Our indecisive congress will have to come to an agreement on whether or not to continue the
payroll tax cut and federal unemployment benefits. Both are set to expire at the end of 2011.
Obama Supports Renewing Payroll Tax Cuts
President Obama last week called for extending the cut in payroll taxes. The
President has been campaigning in support for bigger temporary payroll tax cuts. Obama is
pressuring Congress to renew and increase next year's payroll tax cut. Obama claims it will raise
consumer demand and boost the economy. If Congress fails to make a decision by the end of the
year than the payroll tax would return to 6.2%. This would increase taxes on 160 million
working Americans.
Obama claims that not renewing the the pay roll tax cut would mean a tax increase of $1,000 for
the average American family.
Obama said to Congress "Don't be a Grinch, Don't vote to raise taxes on working Americans
during the holidays."
Bipartisan Political Support for Extending Tax Cuts
Considering the fact that elections are just around the corner it would be easy to fathom
bipartisan support for a proposal involving tax cuts. Just ask Bush senior what raising taxes close
to an election campaign did for him. We believe that the payroll tax cut will resume based on this
line of thinking.
Extending Federal Unemployment Benefits
Congress is also debating whether or not to continue federal unemployment benefits. Federal
unemployment benefits kick in after the 26 weeks of state benefits run out. Federal
Unemployment benefits add 73 weeks in high-unemployment states.
Let's Compare the Cost to our Government
Comparing the cost to our Government, extending federal unemployment
benefits for another year would be the more cost effective of the two. According to the
Congressional Budget Office it would cost $44 billion. Renewing the 2% cut in payroll taxes for
one year would cost up to $116 billion.
The President supports keeping Federal unemployment benefits and is campaigning for
increased cuts in payroll taxes in 2012. It is difficult to predict whether or not Congress will
agree with Obama. Lots of room for comments here!!
The will of the people is always well represented during election season isn't it?
What do you think?
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