Michael Medved

Considered in isolation, payroll tax cuts in the jobs bill look like a crass political stunt: reducing revenues by $240 billion next year and then magically disappearing right after the November elections.

But in off the record conversations, Democratic strategists insist that these “temporary” tax cuts actually represent one step in a multi-stage plan for permanent transformation of the tax system, achieving a sweeping redistribution of money and power. If the President executes this scheme as anticipated, Republicans – even with their disciplined majority in the House – may find it difficult to stop him.

Mr. Obama urgently demands that Congress slash tax burdens for some 40% of Americans (who pay nothing in federal income taxes) by approximately one-half: dropping the Social Security tax rate from last year’s 6.2% to 3.1% next year. A typical family earning $50,000 would surely welcome the chance to keep $1,500 more of their own money, but how would they feel if Washington erased that break in 2013?

Veteran observers know that proposed changes will prove no more fleeting than the last payroll cut — to 4.2% from 6.2%--that the lameduck Congress cheerfully enacted in December, 2010. As the president noted in his joint session speech: “If we allow that tax cut to expire-- if we refuse to act-- middle-class families will get hit with a tax increase at the worst possible time…I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live. Now is not the time to carve out an exception and raise middle class taxes . . .” And when, exactly, is the time for a working politician “to carve out an exception and raise middle class taxes”?

In other words, the new low rates in payroll taxes for every American household won’t suddenly evaporate at the end of 2012; they will become permanent, shrinking revenues not by $240 billion in a single year, but by at least $2.4 trillion over 10 years.

Revenue reduction on this scale would swamp any combination of spending cuts and tax hikes cooked up by the Congressional Super Committee in November… more than doubling the 1.5 trillion in 10 year deficit reduction they need to find. What could government possibly do to plug the resulting hole in its budget?

The answer is easy, organic, inevitable: the sneaky element of Obama’s purported plan. If official Washington does what comes naturally – doing nothing – more than enough money will automatically cascade into the federal treasury to cover the president’s schemes, starting on January 1st, 2013 (once he is safely re-elected).

Michael Medved

Michael Medved's daily syndicated radio talk show reaches one of the largest national audiences every weekday between 3 and 6 PM, Eastern Time. Michael Medved is the author of eleven books, including the bestsellers What Really Happened to the Class of '65?, Hollywood vs. America, Right Turns, The Ten Big Lies About America and 5 Big Lies About American Business
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