The agreement reached by President Obama with Republican leadership, including a two-year extension of tax cuts for the wealthiest in return for a one-year extension of unemployment insurance for families decimated by joblessness, is the wrong way to stimulate our economy.
The payroll tax holiday is particularly troubling for women, who rely more on Social Security than men do. The “holiday” benefits higher income people more than those in the middle or bottom, excludes retirees — including those forced into early retirement due to joblessness — and excludes state and local government workers at a time when they are facing a pay freeze. Worst of all, it slashes Social Security’s dedicated funding stream — something Republican leaders and other anti-New Deal forces have wanted to do for decades.
Cutting Social Security’s dedicated funding stream threatens its long-term integrity, and breaks faith with the workers who have paid into the system so that it would be there for them when they are no longer working.
The White House says the tax holiday will stimulate the economy, and Social Security will get its lost revenue back from the federal budget. We say: then why not use the federal budget to stimulate the economy in the first place? Proposals exist that would do just that. For example, it would be simple to double the Making Work Pay program. Giving everyone who earns at least $5,000 per year a benefit of $800 would be much more progressive than the payroll tax holiday and would directly stimulate the economy.
There is no need to strike at the heart of Social Security’s integrity in the name of stimulus.
The president’s package also allows income inequality to continue growing, and will result in more pressure to cut programs that employ and serve women disproportionately, including education, health care, child care, domestic violence prevention and other social programs.
NOW urges the Senate, which is expected to vote on the president’s proposal on Saturday, to reject it. Instead, senators should pass a stimulus package that targets relief to where it is needed most — middle and low-income families, not those earning $1 million, $2 million, or $5 million per year and more.