Should American workers continue to get a payroll tax break?

President Barack Obama has been pressing Congress to extend this year’s payroll tax break — a two-point reduction from the usual 6.2 percent tax that workers usually pay to support the Social Security program. Obama says letting the break lapse would amount to a tax hike on workers; GOP leaders have said they’ll pass an extension only if there are cuts to other government programs.

Should the payroll tax break continue? Joel Mathis and Ben Boychuk, the RedBlueAmerica columnists, debate the issue.

JOEL MATHIS

Whether he means to or not, President Obama is threatening the future of Social Security and the cause of good governance with his campaign to extend the payroll tax cut.

Sure, the tax break is meant to be temporary. But lots of tax breaks have a sunset clause. Yet somehow we’re still stuck (for example) with the tax cuts that were passed under George W. Bush, which helped create our current deficit mess. Why? Because Obama didn’t have the political will to let those tax cuts expire and let America’s wealthiest citizens start contributing to deficit reduction.

Now the president is traveling around the country, saying the end of the payroll tax break is an attack on the middle class, one that will further undermine an ailing economy, and proves that Republicans only care about keeping taxes low for the rich.

On that last part, he’s right: GOP tax-cutting zeal has been mysteriously absent on this issue.

But if the end of the temporary tax break amounts to an unconscionable tax hike on the middle class, it will probably be an unconscionable tax hike on the middle class next year and the year after that, and so forth, for as many times as is needed to renew the “temporary” exemption. If the economy suddenly, finally starts to grow, there will surely be politicians who suggest that letting the break expire at that point will bring the pain back.

Americans will want to keep their tax break. (It amounts to about $1,000 a year for many families.) But they’ll also eventually want their Social Security check. It may not be possible to keep both. In the end, we really do have to pay for the government we get, or we’ll stop getting that government. We’ll end up paying, one way or another.

BEN BOYCHUK

Taxes, as a rule, should be low, and government should spend what it takes in and borrow only what it can afford to pay back. But Congress has long lived and thrived on the maxim that rules are made to be broken.

Low taxes are good, but not all tax cuts are created equal. It’s true.

Cutting personal income and corporate taxes has a different effect on revenue and economic activity than cutting the payroll tax.

When Congress passed a two-year, temporary extension of the Bush-era tax cuts late last year, it approved the accompanying payroll tax holiday as a kind of mini-stimulus.

Remember how well the $787 billion stimulus worked? Right. It failed because Congress, in cahoots with Obama, blew all of that money on the wrong things at the wrong time: bailing out government workers and propping up state budgets for the most part, but also wasteful follies such as “Cash for Clunkers.”

Cutting the payroll tax was also a wrong move, at the wrong time. Like the 2009 stimulus, it didn’t work as advertised.

In theory, economists say, a payroll tax cut is supposed to reduce the cost of hiring new employees and leave existing workers with extra cash in their pockets to spend as they please. In practice, however, unemployment remains around 9 percent and the economy is just so-so, recent headlines about great Black Friday sales notwithstanding.

What’s worse, the payroll tax cut undermined funding for Social Security. Now, conservatives aren’t fans of Social Security and rightly so. It’s a generational Ponzi scheme. Actually, it’s worse. At least in a Ponzi scheme, the mark has a choice. Social Security is a mandated shakedown.

Whether the payroll tax is 6.2 percent, or 4.2 percent, Social Security’s obligations remain the same. Absent the necessary revenue, the federal government will need to fund Social Security through higher income taxes or through more borrowing.

To sum up, then: the payroll tax cut created no new jobs, didn’t move the economy, and threatens to leave us in greater debt. Other than that, what’s not to like?

Ben Boychuk and Joel Mathis are moderators of the website, RedBlueAmerica.com, an initiative of the E.W. Scripps Co. Boychuk ([email protected]) represents the Red (conservative) side. Joel Mathis ([email protected]) represents the Blue (liberal) point of view.