notion of an alternative to the holiday.

“AARP still believes that further extension of the payroll tax holiday would undermine confidence in Social Security and put at risk the program’s dedicated funding stream," AARP’s Cristina Martin Firvida said in a statement. "If a consensus emerges that the economy would benefit from continued tax relief to workers, that goal can certainly be achieved through alternative means other than a reduction in Social Security’s dedicated funding stream."

And, in a surprising twist, Grover Norquist has said he could accept an expiration of the payroll tax cut provided it is replaced with tax cut of a similar size. Which surprisingly  dovetails quite nicely with what I believe may be our best approach. This is the only time ever in my lifetime, Grover Norquist has seemed to be reasonable.  

An additional advantage, for the most progressive Democrats, is that this approach appears to improve our BATNA, aka -best alternative to a negotiated outcome, by improving our fallback  other "option - strategy" we have for resolving our budget dilemmas, that of "Dealing With the Pieces One at a Time."  

Speaker Boehner has announced there is zero chance Congress is going to give up control of the debt ceiling and we also hear reports he is considering allowing us a vote on the middle class tax cuts. Howard Dean suggests the sequestration cuts may be the best possible deal progressive will get but it includes cuts to military spending we will get no place else.  Not having to be under the gun to extend payroll tax reductions as a stimulus may free us to build a better strategy around Howard Dean approach with Nancy Pelosi leading the charge on a discharge petition.

If we can either persuade Boehner to take what the GOP is calling their "Doomsday option," or force a discharge petition it will be a completely different and much better ball game.  

8:42 AM PT: Please check out these two post I wrote so late last night few may have seen them. The Boehner Doomsday Option one is directly relevant to our BATNA option I discussed here.  Thanks - HD

HouseGOP considering "doomsday plan" to cave on middle tax class cut vote and punt until 2013

Lawmaker who said undocumented immigrants should be shot from helicopters denied leadership spot


Originally posted to HoundDog on Tue Dec 04, 2012 at 08:33 AM PST.

Also republished by Social Security Defenders.

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Comment Preferences

  •  Tip Jar (17+ / 0-)

    The means is the ends in the process of becoming. - Mahatma Gandhi

    by HoundDog on Tue Dec 04, 2012 at 08:33:27 AM PST

  •  It would be a good thing to keep Social Security (2+ / 0-)
    Recommended by:
    J M F, HoundDog

    strong and as far away from the table as it can be, now and in the future.  The payroll tax cut should probably be phased back up to where it was.

    If love could have saved you, you would have lived forever. & http://www.dailykos.com/blog/Okiciyap

    by weck on Tue Dec 04, 2012 at 08:52:15 AM PST

  •  Where do I sign? (1+ / 0-)
    Recommended by:
    HoundDog
    Grover Norquist has said he could accept an expiration of the payroll tax cut provided it is replaced with tax cut of a similar size.

    Notice: This Comment © 2012 ROGNM

    by ROGNM on Tue Dec 04, 2012 at 08:53:30 AM PST

  •  What am I missing? (1+ / 0-)
    Recommended by:
    HoundDog

    Do you honestly believe Norquist is willing to help the middle class or struggling seniors?  Isn't this just his way of further benefiting his wealthy fans and further screw the people who need it?  

    No, Grover Norquist is NOT being reasonable.  Sure, I'm all for strengthening the SS trust fund and keeping it further away from Republican paws, but I for one am very suspicious of trading one tax cut for a yet-to-be-defined tax cut.  

    •  We would have to get our tax cut this month. (0+ / 0-)

      Grover was not commenting on the current situation.  He is just saying he did not object to allowing the Social Security withholding to return to its previous level, because the reduction was clearly designed as a short-term stimulus.

      So, he is saying he would no penalize Republicans who support this, by considering it a violation of their pledge not to raise taxes.

      The means is the ends in the process of becoming. - Mahatma Gandhi

      by HoundDog on Tue Dec 04, 2012 at 09:03:52 AM PST

      [ Parent ]

  •  YES. The payroll tax "holiday" is dangerous (4+ / 0-)
    Recommended by:
    blueoasis, HoundDog, Bruce Webb, HeyMikey

    It's the camel's nose in the tent of making Social Security no longer independent, self-funded, and 100% justifiable.  

    We still need stimulus, but this is the worst possible kind.  It jeopardizes our unquestioned right to the one entitlement to which we are all clearly and decidely entitled.

    "The extinction of the human race will come from its inability to EMOTIONALLY comprehend the exponential function." -- Edward Teller

    by lgmcp on Tue Dec 04, 2012 at 10:08:27 AM PST

    •  AARP still listening to FDR. (1+ / 0-)
      Recommended by:
      lgmcp
      "We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program."

      --FDR

      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

      by HeyMikey on Tue Dec 04, 2012 at 02:36:38 PM PST

      [ Parent ]

  •  stimulus check (0+ / 0-)

    Instead of another tax cut, why not calculate the value of the payroll tax cut and issue a check to everyone. That would put money in pockets right away.

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