The Coast Guard Will Get Paid

Yesterday The Washington Examiner reported the following:

Concerned about U.S. Coast Guard forces losing a paycheck in the partial government shutdown, President Trump personally urged his team to find a solution that would allow the administration to make this week’s $75 million payroll, according to officials.

Trump stepped in on Wednesday, calling on top lawyers and staffers to determine if the Coast Guard could make payroll despite being included in the shutdown that has impacted about 25 percent of the government, including the Department of Homeland Security, which houses the Coast Guard.

Military personnel under the Department of Defense are not included in the shutdown, because their appropriations were approved earlier in Congress.

Officials said that Trump was keen to find a “way we can fix this” as news media stories about the Coast Guardsmen’s plight started to pile up.

At his urging, the Office of Management and Budget, DHS and the Coast Guard determined that the rules governing pay to Coast Guard forces requires it be made through the end of the year. To make it, the lawyers said that unused funding could be tapped for pay. The service had a bit more than the needed $75 million left over from its past continuing resolution appropriation, enough to make this month’s last payroll check.

“The president is trying to make the shutdown as painless as possible for workers, and this case proved it,” said an official.

Remember that only 1/4 of the government is shut down because President Trump had the forethought to get the rest of the budget passed previously. The Democrats (who in the past voted for a fence (a.k.a. wall) have changed their minds and shut down the government because President Trump wants a wall. At least President Trump is attempting to make the shutdown as painless as possible while Representative Nancy Pelosi (who should be in Washington negotiating) vacations in Hawaii.

What We Didn’t Know About The Senate Payroll Tax Extension Bill

Fox News posted a story yesterday about exactly what was in the payroll tax extension bill passed by the Senate. It seems that the bill that the Senate passed was unworkable.

The article reports:

The Senate bill did not cleanly extend the current Social Security employee share of 4.2 percent for two months. Instead, it created a two-tiered payroll tax with a rate of 4.2 percent for the first $18,350 of income in those 60 days, with a 6.2 percent rate above that.

This establishment of multiple rates of payroll tax presents serious logistical challenges for payroll processors. In fact, the National Payroll Reporting Consortium strongly opposed to the Senate bill based on this feature, writing:

“The difficulty is in establishing a new Social Security Taxable Wage limit of $18,350 for the two-month extension period. More than ten percent of the workforce is likely to meet that limit, and would be subject to the higher 6.2% tax rate for earnings over that amount. However, many payroll systems are not likely to be able to make such a substantial programming change before January or even February. The systems affected tend to be highly complex, normally requiring at least ninety days for a change of this magnitude for software testing alone; not to mention analysis, design, coding and implementation.”

To me, that explains why the Senate did not simply pass the House version of the payroll tax extension–they were using the bill as an instrument of class warfare.

Please follow the link above to read the entire article. It explains the actual process that resulted in a workable bill being passed. This bill was a victory for the taxpayers and for the companies having to deal with payrolls. It was a small victory, but it was a victory.

Enhanced by Zemanta

In Washington Things Are Never As They Appear To Be

 

English: Aerial photo of Tea Party rally to ou...

Image via Wikipedia

Tampa Bay Online is reporting today that the House of Representatives has voted 229-193 to reject the Senate’s proposal for a two-month extension of the payroll tax cut. 

The article reports:

The House vote, 229-193, kicks the measure back to the Senate, where the bipartisan two-month measure passed on Saturday by a sweeping 89-10 vote. The Senate then promptly left Washington for the holidays. Senate Majority Leader Harry Reid, D-Nev., says he won’t allow bargaining until the House approves the Senate’s short-term measure.

OK. Let’s take a look at this. The Republicans in the Senate need to be taken to the woodshed on this one. First of all, a two-month extension of a tax policy is totally ridiculous. Companies need time to program their payroll software, they need some certainty in the future to allow them to plan expenses. The Republicans in the Senate fell right into the hands of the Democrat politicians on this one. Harry Reid left town in order to avoid negotiations. He knew that the House would reject this bill–this is the Democrat way of avoiding the Keystone Pipeline and blaming the Republicans for the middle class tax increase that is coming.

There will be no payroll tax cut extension. In itself, that is not horrible. (Don’t panic. I am not for higher taxes, I just don’t like the way this was done). The payroll tax cut comes out of the “Social Security Fund” (which is nonexistent)–not the general fund. The payroll tax cut ensures the demise of Social Security sooner rather than later. Raising taxes on millionaires, increasing the cost of mortgages, etc., has no impact on the money not collected because of the payroll tax cut–those things impace the general fund–not the social security fund.

Unfortunately, this battle is totally about politics and the American people are the losers. The correct answer to the entire situation would have been for Congress to pass a real budget–which it has not done for almost three years and proceed from there.

Enhanced by Zemanta