Business

Who Is Paying for the Two-Month Extension of the Payroll Tax Cut?

Remember when, just before Christmas, it was announced that the current payroll tax cut was going to be extended for two months?

During all of the congratulatory remarks and back-patting, you know what the architects of the two-month tax cut failed to mention? They failed to mention the fact that they were going to pay for the whole thing with “hidden” mortgage fees.

That’s right, D.C. is financing the two-month tax cut with what has turned into a brand new fee on home buyers.

How is that supposed to work?

“The new fee is a minimum of one-tenth of 1 percent on Fannie Mae- and Freddie Mac-backed loans, and is likely to go much higher,” CBS reports. “It will be imposed for the next 10 years on most mortgages and refinancings and it lasts for the life of the loan.”

Watch the CBS news update:

To cover the two-month extension’s $33 billion price tag, the measure increases the fee that the government-backed mortgage giants, Fannie Mae and Freddie Mac, charge to insure home mortgages. That fee, which Senate aides said currently averages around 0.3 percentage point, would rise by 0.1 percentage point under the bill.

“Guess what? The fees collected won’t even cover the loss to the Social Security fund,” writes Ed Morrissey of Hot Air. “It’s going into the general fund instead.”

He’s right. According to CBS, the $35.7 billion collected in fees won’t go into the Social Security fund to replace the lost payroll tax. It goes to the general treasury where Congress can spend it “however they please.”

And while the House blamed the Senate and the Senate blamed the House when they were asked about the “hidden” fee, one Obama administration official defended the mortgage fee, calling it “modest,” according to the CBS report.

The White House said it’s “unlikely to negatively affect borrowers” because increases “will be phased in over the next two years.” Moreover, it will “help bring private capital back into the mortgage market, which [is] good for borrowers over the long term.”

But does that really work?

“Remember this, and remember it well — fees placed on businesses get paid by consumers,” Morrissey writes, “Taxes on businesses get paid by consumers.  Businesses pass costs along to consumers, and when they don’t, they don’t remain in business for very long. As Robert Heinlein once wrote, ‘There ain’t no such thing as a free lunch.’”

The Associated Press contributed to this report.

Comments (52)

  • gr8t2bfree
    Posted on February 8, 2012 at 5:17pm

    obama is going to pay for it this fall!

    Report Post » gr8t2bfree  
  • Cindy in CA
    Posted on February 8, 2012 at 2:11pm

    We have a small business and I notice on the January payroll, the net pay of our employees was more than it was in December. I compared January with December. Feds deducted fewer taxes in January than they did in December. They increased employer’s payroll taxes and the employers are paying the difference between the deductions. So once again Obama is screwing small business.

    Report Post » Cindy in CA  
  • TEARS FOR AMERICA
    Posted on February 8, 2012 at 2:09pm

    And so…they steal the money generated by the ADDED mortgage tax and spend it deepening the deficit even further-way to go, Congress and Obama! Just beautiful.

    Report Post » TEARS FOR AMERICA  
  • Redmanblackdog
    Posted on February 8, 2012 at 10:57am

    Here we go again. The very same people (politicians) that gave us this mess with the economy is at it again.

    People in this country are so stupid not to understand the payroll tax break is money that isn’t going into Social Securtiy, so it will go broke even sooner.

    So how do they want to fix this country? By making it so we have to borrow more money to get the seniors there social security checks.

    When the money drys up, and no more can be borrowed we all loose big time!

    Report Post »  
    • snufy
      Posted on February 9, 2012 at 11:03pm

      Right on, Red. The social security fund was never designed to be anything but a social security fund. The greedy politicians just couldn’t control themselves. They say all that money and raided it, putting it into the general fund to spend on their pet projects and replaced it with worthless IOU’s. Now that they are having to pay it back, they’re trying to make people think that the money we all (except politicians and gov’t employees) were forced to put into ss is somehow an entitlement that greedy old folks are soaking up. Employeers have to match the amount withheld from payroll. You pay more in soocial security taxes than income taxes. The gov’t is screwing us, good. The problem is that most people don’t even know it. They keep re-electing the same old foxes to guard the hen house.

      Report Post » snufy  
  • Derek01
    Posted on February 8, 2012 at 10:19am

    Who do you think pays for it? You are putting in less so down the road your benefit will be less. Once again Obullsht trying to look good at your expense

    Report Post »  
  • American Mensch
    Posted on February 8, 2012 at 9:45am

    To Salamander:
    Good point. I wish more people would educate themselves about how the system REALLY works, and stop getting their information from a left-leaning media or the Obama talking points. The Democrats are counting on more Americans to have the same kind of simplistic and faulty logic that MICurmudgeon displays. This is an area of discussion that is almost impossible to explain to most people, without sounding as if you must want to protect the “rich”, and I foresee a hard slog for the Republican candidate. Obama and his minions will be out in force demagoguing this issue to death.

    Report Post »  
  • American Mensch
    Posted on February 8, 2012 at 9:28am

    ‘There ain’t no such thing as a free lunch.’

    According to President Obama, there is.

    Report Post »  
  • discus02
    Posted on February 8, 2012 at 8:09am

    Tax the 40% who pay nothing and still get a tax return. Tax the rich so the government can spend more. Why not take all their money and lets see how long it takes for the government to spend it. I
    would give them 3 months if that long!

    Report Post »  
  • MiCurmudgeon
    Posted on February 8, 2012 at 8:08am

    Cuts in the Federal payroll would allow the same crappy bureaucrats to keep their jobs , but at least it is a start. That is where cuts should be made.

    Report Post »  
    • Salamander
      Posted on February 8, 2012 at 8:21am

      Hmmm, depends on WHERE you cut the Federal payroll. Why not start with The Executive, The Legislature and The Court? That’s right, make it a sacrifice to run the country! Those who have demonstrated success won’t be lying their way to the top so they can feather their own bed! Cut the salaries of The President, The Senate, The House of Representatives, The Supreme Court, then make cuts in Federal Judges, etc. At some point, when we can’t get people to run for these positions, we‘ll know we’ve cut just a bit too much and can simply reverse the last cut! But, until that happens, we’re paying too much!

      Report Post »  
  • jzs
    Posted on February 8, 2012 at 7:59am

    Who is paying for the Bush tax cut for millionaires? Nobody, that’s who. Those only add to the deficit. Why is it Republicans are against tax cuts for the average American, yet support tax cuts for the wealthiest?

    Report Post » jzs  
    • Salamander
      Posted on February 8, 2012 at 8:16am

      Do you even understand the difference between an income tax, a consumption tax, a wealth tax, an excise tax, a property tax, a capital gains tax, a utilities tax, etc.? Why are you so concerned about ‘tax breaks for the rich’ when most of the arguments compare an income tax rate for one with capital gains tax rate for the other, without differentiating between the two numbers. That‘s like ’the rich only get 86, while the poor get 110 (comparing Summer temperature for one group to electricity consumption for the other! Hey 86 is less than 110, so the guy with 86 has an advantage over the one that gets stuck with 110! (However, just like everybody gets 86 that day and uses 110 that day, if the poor were to save and invest (and it may be the hardest thing they ever did, but many do it), they will (not can, but will) be able to enjoy the benefits of the growth of an asset they bought with funds that had previously been taxed as income! And, I‘ll bet MOST of those whining about the rich and the poor don’t realize they may, one day, be paying 36% or 90% on the sale of their home–if they keep barking up the same tree!!! (By the way, the ‘poor’ get free education, free healthcare, reduced cost housing, reduced cost food, reduced cost transportation, etc. No doubt, ’tis better to be rich than poor, but whining about it isn’t going to get the job done! So, stop being a tool of the politicians, the media and everyone else that has a gripe, and get to work and get ric

      Report Post »  
    • RJJinGadsden
      Posted on February 8, 2012 at 12:19pm

      SALAMANDER, Excellent and informative post. Your analogies certainly make some of the best sense that I have yet to read here. The media and politicians have taught the shallow of mind to do nothing but compare apples and oranges to ensure their desired outcome.

      Report Post » RJJinGadsden  
    • jzs
      Posted on February 8, 2012 at 12:54pm

      Salamander, Republicans fought to stop an extension of the payroll tax cut, which puts extra money in the hands of the average American (Romney, for example, doesn’t pay much income tax, because his “salary” is characterized as capital dividens. Republicans say they want to cut taxes, but it appears they only want to cut taxes for the richest. But when it comes to the payroll tax cut, which benefits to average American more than the rich (as it is a larger fraction of their income), they oppose it, even though the cut is “paid for”, unlike the Bush tax cuts.

      Report Post » jzs  
    • magnum357
      Posted on February 9, 2012 at 9:11am

      JZS could you run up stairs and have your mom fix you another dish of oat meal.

      Report Post »  
  • 4xeverything
    Posted on February 8, 2012 at 7:45am

    They call it a ‘backdoor tax’ because that is exactly where we are taking it.

    Report Post » 4xeverything  
    • Americanius
      Posted on February 8, 2012 at 9:42am

      And the GOPers lined up in lock step with the Marxists to stick it to us once again. Question is if it begins at one tenth of one percent and is going to be phased in then what’s the final percentage going to be when they drive it home? Can we at least get a kiss?

      The only way to avoid this is to get a mortgage from a lender that does not underwrite to FMs which is nearly impossible now since the government has taken control of 90% of the finance industry.

      Since it’s all going into the general fund how does it “bring private capital back into the mortgage market.” Freakin liars!

      Report Post »  
  • Bicyea
    Posted on February 8, 2012 at 6:44am

    REMEMBER THIS—- When the government pass the refinancing of mortgages for people who are up to date and struggling, to a lower rate ALL OF THOSE PEOPLE WILL ALSO BE PAYING THIS FEE!! You are being set up to pay this!

    Report Post »  
    • Salamander
      Posted on February 8, 2012 at 8:04am

      Wait a minute, let me understand this, so the government ‘helps’ the consumer by mandating lower mortgage rates and no affirmations on the part of the borrower, other than they be current (ability to pay), then slaps a hidden fee (tax) on the loan! Hmmm, after moving all the walnut shells around, where’s the pea?

      Report Post »  
  • fatsomann
    Posted on February 8, 2012 at 6:37am

    “That’s right, D.C. is financing the two-month tax cut with what has turned into a brand new fee on home buyers”.
    Hidden tax anyone? This Administration and Congress are so deceptive. No new taxes – I got a bridge in San Fran to sell you.
    Who Is Paying for the Two-Month Extension of the Payroll Tax Cut?
    Taxpayers for many generations to come.

    Report Post » fatsomann  
  • wboehmer
    Posted on February 8, 2012 at 5:53am

    All I know is that the surest sign that something fishy is going on is when the government tries to hide what it’s doing.

    You be the judge . . . was Worst-President-Ever Obama’s oh-so-transparent Administration up-front about the 0.1% or not?

    Report Post »  
  • LovinUSA
    Posted on February 8, 2012 at 4:13am

    Why do you people even bother to ask such stupid questions like this? Everybody knows who is paying for EVERYTHING IN THIS COUNTRY…………..

    Report Post » LovinUSA  
    • Amos37
      Posted on February 8, 2012 at 6:05am

      The rich get richer off the poor people’s money. people wonder why the occupy protestors are so upset. too bad they aren’t fighting for the right reasons because of the bad leaders they have.

      Report Post »  
    • 4xeverything
      Posted on February 8, 2012 at 7:06am

      This is not a private entity getting rich. This is government taxing us into poverty. Please, sit down before you hurt yourself.

      Report Post » 4xeverything  
  • Ghandi was a Republican
    Posted on February 8, 2012 at 1:00am

    Every one of their “Tax the rich” schemes is just another hidden tax somewhere. The objective is too suffocate the tax base in a community near you. This is the ghetto model of the progressive Alinsky party,.,. Destroy the tax base and create dependence! They know we know, so they lie and claim good intentions. Allah Alinsky!

    Report Post » Ghandi was a Republican  
    • cuinsong
      Posted on February 8, 2012 at 2:05am

      Wow a new way to get screwed by politicians who-da thought of that? Are these people out of control or what? This is outrages and they did it right in front of our eyes those brazen a&& holes! can’t wait to vote them out! But till then here is a song for them called “Their Wrong” http://www.reverbnation.com/play_now/song_12090926

      Report Post » cuinsong  
    • WeDontNeedNoSteenkinBadges09
      Posted on February 8, 2012 at 4:10am

      What is wrong with these nígģers-high-places? Is their racist white-hatred so great they are willing to put holes in the very ship they are sailing? One sad race …

      Report Post » WeDontNeedNoSteenkinBadges09  
  • The-Monk
    Posted on February 7, 2012 at 11:29pm

    Why don’t we take a minimum of one-tenth of 1 percent from every Fannie Mae and Freddie Mac employee’s paycheck instead?

    Report Post » The-Monk  
    • db321
      Posted on February 8, 2012 at 12:20am

      Obama doesn’t care who is paying for it – he can spell budget – nor does he care. Blaine it on Bush.

      Report Post » db321  
    • 2theADDLED
      Posted on February 8, 2012 at 1:45am

      I was hoping Barry was covering it since he was so generous and willing to share his wealth.

      Report Post »  
  • Tankertony
    Posted on February 7, 2012 at 11:13pm

    Its sounds like a progressive marxist wrote this article. Nobody ‘pays’ for a tax cut. The real question is who will pay for all the spending and entitlements, the $15 trillion we’re handing down to our children and grandchildren? A great sin.

    Report Post » Tankertony  
    • Obama_Sham
      Posted on February 8, 2012 at 6:47am

      My thoughts exactly… Those that think we “have to pay for a tax cut” believe that it is the governments money that we earn…

      Report Post » Obama_Sham  
  • BeardedDog
    Posted on February 7, 2012 at 9:51pm

    I would expect nothing less from either party. I say throw them both out. We need an honest party and we only have 2 crooks to chose from.

    Report Post »  
    • pamela kay
      Posted on February 7, 2012 at 10:56pm

      BEARDEDDOG, Well the way I figure we will have 4yrs (God willing) to organize and fund a third party if who ever wins continues to destroy our country. The bad news, allot of damage can be done between now and then. This will be a tough and sacrificing time for the citizens who are so dependent on government assistance, or have union ties. It can be done but I expect that there will be allot of chaos and violence in the process. I hate that our country has come to this. If only we had paid more attention. I pray that violence does not occur. I hope that Americans will pull together and have the strength and courage to face what lies ahead. Faith and morals will be crucial to our success.

      Report Post » pamela kay  
  • soybomb315
    Posted on February 7, 2012 at 9:33pm

    whatever – amazing how a story like this is small potatoes these days

    Report Post » soybomb315  
  • A Conservatarian
    Posted on February 7, 2012 at 9:27pm

    The two month extension of payroll taxes could easily be paid by the profit the pension fund of the social security made just this year. We are lied to and told Social Security is bankrupt. Most people do not understand that there exists A SOCIAL SECURITY FUND. Just like pension funds, police officer funds… a the municipal, county, state.. in this case Federal level.

    Look up “Social Security CAFR” on google: It states – Total Assets for the social security fund in 2010 is 2.635 TRILLION DOLLARS minus 95 Billion in liabilities (payments to beneficiaries on the year etc.) for a net 2.500 TRILLION DOLLARS. That’s not a joke.

    We are told Social Security is underfunded and it’s broke. We are told mere accounting tricks of looking at a 1-3 year investment outlook, versus a 5-10-15 year outlook. The last 2 years sucked, of course the 1-3 year outlook sucks. But, the longer term outlook? Well lets take a look at the last 5 years of the fund!!!

    Google “CAFR Federal Government” and you will see under NOTE 26 – SOCIAL INSURANCE::: Net Value of the Social Insurance Fund :::
    2006 — $1.859 TRILLION
    2007 — $2.048 TRILLION
    2008 — $2.238 TRILLION
    2009 — $2.419 TRILLION
    2010 — $2.540 TRILLION

    Does it look like it’s going broke? We could pay off the deficit alone with the Social Security Fund.

    Continued …

    Report Post » A Conservatarian  
    • A Conservatarian
      Posted on February 7, 2012 at 9:35pm

      (cont).
      If you want to know more about CAFR – which stands for Comprehensive Annual Financial Report then study these videos (below). As an example, the federal reserve has a CAFR that shows the disposition of all its funds that is independently audited; Ron Paul is asking for an independent audit to the fed reserve… when the CAFR already has one and he knows because the house of reps and the senate each receive a copy of this report yearly. It’s political suicide to mention them, for good reason.

      The vids are long. But, I liken the situation to this: If say 20 people out of 1000 can comprehend the federal reserve racket… then only 1/2 of a person of that 20 will understand this scheme. It’s monumental, beautiful and shocking. We put Italy, Nazi Germany.. everyone to shame who ever tried out fascism and completely failed compared to the spectacular success of the government FUND.

      This is 9 some odd hours of video, so yes it’s long. The path to understanding this fraud of accounting tricks is massively extensive, so to learn it all in 9 hours? Is nothing short of amazing. If you liked The Money Masters, you’ll love this.

      The Corporation Nation part 1 – http://www.youtube.com/watch?v=QkfMuvVuETQ
      The Corporation Nation part 2 – http://www.youtube.com/watch?v=fhkWueEjewM
      The Corporation Nation part 3 – http://www.youtube.com/watch?v=mjxU8bqXHn8

      Report Post » A Conservatarian  
    • A Conservatarian
      Posted on February 7, 2012 at 9:46pm

      Btw, if you’ve ever felt like you were getting ripped off, knew something was happening, the money was going somewhere… it was being hidden from you and you just couldn’t find out who.. or how “They” were doing it?

      This will explain it for you 100%; if I could bet on your understanding this situation and being happy that you understand the biggest racket of all time, I would put all the money I have on the fact that you will understand this!

      Report Post » A Conservatarian  
    • Dougral Supports Israel
      Posted on February 7, 2012 at 9:53pm

      The SS Trust Fund consists of government bonds, yep, IOUs. There is no actual money in there. In order to access it the government has to sell those IOUs on the open market. This adds to the amount of bonds that the government has to find borrowers for. Right now the government is issuing a record amount of bonds just to cover its overspending. If they add more they might not be able to sell all of them and have to get the Fed to buy them with conjured money. I believe this has already happened and is the real reason for last year’s QE2.

      Anyhow, the SS Trust Fund is supposed to cover the SS needs of the baby boom generation. It is not there to be used to pay for Obama’s huge bar tab he is running up. If the fund is exhausted early then the gov’t will have to make it up or face the prospect of millions of angry seniors voting them out into the street in the next election. The really is no such thing as a free lunch, even in Obama’s utopia.

      Report Post »  
    • brien1969
      Posted on February 7, 2012 at 9:54pm

      yeah on paper there is that money in there, but there is no actual money in the fund. IOU’s only. It’s a ponzi scheme and is paid for by monthly receipts.

      Report Post »  
    • A Conservatarian
      Posted on February 7, 2012 at 9:57pm

      No gentleman, you don’t understand. That’s not correct. The assets may be in “paper” IOU’s… but it is in federal reserve note IOUs. The last year they had 80.1 Billion in profits that went nowhere but back into the fund. The money is invested in corporations all over the world. Stop saying what you think you know, I used to say the same things. Watch the videos PLEASE! If you refuse and want to stay stubborn that’s fine. Just don‘t think you know everything the government does about accounting tricks because you’re being spoon fed BS.

      Report Post » A Conservatarian  
    • A Conservatarian
      Posted on February 7, 2012 at 10:01pm

      Ok I’ll ruin part of the videos even more for some of you. The SS fund is invested in Mutual Funds, Stocks, Real Estate and more. While it may have IOU’s? You can‘t invest in mutual funds and stocks and more with IOU’s unless it is federal reserve notes.

      Don’t take my word for it, the portfolio of the SS Fund, for every fund hell the CalPERS fund, any state fund, county, municiple, look up there CAFR and you will see diversity in stocks, mutual funds, real estate, gold clubs, etc. etc. etc. These are not IOU’s and we cannot touch the money as taxpayers. Stop with the quick quip answers and study the CAFRs and the VIDEOS.

      Report Post » A Conservatarian  
    • soybomb315
      Posted on February 7, 2012 at 10:02pm

      Obviously, all that money is tied up in government bonds ($15 TRILLION DEFICIT). with a name like conservatarian, i expected better

      Report Post » soybomb315  
    • A Conservatarian
      Posted on February 7, 2012 at 10:12pm

      There are over 20+ trillion worth of government funds that if they were cashed in today could wipe out the federal deficit. Again stop the regular response mechanism and read the CAFR’s They are all online. I will take the ridicule as I understand the misunderstandings many of you have, I had them too.

      You say it’s all bankrupt? The CAFR’s say you are all wrong. If the CAFRs didn’t exist and I had no proof? I wouldn’t be posting this. Don’t believe me? Again, read the CAFR’s. The fund portfolios are laid out for everyone to see. My hope is that at least 1 or 2 of you will actually investigate. The rest of the balance will ignore and ridicule. I expect this and am not upset with any of you, in all honesty. All the best!

      Take care, I’m done with this website. My shackles are removed completely.

      A Conservatarian.

      Report Post » A Conservatarian  
    • Dougral Supports Israel
      Posted on February 7, 2012 at 10:21pm

      @Conservatarian Read this link: http://www.ssa.gov/OACT/ProgData/investheld.html

      Right at the top of the page is this paragraph:
      “The Social Security trust funds, managed by the Department of the Treasury, are the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds. Since the beginning of the Social Security program, all securities held by the trust funds have been issued by the Federal Government.”

      SS admits that its entire trust fund holdings is government bonds (IOUs). The money has been spent once already. The government is committed to spend it again to cover SS for the retiring generation. Obama is trying to spend yet again before SS has to pay it out. Its criminal what the government has done and what they are planning to do. If anyone here ran their finances that way they would be in jail for fraud.

      Report Post »  
  • loopy1
    Posted on February 7, 2012 at 9:18pm

    Weren’t the “Bush tax cuts” supposed to expire at the end of 2011? Wasn’t that part of the “near government shut down” in 2010 where Obama supposedly caved to the Republicans? What happened to them? Did they expire or were they renewed with no fanfare from either side? Does anybody know?

    Report Post »  
    • Americanius
      Posted on February 8, 2012 at 11:53am

      All I know is that my income rose 3% last year but my income taxes went up 15% with more deductions and less taxable income.

      They‘re slinging mud at each other claiming they didn’t know? It was a 14 page bill not Obamacare! With a section clearly labeled TITLE IV—MORTGAGE FEES AND PREMIUMS over 3 pages.

      Freakin lie-awyers!

      Report Post »  
  • right
    Posted on February 7, 2012 at 9:17pm

    Thanks Obama. Another good deed. We’ll pay for it for 30 years on our mortgage.
    I feel real good about that tax break. NOT!

    Report Post »  
  • SamIamTwo
    Posted on February 7, 2012 at 9:12pm

    Robbing Peter to pay Paul…debt is still debt…and a sigh is just a sigh as time goes by.

    Report Post » SamIamTwo  
  • NOBALONEY
    Posted on February 7, 2012 at 9:11pm

    Washington shenanigans!

    Report Post » NOBALONEY  

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