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  • Obama Fiscal Cliff Plan Silent on Payroll Tax Cut

    Credit: Jewel Samad/AFP/Getty Images/Newscom

    This time last year President Obama said of the pending expiration of the payroll tax cut, “It may be that there’s [sic] some folks in the House who refuse to vote for this compromise because they don’t think that 40 bucks is a lot of money. But anyone who knows what it’s like to stretch a budget knows that…$40 can make all the difference in the world.”

    The Administration rolled out a flashy campaign, asking middle-class Americans what $40 less per paycheck—the amount a typical family would lose if the tax cut expired—would mean to them.

    Fast forward to the present, ever-changing fiscal cliff negotiations. This time the stakes are higher; as the Obama Administration’s My2k campaign warns, the typical middle-class family stands to lose $2,000 next year if Bush-era tax rates expire.

    Obama’s mantra remains: “So my message to Congress is this: Pass a bill extending the tax cuts for the middle class; I will sign it tomorrow.”

    The common thread in these episodes is the President’s apparently ironclad commitment not to raise taxes on the middle class. How curious, then, that a payroll tax cut extension is conspicuously absent from his latest fiscal cliff counteroffer.

    Obama’s offer would extend marginal income tax rates for households making less than $400,000 (up from $250,000). It even includes $80 billion in stimulus for what would mark the umpteenth failed attempt to jumpstart the economy via government spending. But, alas for the middle class, his plan is silent on payroll taxes.

    Obama’s payroll tax about-face begs the question: If $40 was real money and “could make all the difference in the world” last year, why is it not so this year? Families and businesses have been living under the ominous threat of Taxmageddon all year. The job market is still struggling, and many Americans have left the labor force. Economic growth remains sub-par.

    As The Heritage Foundation has pointed out, extending the payroll tax would not create jobs, no matter what Obama says. Still, as a matter of responsible governing, Heritage recommended that Congress and the President extend all current tax policies, including the payroll tax cut, to avoid Taxmageddon. This would give the businesses and families the certainty they need and lawmakers time to work on comprehensive tax reform next year.

    Now the fiscal cliff deadline looms, and the number of options available are shrinking. The least bitter alternative would be to delay all of the fiscal cliff’s scheduled tax increases and spending cuts—but only until the end of March, when a number of other budget and spending decisions will come to the forefront. Yes, it means the can is kicked down the road again, but lawmakers would be forced before too long to reach a solution.

    That solution should not rely in the slightest on tax increases, because Washington has a spending problem, not a tax revenue problem. Instead, Congress and the President should propose meaningful entitlement program reforms—many of which enjoy bipartisan support—to get federal spending under control. Because the middle class, along with all other Americans, would benefit, then surely the President could get on board, too.

    Posted in Economics [slideshow_deploy]

    4 Responses to Obama Fiscal Cliff Plan Silent on Payroll Tax Cut

    1. Bobbie says:

      40 dollars sure does make a difference to not be without!. In fact all reduction in government costs wold make a difference and build our self esteem to have more of what we earn to provide for our own independence.

      Why is Obama's words less his actual plan, barely relevant to his intentional conception of his message? Why isn't Obama held to the same standards as other Presidents? Why is Obama's corruption winning? Why is principle, America's principle so hard for Obama (or any man,) to respect? Why would anybody think that low of the founders of this country who were noble men of honor, dignity and various nationalities with humanitarian characteristics, to want to misinterpret the truth of the people's constitution that respects the basic standards of individual people, encouraging personal strength and dignity through freedom and independence if it wasn't the purpose of destroying the nature of this country's civil greatness?

      When a government who has taken unconstitutional control over America tells us they're going to take someone elses money for our benefit, the only way it construes a remote benefit is if America's people are coerced into government dependency. Total violation of government code of ethics and violation of America's principles and against ours! No real American man compromises her principles, Mr. Boehner.

      BTB-Where did America's budget for the vets and natural disasters go? Why isn't the President responsible enough to have a budget to afford America's military vets and recoveries from natural disasters or man made ones so recovery isn't hindered by governing incompetence that coerces compromise? What's really going on with America's money?

    2. Homer says:

      If you are talking about cutting our Social Security that has been paid in for retirement and was supposed to be put into a secure account .Lyndon Johnson took our money and put it into the General Fund and it has been wasted since that time.This is not an Entitlement. An Entitlement is the maintenance of the White House, the taking care of Air Force 1.and flying the President's dog from Hawaii at a cost of $200,000 per hour, The Mexico Vacation of the Daughter of Barack, The mating habits of the killer bees and on and on..

    3. Vicky K says:

      Why would you want to extend the payroll tax cut. This is money that goes to Social Security and Medicare. People need to pay into these programs if we are going to keep them. A better solutions would be to overhaul our tax system. Everyone should file their own taxes, eliminate the filing status, cap dependents, cap deductions($50,000), end all credits, end earned income, stop taxing Social Security for those making $50,000 or less, and reduce tax rates.

    4. Lindecisive says:

      I thought I'd paste my dillemma here too-
      A quick question for proud Americans. Not long ago the position I held at my company was eliminated and I suddenly had no income and a pile of bills—basically, I was poor. With tremendous guilt, I was forced to negotiate and plead with the utility companies to extend my payments. It was a very stressful time in my life, but with the help of friends and using the traditional conservative tools of frugality+hard work, I was able to find a job and get back on my feet. Now that my financial situation has stabilized and (though not nearly as blessed as some) I found a comfortable little apt. to rent, I thought I'd give a couple hundred dollars back to those less fortunate in my community. I was planning to travel to the low income area where there is an organization that helps struggling families pay their heating bills (and other necessities) for the upcoming winter. But now, after reading the posts here, I'm afraid that these funds would only enable these people to become dependent. Wouldn't it be more effective if, instead, I were to travel up to the affluent areas where people have (because of their obvious status) proven to be better money managers, and give my $200 to someone whose use of it strengthens the economy, thereby helping those people out of poverty? Torn and confused—
      Lynn S.

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