"Don't be a Grinch," President Obama chided Republicans on Tuesday, during a speech in New Hampshire in which he, too, was briefly heckled. "Don't vote to raise taxes on working Americans during the holidays." Indeed, payroll tax rates will revert to 6.2 percent for all workers on Jan. 1, 2012, unless Congress intervenes. Currently, wages are subject to a 4.2 percent Social Security payroll tax, thanks to a temporary cut that saved the average family roughly $1,000 in 2011. The president's $447 billion American Jobs Act, which has failed to gain any traction on Capitol Hill, proposes lowering the employee tax even further to 3.1 percent, and gives employers a tax break, too. The Senate might vote as early as next week on a payroll tax cut extension. Should Republicans join Obama's push to keep taxes low?
Of course they should: Renewing the payroll tax cut "could actually juice the economy," says Siddhartha Mahanta at Mother Jones. And failing to extend the 4.2 percent rate will surely damage the fragile recovery. Goldman Sachs estimates that if Washington kisses the payroll tax cut goodbye, it "would stymie GDP growth by two-thirds of a percentage point in early 2012." And how would it affect your wallet? We're talking $396 in extra 2012 taxes for cashiers, $789 for truck drivers, $1,354 for nurses, and $1,498 for computer programmers (based on average salaries for each job). This should be a no-brainer.
"GOP: All tax cuts not created equal"
But Republicans want Obama to fail: The "odds are good" that Obama's proposal of a cut to 3.1 percent will go down in flames, says David Callahan at Demos' Policy Shop. Why? "The only time Republicans don't like big tax cuts, it turns out, is when they might help an incumbent Democratic." Sadly, that partisan cynicism will have "devastating" economic consequences. "Let's pray that Congress at least extends the payroll tax cut that is now in place."
"Stimulus at stake in payroll tax and unemployment renewal"
And the GOP certainly doesn't want to pile up more debt: "Republicans are in no mood to increase the deficit," says Kent Hoover at Portfolio. The payroll tax cut cost the country roughly $120 billion this year. And Obama's new proposal would cost even more. Do Democrats expect to pay for this by raising taxes on high-income Americans? If Republicans on the super committee were unwilling to raise taxes "to get a historic deal solving our nation's longterm fiscal crises, they're not going to raise taxes in order to pay for an extension of a temporary tax break."
"Payroll tax cut battle begins"
Don't discount the savvy White House PR campaign: Obama's speech Tuesday was just the beginning, says Jonathan Cohn at The New Republic. Get ready for an "intense White House push." The administration has already unveiled a nifty calculator that lets Americans see exactly how much tax they'll pay if the rate reverts to 6.2 percent. "It's clever — and it makes the essential point" that inaction will cost voters money. You can bet that Obama will keep hounding Republicans. I think he'll win this "fight, because, by and large, the public agrees" with him.
"Getting over the super committee"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Why is American internet so slow?
- 7 ways to be the most interesting person in any room
- Colorado’s new ‘drive high, get a DUI’ commercials are actually pretty clever
- What would a U.S.-Russia war look like?
- What the collapse of the Ming Dynasty can tell us about American decline
- Who are the real gay marriage bigots?
- 10 things you need to know today: March 9, 2014
- Ukraine's fraught relationship with Russia: A brief history
- This energy source could solve all of our problems — so why is no one talking about it?
- 22 TV shows to watch in 2014
Subscribe to the Week