Obama proposes 2% cut in payroll taxes

[Elwar]

http://online.wsj.com/article/SB10001424052748704156304576003441518282986.html?m od=WSJ_hp_LEFTWhatsNewsCollection

WASHINGTON—Aides to President Barack Obama are proposing a one-year reduction in the payroll tax as part of negotiations with Congress on a broader package to stave off income-tax increases due to take effect next year.

Under the White House plan, the Social Security tax paid by workers would drop temporarily by 2 percentage points, to 4.2% from 6.2%, a person familiar with the proposal said. For a worker earning $40,000, the tax savings would be $800.

The proposal has not won the approval of congressional Democrats or Republicans. Its emergence in the broader tax negotiations is a sign that the White House is trying to break the logjam on those talks before the end of the year, when tax cuts signed into law by former President George W. Bush are due to expire.

White House officials proposed the cut as a way to stimulate the economy, said the person familiar with the talks. The proposal would take the place of an earlier White House push to extend Mr. Obama's signature Making Work Pay tax cut, which reduced income taxes for middle-income individuals by $400 a year.

Republicans had adamantly opposed extending Making Work Pay, and House Democrats were cool to it, as well. But Mr. Obama and Democrats are likely to accept a Republican demand that the Bush-era tax cuts be extended even for wealthy taxpayers, and the White House is looking for more in return for agreeing to extend the cuts for higher earners.

[forsmant]

I like it! Lets make it permanent!

[qh4dotcom]

I like it! Lets make it permanent!

Oh dear, you don't think taxes are still going to be way too high even after this tiny tax cut?

[forsmant]

of course I do. But goverment doesn't slash taxes. In reality this is a victory, just like the bush tax cuts.

800$ per year translates into 67 $ a month. Thats a utility bill.

[QueenB4Liberty]

I like it! Lets make it permanent!

Here Here! I'll take what I can get for now.

[Rael]

Isnt that more like a 30% drop

[MRoCkEd]

I knew he was a libertarian!

[oyarde]

Here Here! I'll take what I can get for now.

YES , THAT would pay my phone bill .

[Austrian Econ Disciple]

Lol. White House officials are fucking stupid. They lower taxes, yet extend unemployment for another 13 months. Why on Earth would any of the people on unemployment seek a job for the next year? They won't. Absolutely moronic. These tax breaks won't do much to increase employment (in fact, the effect is negligible at best for something so small), and whats worse is that spending is going up even more. Well...QE2, more massive spending and entitlements, etc. What's not to love?

[cindy25]

it will be permanent, and is the beginning of the end for Social security. Obama has made a huge blunder. Even Reagan didn't try this-Reagan raised Social security taxes.
It will be the first cut EVER in Social Security taxes, and no way will anyone ever try to raise it again. Obama's finest hour.

and it's not a 2% cut, but a 4% cut, because the "employer share" will also be cut 2%.

[forsmant]

what are your sources on that?

[malkusm]

Uh, guys? This is a horrible decision. The tax cut is for one year only, meaning it's going to do exactly NOTHING with respect to job creation. Companies are not going to change their behavior and hiring decisions based on such a small, short-term change.

This is pandering to score political points at its finest. Don't buy it.

[forsmant]

Not like I;m going to vote for him. But come on. This is a tax cut however briefly.

[oyarde]

it will be permanent, and is the beginning of the end for Social security. Obama has made a huge blunder. Even Reagan didn't try this-Reagan raised Social security taxes.
It will be the first cut EVER in Social Security taxes, and no way will anyone ever try to raise it again. Obama's finest hour.

and it's not a 2% cut, but a 4% cut, because the "employer share" will also be cut 2%.

You think it will get through the senate ? I do not see that part of the bill making it through there ?

[cindy25]

You think it will get through the senate ? I do not see that part of the bill making it through there ?

if Obama wants it, Reid will support it. business will back it.
Republicans will back it. at least 7 of them, and probably most.

they don't see it as death knell for social security

no way will they ever let it expire, 2012 is election year so another extension. maybe cut another 1%. nudge to extinction.

[puppetmaster]

100%.....payroll tax cuts are what we need

[oyarde]

100%.....payroll tax cuts are what we need

If they had suspended Fed payroll tax for , say , nine months or so when the recession started , it would have recovered , I think .

[HOLLYWOOD]

If they had suspended Fed payroll tax for , say , nine months or so when the recession started , it would have recovered , I think .

It's a fact through history, you put the money back in the people's pockets, the economies flourish, but 2% is another lab experiment in futility.

Remember after 9/11. George Dubya Bush secretly begged citizens to go out and spend, go on vacations, consume. This was all to stimulate the economy, then the fed and government pulled their circus stunts with bailouts to airlines, cities, states, easy credit and low interest rates, never realizing the repercussions down the road.

These knucleheads in government and the banks don't realize that government is Too Damn Expensive. America can't compete with high restrictive taxes and the most expensive government, compound that with labor rates and slave labor hours to compete against. Add the absolutely ridiculous secondary tuition/schooling costs to learn garbage courses/degrees... it's a done bad deal.

Ka-Boom down the road...

[oyarde]

It's a fact through history, you put the money back in the people's pockets, the economies flourish, but 2% is another lab experiment in futility.

Remember after 9/11. George Dubya Bush secretly begged citizens to go out and spend, go on vacations, consume. This was all to stimulate the economy, then the fed and government pulled their circus stunts with bailouts to airlines, cities, states, easy credit and low interest rates, never realizing the repercussions down the road.

These knucleheads in government and the banks don't realize that government is Too Damn Expensive. America can't compete with high restrictive taxes and the most expensive government, compound that with labor rates and slave labor hours to compete against. Add the absolutely ridiculous secondary tuition/schooling costs to learn garbage courses/degrees... it's a done bad deal.

Ka-Boom down the road...

That budjet they have now is too expensive . Period . You are correct .

[sluggo]

Lol. White House officials are fucking stupid. They lower taxes, yet extend unemployment for another 13 months. Why on Earth would any of the people on unemployment seek a job for the next year? They won't. Absolutely moronic. These tax breaks won't do much to increase employment (in fact, the effect is negligible at best for something so small), and whats worse is that spending is going up even more. Well...QE2, more massive spending and entitlements, etc. What's not to love?

My Congress critter just sent out three emails in two days.

The first bragged about supporting legislation that would eliminate paper bills for the Congress, with all bills being in electronic form only. Savings of $35 million.

Next day he sent out an email bragging about his support of some kind of school lunch program. Cost $4.5 billion.

The same day, he sent out a letter explaining that he is committed to doing anything necessary to help the U.S. get out of the "recession."

Do they even understand the shit they do?

[oyarde]

My Congress critter just sent out three emails in two days.

The first bragged about supporting legislation that would eliminate paper bills for the Congress, with all bills being in electronic form only. Savings of $35 million.

Next day he sent out an email bragging about his support of some kind of school lunch program. Cost $4.5 billion.

The same day, he sent out a letter explaining that he is committed to doing anything necessary to help the U.S. get out of the "recession."

Do they even understand the shit they do?

I read about that evil 4.5 billion crap bill .

[oyarde]

Dept of agriculture will decide how many bake sales the kids can have .

[oyarde]

They expect to provide 20 million meals with that 4.5 billion. What does that come out to a meal ? My calculater will not go that high .

[sailingaway]

This will make SS and medicare that much harder to fix, note. Mind you, I think they should take the bull by the horns and deal with it, but they aren't, and now they are reducing the 'funding stream'.

[HOLLYWOOD]

That budjet they have now is too expensive . Period . You are correct .

They know it, they don't care... no one being in the depression fight this long can say it's anything else. Government and their master banks are Never in a Depression. When you do the math .gov is the GDP now and then add up all the bullshit government sucking machine at all levels, the US for Middle and Upper Middle classes are done.

I just saw the stats on Production/Manufacturing job in the US... there are now LESS of those producing jobs now with ~310+ Million citizens than in 1940 with ~132 million.

A DISASTER

[Fox McCloud]

They expect to provide 20 million meals with that 4.5 billion. What does that come out to a meal ? My calculater will not go that high .

$225 per meal if your figures are correct.

granted, there's administrative costs, distribution, labor, etc...but $225 per meal is still insanely high (again, if your figures are accurate).

[oyarde]

$225 per meal if your figures are correct.

granted, there's administrative costs, distribution, labor, etc...but $225 per meal is still insanely high (again, if your figures are accurate).

Well the figures came out of the bill if bill is still same .

[oyarde]

$225 per meal if your figures are correct.

granted, there's administrative costs, distribution, labor, etc...but $225 per meal is still insanely high (again, if your figures are accurate).

Whoever thought I would need a calculater that goes to billions and trillions ??

[cindy25]

100%.....payroll tax cuts are what we need

learn from the socialists, social security started at 1% and gradually was hiked; has to be phased out gradually. a benefit cut here, a raise in retirement there, a payroll cut there, and soon its gone.

[mczerone]

Pros: A tax cut is good. Less burdens on employers. More money resting with the consumers.

Cons: Spending is not going to be reduced, so revenue from other sources will be ramped up (e.g. Treasury bonds, monetary policy). The cut is marginal to the point of being insignificant. And the biggest Con of them all, When the economy continues to do poorly, these tax cuts will be the scapegoats (e.g. "well we tried cutting taxes, and that didn't fix things, so the obvious solution is to have a massive tax increase!").