The halls of Congress are ringing with overblown oratory these days and our TVs and telephones are getting hoarse from all the ads and calls about those rotten millionaires, long-suffering small businesspeople and the hard-working middle class.
Yes, it's the Great Tax Debate of 2012, except it's not much of a debate. It's more like political theater, as each side plays to its base. And meanwhile, backstage, the biggest tax break of them all is about to quietly expire while the actors onstage yell and gesture, running out the clock til Election Day.
We're talking, of course, about the payroll tax which is deducted from the paycheck of every working American every payday. But unlike taxes that go to support the military, industrial farming and Big Oil, the payroll tax goes to fund Social Security, the program that provides a meager payment to working people who have passed into retirement.
And let's be clear about one thing: this is a tax nearly everyone pays. The obvious exceptions are the unemployed and the self-employed. Republicans like to say that 50 percent of Americans don't pay any taxes, by which they mean the income tax. But chances are most of those very same Americans, if they are lucky enough to be employed, are paying the payroll tax.
So, no fewer than 122 million working people have been enjoying a few extra bucks in their paycheck since 2011, when Congress temporarily cut the rate to 4.2% from 6.2%, hoping to give the economy a little boost and perhaps mollify restive voters. At the urging of Democrats last year, the tax break was extended to 2012 after the usual warnings that it would spell the end of the world as we know it.
Democrats fall silent
But this time around, the Democrats are remaining mum. The White House, a place where many wealthy people work, constantly preaches its disdain for the wealthy and its love of the common working stiff, but is sitting on its hands this year.
The average family has gained about $934 a year from the tax cut, the Tax Policy Center estimates. The cost to the federal government is estimated at $120 billion a year and, since Congress didn't see fit to trim spending anywhere else to pay for it, that $120 billion has come out of the general fund, which means it goes straight to the deficit.
Economists generally agree the extra money each payday has helped keep the anemic budget crawling ahead. No one seems to talk about how much, or whether, it has helped struggling families.
Hoping to find out, we conducted a computerized sentiment analysis on about 290,000 consumer postings on social media like Twitter and Facebook over the last year. We found very little discussion of the topic except last December, when the tax vacation was about to expire. Net sentiment was negative then although it has picked up a bit since then, as shown in this graph:
Those who favored the measure overwhelmingly did so because they felt it would help working Americans, while those who opposed it said that it would not create jobs and would be too costly. See sample verbatim comments at the end of this story.
Those who have enjoyed the extra money have been pretty silent about it, and they may be about to pay the price for their silence, as both parties line up to drive a stake into any proposed extension.
AARP says no
Perhaps surprisingly, one of the biggest opponents of extending the tax break is AARP, the insurance vendor and advocacy organization that purports to represent seniors.
AARP CEO A. Barry Rand went on record as early as May, with a letter to Congress that outlined his objection to extending the tax holiday.
“On behalf of millions of members nationwide and all Americans age 50 and over, I write today to express AARP’s belief that the Congress should not extend the Social Security payroll tax holiday beyond the current year. If economic relief is still a necessity at the end of the year, AARP believes that it should be delivered through other avenues and no longer through the payroll tax system," he said.
Rand said that while AARP originally supported the tax break as a temporary measure to aid struggling families, it has long made it clear that the respite must be temporary.
“AARP made clear that the Social Security payroll tax holiday should have no negative impact on Social Security or its beneficiaries in the short and long-term," he said.
The semantic differences help illuminate who's who here. Advocates of the tax break generally refer to the tax in question as the "payroll tax" while AARP and other seniors' groups call it the "Social Security tax." Both are right, of course. It is a payroll tax that supports Social Security but how you describe it tends to reflect how you feel about it.
Also siding with AARP are Congressional Republicans, who are seldom on the same page as the giant seniors group. Republicans have never liked the tax cut, they don't like it now and the GOP is being upfront in its opposition to extending it.
Democrats, on the other hand, are keeping a low profile. Their usual allies in the public employee unions are also remaining silent, since for the most part they have no horse in this race. Most public employees are part of state and local retirement systems which are separate from Social Security.
It was just last December that the White House was out in front on the issue.
"Lately, many Americans have asked me if the payroll tax cut will affect Social Security. The answer is simply no," Deputy Assistant to the President Jon Carson said. "While more money stays in workers’ paychecks, the law specifies that Social Security receive every dollar it would have gotten even without the payroll tax cut."
So what can we expect this year?
Probably nothing, other than more rhetoric -- President Obama vowing to more severely tax the rich (and, if he spoke more accurately, the upper middle class) and Mitt Romney promising to create jobs by cutting taxes on "job creators," i.e., businesses.
Everyone knows the Tax Code is in desperate need of reform, as it has been for decades. And everyone knows there is an increasingly desperate need to modernize Social Security, as there has been for decades.
And when is all this modernization and reform likely to happen? Why, after the election of course, when it is hoped that the voters will have stopped paying attention and that those who haven't will forget by the next election who it was who gored their ox.
For now, the political battle continues onstage, the press obsesses over the horse race aspects of the contest and the year slips away. Have a nice day.
The halls of Congress are ringing with overblown oratory these days and our TVs and telephones are getting hoarse from all the ads and calls about those ro...