Prospects Brighter for Longer Term Payroll Tax Cut

Posted on January 10, 2012. Filed under: Uncategorized | Tags: , , , , , , |

By Scott Orr

Last month’s stronger than expected economic news did more than buoy investors’ spirits and brighten President Obama’s reelection chances, it also improved the chances Congress will act on a longer term extension of the middle class payroll tax cut.

Obama, cautious about sounding too optimistic about the state of the economy, focused instead on the tax cut extension in remarks at the Consumer Financial Protection Bureau where its new director, Richard Cordray, was welcomed.

“We’re making progress. We’re moving in the right direction. And one of the reasons for this is the tax cut for working Americans that we put in place last year,” the president said. “When Congress returns they should extend the middle class tax cut for all of this year, to make sure we keep this recovery going,” he added.

Obama made the remarks as newly released unemployment data showed a December job increase of 200,000 that bested the predictions of analysts and brought the unemployment level down to 8.5 percent, its lowest level in almost three years.

House Republicans were forced to back down on the tax cut issue in late December when some GOP House members defected and pressure from Republicans in the Senate became too great. Still, Congress only agreed to a two month extension, essentially punting the issue into this year.

The measure extended the two-percentage-point payroll tax cut for 160 million U.S. workers and made adjustments to unemployment benefits and Medicare.

With the president pointing to the payroll tax cut as a contributor to recent good news on the economy, the Republicans could be in an even weaker position to try to amend the measure this year.

Still, some House Republicans, like Rep. Allen West of Florida, vowed to continue to fight the tax cut.

“When we get back to D.C., the first House GOP conference, we’re going to have some serious discussions about how do we get ourselves on the same sheet of music, because we really felt that our leadership did not stand against the Senate Republican leadership who kind of sold us down the road,” he said.

Polls have shown increased public anger over congressional dysfunction since the conservative wing in the House, led by newly elected Tea Partiers, began flexing its muscle on a range of issues.

But with the election just nine months away, the GOP can hardly afford to appear as the party of “no,” especially on an issue like cutting taxes.

Turner GPA is a leading D.C.-based national lobbying and government affairs firm dedicated to delivering cutting edge policy advocacy for the manufacturing, defense, aerospace, health and energy industries. Members of our professional policy team can be reached at (202) 466-2511. We are also on the Web at www.turnergpa.com.

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