Is The GOP Really Willing to Sabotage the Economy to Protect the Wealthy & Hurt President Obama?
By THE PROGRESS REPORT
As a reminder, here’s how Senate Minority Leader Mitch McConnell (R-KY) described his priorities:
The single most important thing we want to achieve is for President Obama to be a one-term president.
A few weeks ago, we took a closer look at polls showing that fully half of Americans believe the GOP is sabotaging the economy on purpose to make sure that President Obama is not re-elected. We concluded thusly:
If Republicans don’t want the American people to believe they’re trying to sabotage the economy just to stop President Obama from being reelected, they can easily dispel this notion by starting to cooperate with President Obama and Democrats to pass bills that will put millions of Americans back to work.
Yesterday, we discussed the payroll tax cut extension and expansion the Senate will vote on later this week. Today, we’ll take a closer look at the economics behind it — and why it would be devastating for the economy and tens of millions of Americans if Republicans block this must-pass legislation in order to achieve their other main goal: protecting the wealthiest Americans at all costs.
(Tune in tomorrow for a look at an equally important must-pass piece of business: an extension of long-term unemployment benefits.)
Payroll Tax Cut Extended & Expanded: Jobs, Money In Your Pocket, Economic Growth
* Macroeconomic Advisers: Payroll Tax Cuts Could Create More Than 50,000 Jobs A Month. “Preliminary analyses of the White House plan estimate that the tax cuts could create more than 50,000 jobs a month, a significant boost considering that employment climbed by 35,000 jobs, on average, in each of the last three months… Joel Prakken, senior managing director at Macroeconomic Advisers, a forecasting firm, said that the benefits of creating more than half a million jobs next year should not be minimized. ‘It’s going to make the unemployment rate lower than it otherwise would be,’ he said.”
* Ameriprise Financial Economist: Payroll Tax Cut Will Add More Than 1 Million Jobs. “This additional spending capacity in the hands of consumers should continue to foster improvements in aggregate domestic demand. And ultimately, it is demand and demand alone that will lead to more business hiring,” said Russell Price, senior economist for Ameriprise Financial Services. “Price estimates the increased payroll tax holiday for workers by itself is likely to add between 750,000 to 1 million jobs, and that the new break on payroll taxes for employers could add an additional 100,000 to 200,000 jobs. He added that gross domestic product, the broadest measure of the nation’s economic activity, could get a 1.5 percentage point boost as well.”
* Decision Economics Economist: “Payroll Tax Cuts Are Very Powerful.” “Payroll tax cuts are very powerful,” said Allen Sinai, chief economist of Decision Economics. “They provide a boost to direct income and, in turn, spending, which is important to growth.”
* Former McCain Adviser Mark Zandi: Payroll Tax Cut are “Much Needed.” Mark Zandi, chief economist at Moody’s Analytics, called the payroll tax cut for employers a “creative” way to help small companies, which have struggled more than larger ones to recover from the Great Recession of 2007-2009. “Something like this is much needed” for an economy grappling with 9.1 percent unemployment, Zandi said. “The economy is on the edge of recession.”
Payroll Tax Cut Blocked by GOP: The Economy Drops Like a Stone
An analyst from Barclays was on Bloomberg TV this morning. Here’s what he had to say about the consequences of blocking an extension of the payroll tax cut:
One of the things that we’re watching is the payroll tax extension and the signals that we’re getting from Washington as to whether we get that extension. Because if we don’t, our growth forecast frankly will probably be dropped down from about 2.5 percent in Q1 down to around 1 percent. It’s that big.
The Cost to the 1%: Virtually Nothing; The Benefit to the 99%: Massive
Greg Sargent at the Washington Post got some new data today from Citizens for Tax Justice. Here’s what they told him about the surtax on millionaires that would finance the payroll tax extension for approximately 160 MILLION working Americans:
The surtax would impact around 345,000 taxpayers, roughly 0.2 percent of taxpayers, or one in 500 of them. Those people would pay on average an additional 2.1 percent of their overall income, or just over 1/50th of that overall income, in taxes.
In a majority of states, only one-tenth of one percent, or one in 1,000 taxpayers, would pay this surtax.
And how many people would benefit from the payroll tax cut? According to the group, around 113 million tax filing units — either single workers or families that include more than one worker — would see their payroll tax cut extended. That’s a lot of people — well over 113 million workers, in fact.
Michael Tomasky sums it up pretty well over at the Daily Beast:
Every blessed once in a great while, all artifice is stripped away, rhetoric collapses under the weight of its own absurdity, and we get to see things as they really are. Such will be the case later this week when the Senate tries to vote on extending the payroll-tax holiday. The Republicans will oppose it—that is to say, the Republicans will support a tax increase on working Americans. And why? Because the Democrats want to pay for it with a small surtax on the very top earners. So the choice couldn’t be more direct: which is more important, giving the middle class a tax cut or protecting those who make more than $1 million a year? Republicans are making it clear. […]
Two, extending the holiday will help the economy at a moment when Republicans are now very clearly trying to hurt the economy. This is not even a controversial thing to say anymore, it’s so obvious. And three, now there’s a price tag on it; it has to be paid for in some way, and that way is a surtax on super-high incomes. And this above all is what the GOP cannot accept.
IN ONE SENTENCE: This week’s Senate vote will illuminate the top priorities for both sides: progressives want an economy that works for everyone which means that the wealthiest Americans will have to pay their fair share, while conservatives appear willing to do nearly anything to protect the wealthy and hurt President Obama.