Talking and listening to Republican senators today, I heard an old-new message on the problem with extending payroll tax cuts. Why can’t we extend the artificially low FICA rates baked in to the 2010 tax deal? Because doing so would mean hurting Social Security.
“We cannot run a retirement security program without contributions,” Sen. Mark Kirk told reporters after the caucus lunches. “We need to make sure we are running policy for the long term, so that when you’re 65, that there’s a Social Security trust fund to take care of you. I think members who vote for this legislation are anti-Social Security, and I think we need to defend contributions to Social Security. The White House has redefined this as the payroll tax deduction. It’s not the payroll tax deduction – it’s contributions to Social Security. And when the American people hear that we have legislation moving forward to cut contributions to Social Security and drive the trust fund into the red, I think opposition would be fairly overwhelming.”
The problem here – and it’s not a problem of Kirk’s making per se – is that most conservative thinking on Social Security involves phasing out the system by letting younger workers build accounts instead of paying FICA. That’s Newt Gingrich’s plan, for example, and it’s the basis of other plans from the likes of Jim DeMint. How to square the GOP desire for reform, I asked, with a full-throated defense of current FICA rates for everyone?
“We’re not capable of a wide-ranging debate on Social Security,” he explained. “What I think we should do is learn the lesson that Europe is teaching us right now as its ecomy collapses – that you cannot run requirement programs without contributions.”
Kirk is one of the more moderate members of the conference on most issues, so I was more surprised to hear this coming from Tea Party-backed freshman and novice politician Sen. Ron Johnson. “The payroll tax is targeted toward making Social Security stable,” said Johnson. “I don’t want to harm the stability of our Social Security system. I’d be in favor of transferring the short-term benefit to something else.”
I posed the same question I’d posed to Kirk: If you want to reform the system, why no start now with lower taxes?
“I’m willing to look at all elements of a solution to Social Security,” said Johnson. “I mean all of them… but a lower FICA is not part of the solution. It’s moving you further away from solving the problem – that’s why I’m objecting to it. I don’t want to make Social Security even more unsustainable. Let’s find another way not to raise taxes on hard-working Americans.”
Back in August, I wondered about the long-term strategic smarts of Democrats embracing payroll tax cuts. I’m still wondering.