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SSPICE: A win-win solution for the GOP on payroll taxes
By Dean Clancy on February 15, 2012
There's an easy way for the GOP to reclaim the tax issue, amazingly stolen from them this past year by the Democrats with their clever payroll tax cut. It's called the SSPICE Act, and embracing it would do the politically beleaguered Republicans a world of good.
But before I describe this simple remedy, allow me to recount the patient's medical history.
Twice in the past 90 days, House Republicans have been outsmarted by Democrats on the issue of whether to extend President Obama's "temporary" payroll tax cut, which began January 1, 2011, and expires a fortnight hence.
It's not that the Republicans oppose tax relief for working Americans. They support it. They just can't find a way to do it that doesn't increase the tax code's existing unfairness. Right now, half the U.S. population effectively pays no federal income taxes. Cutting the payroll tax, which all workers do pay, only worsens this socialist-redistributionist bias. The GOP is absolutely right to hate this.
But appearing to favor a 30 percent payroll tax hike on 160 million working Americans during a deep recession -- while somewhat ludicrously trying to pose as the defenders of the Social Security trust fund (into which payroll tax receipts are credited) -- is to invite political humiliation. And that's just what they've received, so far.
All last year, Republicans hoped the Democrats would agree to let the one-year payroll tax cut expire on December 31. As the year wore on, reality began to dawn on them. The Democrats sat grinning like the Cheshire Cat. Forced to move from the denial stage of grief to bargaining, the GOP began to demand that a one-year extension be "paid for" with spending cuts elsewhere.
Now, that was fine on paper, but it seriously underestimated the leverage of the Democrats, who, after all, still run Washington and are the "Party of Social Security," to boot. So the GOP got beat. To save face, they meekly agreed to a 60-day extension.
With that deadline looming, they finally entered the acceptance phase, dropping their unachievable "pay-for" demand.
This has had the therapeutic effect of finally putting the Democrats on the defensive.
Now the Republicans, liberated to fight on open ground, should take a real remedy for what ails them. They should pass the SSPICE Act (bill number H.R.3551 in the House and S.2107 in the Senate). SSPICE stands for Social Security Preservation through Individual Choice Enhancement.
This ingeniously simple bill -- authored by Rep. Jeff Landry (R-Louisiana) and cosponsored by Senators Mike Lee (R-Utah) and Jim DeMint (R-South Carolina) -- makes the Democrats' 2 percentage point payroll tax cut optional for each individual. Those who opt for the tax relief thereby agree to delay their Social Security retirement age by one month for each year they accept the relief. That's it.
The Social Security Administration's actuarial experts have certified that this small change would NOT harm Social Security's long-term finances -- and would in fact improve them!
And just as important, this change would plant in the tax code and the Social Security Act an exciting new principle: individual choice and control.
What do you know? Good politics, for once, is also good policy.
Here's your chance, GOP. You can take the tax issue back from the Democrats. AND really defend Social Security. AND promote freedom.
What are you waiting for? Do it!
Dean Clancy is FreedomWorks' Legislative Counsel and Vice President, Health Care Policy