Extending Payroll Tax Holiday for the 99%

The Payroll Tax Holiday is set to expire next month and precious take-home pay for the middle class will increase unless Congress acts. The failure to restore the unemployment benefits and the tax holiday will cause the economy to collapse by hundreds of billions of dollars and will most certainly mean less job creation at a time when 14 million Americans are out of work. This should be a no-brainer.

The idea behind this is that as the middle class typically spend almost 100% of what they make, the increased take-home pay will go directly into the economy. This will of course increase demand and where there is demand, there are jobs. We also know according to CBO, for every dollar spent on unemployment benefits - $2 are added to the economy. The best stimulus we know of. Not only are these benefits the smart thing to do doing a severe economic downturn, but it's also the humane thing to do. For millions of Americans, these benefits are there the only thing from keeping them off the streets.

The Republican Party seems so completely out of touch with the reality of the America we live in. Their rhetoric is always one that these unemployed simply aren't looking for jobs, that we're making them lazy while they are "living large" on a couple hundred bucks a week. This couldn't be further from the truth.

While we have seen job creation every month for the last few years, unemployment remains over 8%. Economists agree that we need net job creation of 250-300,000 per month to restore full employment as well as keep pace with population growth. That is a far cry from the 100,000 jobs we have averaged.

Recently, Republicans blocked a bill to extend the payroll tax cut and unemployment benefits because it asked to add a surtax of 3.25% on all income over $1 million.
The interesting thing here is of course that Republicans always insist that tax cuts pay for themselves and whenever they cut taxes they never seem to have to "pay for them." Or course, since this is a Democrat plan, things are different but so be it.

Let's just break this down a bit. First off, the GOP would rather see taxes increase on 160 million Americans because we'd modestly increase taxes on 300,000 millionaires & billionaires. You've got to be fucking kidding me. This is the "Party of Tax Cuts" for fuck's sake!! This is clearly a line in the sand drawn by the Republican Party that they are representing the 1% and not the so-called 99%. Let's be clear about this tax increase too. People often think that this means if you make over a million that all your taxes increase 3%. Not true! That is what marginal tax rates mean.
The first million is taxed at standard rates and income OVER a million is subject to the surtax. This means that if you make say $1.1 million a year - your taxes increase by $3,000. That would mean that your taxes increase like 0.3% I guess that's not so Communist after all huh.

Secondly, Democrats & Republicans claim that reducing payroll taxes will lower the Social Security Trust fund. NOT TRUE! Under the plan, the shortfall would be paid to the SSA from the General Fund. The payroll taxes are simply the vehicle in which we would be increasing employee take home pay. This is far more effective than using a tax credit system. When people have more take home pay on a regular basis, they're more likely to go out and spend that money and help the economy expand. Getting a bigger refund at the end of the year usually goes to savings or paying down debts. Which is not a bad thing, but the point behind the tax cut is to expand the economy and create jobs.

No, this may not be sustainable over a long period of time, but over the past few decades the top 1% continue to take a bigger and bigger slice of the economy. In order to have the same purchase power that you did in 1980 for instance, you would need to earn an average of $12,000 more per year than you do now. Over the last 30 years, the average household income increased 18%. The top 1% increased 275%! Until we can come up with a solution to the income in-equality in America, we should be adopting policies that can increase take home pay for the working middle class. As history suggests, the stronger the middle class, the stronger the overall economy does, more jobs are created, tax revenues increase and even the rich do better.

If we look to Europe which has adopted all sorts of Austerity packages aimed at reducing sovereign debts, we see that these policies are stifling economic growth, increasing unemployment and further reducing tax revenues, which means they have to cut spending even more to cover the revenue shortfall and this vicious cycle goes on and on.

A second round of stimulus would be Dead on Arrival in Congress so the most we can hope for is some middle class tax relief which the GOP always seem to be on board with. And sure enough, because Obama wants this to happen, they have to be against it. It's almost as if they hope the economy continues to suffer so Obama won't be re-elected.

The Republicans continue to pounce on Obama over "failed economic policies" while at the same time they are pushing an agenda that got us into this mess in the first place.

Historians overwhelmingly agree that FDR was are country's greatest president. It took FDR his entire presidency to recover from the Great Depression. I'm so sorry the black guy couldn't do it in two years.

Reading "This Time is Different - 8 Centuries of Bank Failures" suggests that this could take a generation or more to recover employment. Bold action is necessary.. Not austerity, de-regulation or eliminating Social Programs.