In the recent brouhaha over the payroll tax cut there seemed to be controversy solely over how long the tax cut should last. The Senate compromise extended it for two months, while the House was pushing for a full year. In actuality even the President and the Senate want the measure extended to a year at some later date, it’s just a question of how that gets negotiated. The voices were few that thought the extension at any length was a bad idea.
While, like anyone else, I’m not averse to having a few extra dollars in my paycheck, the question arises as to how this cut makes sense given the current state of our economy. With the alarming prognosis for the social security system, how does defunding a portion it do anything but worsen the crisis? The theory is that it injects new cash into the economy which will eventually trickle down from the people who have jobs to the rest of the population stimulating the economy. Of course it’s just as likely that all that money will just trickle up to the owners of Wal-Mart and Apple. In light of the failure of the original stimulus, and the contention of a few on the left that the massive stimulus was simply not large enough, one needs to question what possible effect this “drop in the bucket” can possibly have on the floundering economy. Forgive the cynicism, but in an election year one can only assume that the measure is the equivalent of voting ourselves money, and pity the fool who tries to stand in the way.
We are assured that the cut has in fact been “paid for”, but little mention is made as to how. In point of fact the temporary measure has been “paid for” by a permanent increase in mortgage fees administered by Fannie Mae and Freddie Mac. This fee increase amounts to approximately $180 a year on a $200,000 mortgage. The two month extension of the payroll tax cut amounts to about about $165 to someone earning $50,000 a year. The mortgage fee increase does indeed pay for this two month tax cut… in about 10 years! The intention is to drive mortgages away from the government sponsored mortgage giants and toward private lenders. Of course if that actually happens, the 10 year projection might have to be extended. Meanwhile it is expected that this will even further retard the recovery of the housing market.
IMHO: We have been promised a “free lunch”, the question now is “How would you like to pay for your free lunch?”. We hear all about how the greed of banks and corporations has helped destroy the economy, and while there is truth in that we also need to recognize how pervasive that greed is. The sense of entitlement and self serving support of legislation exists across all classes, and little regard is given toward adopting the painful measures that could actually restore us to a robust economy. Admittedly, the line between self-serving and self-preservation can be fuzzy with a government that wastes money in virtually every direction. Economically, we are on the verge of becoming like a sinking ship where it’s every man for himself. What we need are some heroes to be true leaders, and then people who will support those leaders. That we have as our leaders flip-floppers, panderers, cheaters, thieves and liars in our highest offices says more about the voters than the elected. A grifter relies on the greed of his mark. They tell us what we want to hear, and we sell them our vote. We may well need leaders with the courage to tell us what we do not want to hear, and then we ourselves to have the courage to give them our vote.
