There are many troubling items in the news these days. Joblessness, $15 trillion national debt, giving up on Iraq, the housing market bust, the boy premier of a nuclear North Korea, etc., etc. But what is the issue currently occupying the fertile minds of our president, Congress, and most of the media? Whether the current FICA withholding rate will continue for two months or for twelve months.
The Democrat controlled Senate, with Republican leader Mitch McConnell tagging along, passed a bill extending the current FICA withholding rate until February 29, and then left town on another vacation. The Republican controlled House of Representatives, under the “leadership” of Speaker John Boehner, killed it, and is now attempting to get member approval to extend the current rate until December 31.
The Senate bill would have allowed each worker to keep $83 more of his earnings over each the next two months. The pending House version would allow each worker to keep $83 more of his earnings over each of the next twelve months. It’s the same thing, isn’t it? Yet, Speaker Boehner and friends can’t agree on either one, thus giving the Democrats an opportunity to brand Republicans as tax increasers!
As for the President, he reiterated his stance that if Congress fails to pass “the tax-cut bill,” lawmakers will be endangering the U.S. recovery. Anyone with the sense God gave little green apples will know that $83 a month will have no overall affect on US economic recovery. Why all the fuss? Politics, of course.
So how did this all start? The President wanted to be able to claim that he had given a tax cut to 95% of the nation’s “middle class,” except, of course, for the 13.3 million who don’t have jobs. With the complexity of current tax laws, the only way he could do this would be to change something that applied more or less equally to all workers. . . the FICA withholding. So he proposed, and Congress approved, a reduction of two percentage points in FICA employee withholdings.
But wait a minute! FICA stands for Federal Insurance Contributions Act, doesn’t it? It is not a tax! It is an insurance premium we each pay in advance for future Social Security benefits, and is the only funding source for the financing of Social Security. We have been shown for years that FICA funding for Social Security is woefully inadequate, what with the Baby Boomers now coming onto the scene, and an aging population. So what could possibly be the justification for cutting FICA contributions in the first place, or for extending them now, for one month, two months, or whatever? Politics. Pure and simple. It was enacted initially so the President could disingenuously claim he created a tax cut. It must now be continued lest one side or the other be accused of creating a tax increase.
How long have we heard that Social Security is the electrified “third rail of politics,” meaning that if any politician tinkered with it, the result would be politically fatal. Yet, under the guise of calling it a tax reduction, the President has instituted the largest de-funding of Social Security since its inception in 1935! As a result, the date at which Social Security will be broke has become sooner, rather than later, and the longer we continue this travesty, the sooner it’ll be.
The truth is, the FICA insurance premium should never have been reduced in the first place, and should be reinstated ASAP. But it won’t be. Especially during the upcoming election year.