Obama to Congress: No Payroll Tax Cut, No Vacation
Lawmakers are bickering on how to pay for an extension of payroll tax cuts. Obama says they can’t go home until they agree.
President Barack Obama issued an ultimatum to Congress Friday: Reach a decision about the payroll tax cuts or don’t go home for Christmas.
“We need to get this done. And I expect that it’s going to get done before Congress leaves,” Obama said. “Otherwise, Congress may not be leaving and we can all spend Christmas here together.”
Republicans reversed course earlier this week to throw their support behind the extension. Under the payroll tax cuts, which began this year and are set to expire at the end of the month, workers pay 4.2 percent, instead of 9.1 percent. (Employers continue to pay 6.2 percent on their workers’ wages.)
But the GOP and Democrats have failed to agree on how they’ll make up the lost revenue, which could be as much as $125 billion, The Washington Post reports. Republicans want to make up the difference by cutting government spending. Democrats would create a 3.25 surtax on Americans making more than $1 million annually.
Both parties tried and failed to bring their plans to a vote late Thursday.
Democrats had also sought to extend workers’ payroll cuts further—lowering the rate to 3.1 percent. Their proposal also would have given entrepreneurs and business owners a break by taxing an employer’s first $5 million in wages lower at 3.1 percent, half the current level.
Economists who support the tax breaks believe they play a crucial part in consumer confidence, suggesting that should the cuts expire, consumers might stop spending, threatening the nation’s shaky recovery. Consumer spending accounts for 70 percent of the nation’s economy.
Kip Marlow 10:59 am on December 3, 2011 Permalink |
The real plan for recovery should be a comprehensive program to lower the debt, cut the Federal spending, and slow down the regulatory process. All the rest of this is short term window dressing. Time to get serious about America’s future.