Obama renews call for end to payroll tax impasse
President Obama challenges House Republicans to compromise and pass a payroll tax cut extension.
By Tom Curry, msnbc.com National Affairs Writer
President Obama renewed his call Thursday for the House of Representatives to pass a two-month extension of the cut in Social Security payroll taxes and unemployment insurance benefits which Congress enacted a year ago.
The only reason the impasse continues is because “a faction of House Republicans have refused to support this (two-month) compromise,” Obama stated at a press conference Thursday afternoon, where he was surrounded by several Americans the White House had recruited to support Obama.
The president cited some specific people such “Joseph from New Jersey” who would have to sacrifice a pizza night with his children. “This is insurance to ensure that our recovery continues,” he said, adding that the impasse is “exactly why people get so frustrated with Washington.”
For worker making $60,000 a year, a two-month payroll tax cut would mean $200 in additional take-home pay, or about $25 per week.
For the first time, Senate Republican Leader Mitch McConnell added his voice Thursday to those calling on House Republicans to grant a two-month package to become law, but he also stated Senate Democratic Leader Harry Reid should appoint negotiators to try to work out a one-year accord.
McConnell urges House passage of tax deal
The heart of the discord between Obama and House Republicans remains as it has been for weeks: how to offset, or pay for, the almost $200 billion cost of the package.
The Senate on Saturday passed a two-month extension of the tax cut, after Reid and McConnell couldn’t reach an accord on how to find revenues and cut spending to offset a one-year package.
Mandel Ngan / AFP – Getty Images
President Barack Obama talks on payroll tax extension Dec. 22, 2011 in the South Court Auditorium of the Eisenhower Executive Office Building in Washington.
The Senate-passed bill includes a provision requiring Obama to make a decision within 60 days on whether or not to approve the building of an oil pipeline from Canada, the Keystone XL pipeline.
The Senate bill states Obama could refuse to permit the pipeline to be built if he “determines that the Keystone XL pipeline would not serve the national interest.”
In his statement Thursday McConnell said, “House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms. These goals are not mutually exclusive.”
He said, “Leader Reid should appoint conferees on the long-term bill and the House should pass an extension that locks in the thousands of Keystone XL pipeline jobs, prevents any disruption in the payroll tax holiday or other expiring provisions, and grants Congress to work on a solution for the longer extensions.”
Earlier Thursday, House Speaker John Boehner told reporters that “a one-year bill … is simply better for jobs and better for our economy. A one-year bill provides on average about $1,000 for American workers, as opposed to the Senate bill which would provide a measly $166. As importantly, a one-year bill would provide certainty for American employers as they start to plan for next year.”
House Majority Leader Eric Cantor stated Obama and GOP leaders could probably resolve their differences “within an hour.”
He said, “there’s not a huge difference between our positions – it all comes down to the ‘pay-fors’ (and) the budgetary impact of the extension of the tax holiday.”
Cantor added, “I saw the president out yesterday doing his Christmas shopping. I saw he brought his dog with him. We’re here. He can bring his dog up here – we are pet-friendly.”
Both the House and Senate bills would also extend unemployment insurance benefits and prevent a almost 30 percent cut in Medicare’s payments to doctors.
The cost of House bill would be offset by requiring higher-income people to pay more for their Medicare coverage and by extending through 2013 a cost of living freeze on the pay of federal employees, including members of Congress.
The Senate bill would be offset by higher fees on home mortgages guaranteed by federally backed Freddie Mac and Fannie Mae.
Most congressional Democrats would prefer to pay for a one-year extension of the payroll tax cut and unemployment benefits by imposing a 1.9 percent surtax on income above $1 million a year, but Republicans have rejected that as a burden on small business owners.
The payroll tax cut is intended to provide a stimulus to the sluggish economy, which is growing at less than a two percent annual rate, but Douglas Elmendorf, the director of the non-partisan Congressional Budget Office, told the Senate Budget Committee in testimony on Nov. 15 that “the majority of the temporary increase in take-home pay” from a payroll tax cut “would be saved rather than spent.”
Elmendorf stated a more cost-effective stimulant to the economy would be increase in unemployment benefits. “Households receiving unemployment benefits tend to spend the additional benefits quickly, making this option both timely and cost-effective in spurring demand for goods and services, and thereby economic activity and employment.”
A worker’s maximum earnings subject to the Social Security payroll tax this year is $106,800. In 2012 the taxable maximum will be $110,100. Roberton Williams, an analyst at the nonpartisan Tax Policy Center in Washington, stated that “60 percent of an extended payroll tax cut would go to households making more than $100,000.”
source : nbcpolitics.msnbc.msn.com
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