Political  Calculations

Two days before Christmas 2011, the U.S. Congress acted to pass a temporary extension of the Social Security payroll tax cut that had originally been passed a year earlier, and which had been set to expire at the end of 2011. To celebrate the occasion, the White House issued the following statement describing who would benefit from extending the Social Security payroll tax cut:

President Obama today signed into law a two month extension of the payroll tax cut, which means that 160 million American workers will not see their paychecks shrink starting Jan 1, 2012. The President thanked Congress for ending the stalemate and urged them to keep working to reach an agreement that extends this tax cut as well as unemployment insurance through all of 2012, saying it is the right thing to do for American families and for the economy, and called it "a boost that we very much need right now."

While technically true, we find that the White House's statement is misleading.

The part that's true is that had the Social Security payroll tax cut that had originally passed into law as part of the Job Creation Act of 2010, as many as 160 million individuals would indeed have seen their paychecks shrink as the Social Security payroll tax would have risen back to the level it was in 2010.

The only problem is that just over half of those wage and salary earning individuals ever saw any benefit from the Social Security payroll tax cut on their paychecks in the first place!

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

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