"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.
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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."
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."
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.
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