Americans, whether in favor or not, have been front-row watchers of the theater that is the congressional debate on payroll tax cuts for the past year. A prime point of contention has been that the reduction in a portion of the amount of one’s check that goes toward funding Social Security would essentially drain it and wreak havoc on the economy that would eventually need this benefit. But Senator Jay Rockefeller (D-WV) has brought contrary facts to the forefront of this discussion; he implores Congress to understand that Social Security won’t be defunded through payroll tax cuts, but that by eliminating them we pull vital dollars from the still-rebuilding American economic landscape.
The two-point reduction in Social Security payroll taxes – from 6.2 to 4.2% – was supposed to end on December 31, 2011. With much pomp and circumstance the bill was extended for the first two months of the next year, and then again extended for the duration of 2012. Much of the challenges toward these cuts stem from a belief that by defunding Social Security now there won’t be anything left in it for future retirees. But there have been many details of this perspective that have been essentially debunked. Senators Rockefeller and Bob Casey (D-PA) are two who have championed that these reductions will not hurt future Social Security-recipients.
Rockefeller himself released a fact sheet in December of last year that highlighted some of the many positives of the payroll tax reduction. In his sheet he documented that, in his home state of West Virginia, close to 900,000 are benefiting from the extra money they are bringing home with these cuts. Furthering his support of the plan is the stipulation that “any payroll tax cuts to Social Security must all be reimbursed within the calendar year.” Rockefeller furthered that a draw down on the Social Security Trust Fund will be replaced by the U.S. Treasury’s General Revenue. And his perspective is supported by Stephen C. Goss, chief actuary of the Social Security Administration. Goss feels that, in the near and long-term, reductions to Social Security funding through these payroll tax cuts would have an insignificant effect on the financial status of the Social Security programs.
Ted Boettner, executive director of the West Virginia Center on Budget & Policy, is aligned with Rockefeller for reasons relating to the economic recovery of his state, which can certainly be extrapolated out to other states struggling to come out of the recession. Quite simply, Boettner feels, to take spending money out of the pockets of West Virginians (and all Americans) means reduced sales for businesses, reduced goods produced, and reduced jobs for those who work for these companies. And when jobs are reduced, a state is pretty much back at the drawing board of financial recovery; there is no recovery when job creation or retention is threatened.
Rockefeller went so far as to state that as many as 750,000 jobs will be created as a result of payroll tax cut extensions and the money this puts into the economy. His fact sheet stated that every dollar taken out of the federal revenue pool through these cuts actually grows the American economy by $1.27.
Rockefeller’s fact sheet also reminded that the Social Security Program is in no immediate danger; it has enough resources to pay full benefits through 2036.
