Payroll tax deadlock could hobble economy
December 20th, 2011
02:33 PM ET
3 years ago

Payroll tax deadlock could hobble economy

NEW YORK (CNNMoney) - If Congress fails to pass an extension of the payroll tax holiday, it would put a serious dent into economic growth in 2012 and could even help tip the U.S. back into a recession, according to economists.

Economists surveyed by CNNMoney on Tuesday said that gross domestic product, the broadest measure of the nation's economic health, could be about 0.4 percentage points lower in the first quarter if Congress doesn't extend the measure which lowered payroll taxes this past year.

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Filed under: Congress • House • Senate • Taxes
soundoff (29 Responses)
  1. Four and The Door

    "Temporary tax breaks, or tax rebates, do not help the economy," said Brian Wesbury of First Trust Advisors. "The money that is provided in the tax cut must be borrowed from somewhere else. Either way, it is not left in the private sector."
    _____________________________________________________________________________________________
    Let's be honest here. Obama doesn't want to see a tax cut expire leading into the General Election. It's a political thing.

    December 20, 2011 02:40 pm at 2:40 pm |
  2. NVa Native

    Real simple question for the simple minded ~
    So if tax cuts for the rich and deregulation to benefit for-profit corporations will create more jobs and a stronger economy why did they result in the opposite – 8 million jobs lost and Great GOP Recession that we still haven’t recovered from – during the eight years of Dubya & Dick???
    Is it that Dubya & Dick were even more of a failure than we realize?

    December 20, 2011 02:41 pm at 2:41 pm |
  3. ja

    america need to recall those who oppose the cut, freeze their pay, the same folk allowed america to sink on their watch talk about paying for the tax cut

    December 20, 2011 02:43 pm at 2:43 pm |
  4. Charlie in Maine

    Payroll tax deadlock could hobble economy:

    And do you wonder why the tea-pardiots are causing it? It is more importeant to them that the President fail than that the economy succeed.

    What is this trickiling down on us? It taste like a mixture of BS and bad tea.

    To those saying "Four and the Door" I say "Swo and the Shoo" get these flies out of the oinment. The tea partt's 15 minutes is way over. Note to "Occupy Wall-street" your protests are well and good but unless you "Occupy the ballot box", we will get more of the same from congress and maybe a Prez Gingrich.

    December 20, 2011 02:49 pm at 2:49 pm |
  5. Truth and Nothing But the Truth

    Are we REALLY in a recovery if it is being propped up by temporary gimmicks like this "tax holiday"??? Just more Obama/Democrat smoke and mirrors tpo try and con the American people that their policies are working. If they honestly think this is helping the economy then maybe we should just not collect ANY social security taxes and we"ll immediately shoot up to 5% growth a year. I'm sure "the rich" can afford to pay for it, or the retired people can do without their monthly checks.

    December 20, 2011 02:50 pm at 2:50 pm |
  6. Peggy - TX

    Yes please be honest , for a chnage – Republicans know that their failure to extend the tax rebates will immediately and negatively affect the economy... Regardless of what one economist on the payroll of the Teatards states with false authority, it is just common sense that significantly lower paychecks received by a the large number of hardworking middle class people struggling with inflation and low wages will directly result in less spending. We know that small variations in the price of gas quickly affected Wal-Mart’s bottom line and that is just one of many available empirical ways of measuring such an effect.

    For the tea tard Republicans it a win, win regardless of the outcome They can threat to default the government, shut it down or bust the economy because they do not care … so they can use the economy and middle class as hostage to acheive their evil ends ….. this time the Dems must not cave

    December 20, 2011 02:55 pm at 2:55 pm |
  7. Gino Martell

    The GOP continues to play games with our economy. Independents will not forget come election time.

    December 20, 2011 02:59 pm at 2:59 pm |
  8. Sniffit

    "Let's be honest here. Obama doesn't want to see a tax cut expire leading into the General Election. It's a political thing."

    Of course it is. What's got your panties in a bunch is that the right thing and the political thing coincide and work in Obama's favor here. The right thing: extending the cuts so that demand doesn't drop precipitously and hamper recovery. The political thing: as explained in various writings by the Founding Fathers, doing the thing that will have the most benefit for the most people, who will then vote for your re-election, i.e., election as the nexus between your interests and the public's. Here, they are one and the same and both work in Obama's favor. That really REALLY makes the GOP/Teatrolls angry (and scared), which is why they are desperately seeking a way to poison the legislation with items from their ideological wishlist...maybe laying off 200,000 federal employees or maybe defuunding the ACA...so that the middle class doesn't just feel elated at the continuation of their tax cut, but also feels a pinch from somewhere else to counterbalance it and, they hope, maybe the progressives get more angry at Obama for "caving" if they can force him to let them have something the left/liberals abhore.

    BTW, cherry picking the quote from the one guy CNN could find who was quoted as not fully agreeing with the rest of the economists out there...not the best argument strategy.

    December 20, 2011 03:01 pm at 3:01 pm |
  9. NVa Native

    Hey baggers – no matter how many times you arrogantly repeat the GOP ignorant re-write of history the only people gullible enough to believe the lies already do. Just re-bleating your lies won’t make them magically come true, except for the sheeple who follow fox.

    December 20, 2011 03:01 pm at 3:01 pm |
  10. rs

    It is backbone time, Democrats. If the middle class lose their tax cut- end the bush cuts for the wealthy. Also- time to start hearings about the damage the GOP/TP is doing to the American (if not the world's) economy. Jail the economic terrorists!

    December 20, 2011 03:04 pm at 3:04 pm |
  11. ..a laurel and hardy handshake..

    Hey Ollie, what advice would you give to those that want to see an END OF THE TEA PARTY ?
    .
    Well Stan, it's like this:
    1 – GET YOUR PHOTO IDs or YOUR STATE-REQUIRED VOTER's IDS.
    2 – GET YOUR VOTER's REGISTRATION CARDs.
    3 – and GET YOUR VOTE READY TO CAST FOR PRESIDENT BARAK H. OBAMA's RE-ELECTION !

    December 20, 2011 03:05 pm at 3:05 pm |
  12. DA

    What is it these guys don't get, when you have some money in your pocket, you don't like it taken away. I guess they don't really give a crap or they know something that we don't know, but I know right now the Republicans are all out of a job come next year!! LOL...they are just really stupid!!

    December 20, 2011 03:05 pm at 3:05 pm |
  13. Sniffit

    "Is it that Dubya & Dick were even more of a failure than we realize?"

    Not really. As far as they and the GOP/Teatrolls are concerned, Dubya and Cheneybot accomplished their mission: the GOP/Teatrolls now have all the manufactured superficial justification they could ever have hoped for to demand the death of Medicare, SS and various regulatory bodies that they're wealthy backers don't like...or that have become a social inconvenience for doing things like standardizing education so that we don't have grown adults (or at least not as many) running around thinking the planet it flat, 6,000 years old and that we magically appeared from nowhere when some invisible dude in the sky waved his pinky and said some magic words.

    December 20, 2011 03:07 pm at 3:07 pm |
  14. Mikey

    @Four – We can have dueling economists because you can find one that says anything you want. Let's be honest here, short term stimulus can help the economy get healthier in the short term so it can become strong enough to absorb the revenue requirements later. One of the tragedies of the Bush years, was that we took budget surpluses, cut taxes, increase spending dramatically, and never attempted to raise revenue (taxes) when the economy was good.
    Let's also be honest here, like the rest of your right wing buddies, you would be happy to sacrifice the financial well being of the majority of Americans if it means harming the President politically. America first? LOL

    December 20, 2011 03:07 pm at 3:07 pm |
  15. Sandy

    This will cost me $100 a month! That money can pay one of my bills!

    Please vote all republicans out of office. Get them out of our government!

    December 20, 2011 03:13 pm at 3:13 pm |
  16. Rudy NYC

    Four and The Door wrote:
    Let's be honest here. Obama doesn't want to see a tax cut expire leading into the General Election. It's a political thing.
    ---------------
    Let's get it right, here and now. Republicans do not want to see him get a tax cut extension. And, Obama would love just it for the Republicans to block Democrats from getting it passed, especially if Republicans scream about paying for it. Oh, but they're doing that already, though. Aren't they?

    December 20, 2011 03:14 pm at 3:14 pm |
  17. Truth and Nothing But the Truth

    Republicans know that their failure to extend the tax rebates
    ===============================================
    What's with this repeated lie??? Republicans want to, AND DID, extend them for ONE YEAR!! Why aren't you asking, "Why do the Democrats want to extend them for only TWO MONTHS?"???!!!

    Honestly, libtards and Democrats need to start living in the REAL WORLD. Obama wanted them for a year! The Republican House GAVE THEM to him!! The Sneate Democrats and workless Harry Reid SAID NO, we'd rather play politics and screw the American people.

    December 20, 2011 03:18 pm at 3:18 pm |
  18. The Greedy Old Pigs have declared class war on US!

    What a crock. Negotiations didn't work with the deficit reduction committee. Here's a better idea, Mr. Orangeman: how about you and your elitist bootlickers start paying attention to the US public! A huge majority wants an end to the tax cuts for the filthy rich and a new millionaire's surtax. More than half of the 1%ers agree with this as well. So now it is quite clear and obvious to all that your greedy little deathcult is bought and paid for by a hidden elite that is un-American and working against the better interests of our nation. That makes the GOBP a cowardly bunch of traitors.

    Bottom line: These vile traitors in the GOBP deathcult WANT to hobble the economy. They care nothing about us.

    December 20, 2011 03:22 pm at 3:22 pm |
  19. Jules

    Let's understand one thing here, it is apparent that the GOP does not want the economy to improve under the Obama Presidency and they don't care who sufferes because of their political will. Stand up to them, Mr. President. The senate should refuse to come back and just let the house members sit there, if that is what they want. They can all have their own type of Grinch Christmas in Washington. The reason not passing this hurts the economy is because the people who need this the most put every dime they have back into the economy. 160 million people at $1,000 each is a lot of money flowing into the economy over the next couple of months. The GOP knows if they can derail this, then the economy will suffer. These are some really nasty, uncaring people known as the so called "Christian Right." Truthfully they are the hatefilled wrong.

    December 20, 2011 03:28 pm at 3:28 pm |
  20. 1crusader

    This is a critical time, and the economy is making some improvement.If the GOP cares anything about the average American , they need to live by their own mantra ; and keep this tax cut in place, instead of looking for ways to foil the president.

    December 20, 2011 03:29 pm at 3:29 pm |
  21. Truth and Nothing But the Truth

    NVa Native

    >Real simple question for the simple minded ~ So if tax cuts for the rich and deregulation to benefit for-profit corporations will create more jobs and a stronger economy why did they result in the opposite – 8 million jobs lost and Great GOP Recession that we still haven’t recovered from – during the eight years of Dubya & Dick???

    A real simple answer for the simple minded people that keep ask this inane question: Because they are NOT related.

    "Tax cuts for the rich" were tax cuts for EVERYBODY THAT PAID TAXES. Many millions of which are NOT "rich". It lead to over 50 months of record economic growth.

    The financial market crash was set up years before Bush ever took office. It was allowed to fester and grow for decades, even though George Bush had warned about the dangers of Fannie Mae and Freddie Mac. Did you happen to notice who the FIRST people were that have been charged??? Fannie Mae and Freddie Mac execs! Both of these quasi-government agencies were the darlings of the Democrats. They were protected and encouraged for years by the Democrats. But I doubt that Barney Frank will spend one day in jail, though he should.

    December 20, 2011 03:32 pm at 3:32 pm |
  22. Scott O' Canada

    I'm as fiscal conservative as you'll find anywhere. But the only terrorists you have to worry about at the moment is the current incarnation of the Republican Party. If I didn't know any better (and I quite often don't), I would assert that they collectively have an agenda to bring American to the abyss. Seriously.

    December 20, 2011 03:33 pm at 3:33 pm |
  23. Wire Palladin, S. F.

    truth blah blah – the economy was far more fragile than the idiot from Texas led us to believe. We were led to believe that the the GDP was -2.9% when in reality, it was -8.9%. In spite of the GOP destroying America, the economy has turned around. Even though billionaires are not adding to the growth by buying products, the middle class is putting their money back into the economy by buying goods.

    December 20, 2011 03:36 pm at 3:36 pm |
  24. jim

    Four on the floor ...

    MCCONNELL: The single most important thing we want to achieve is for President Obama to be a one-term president.

    What about America? Oh, It's a political thing.

    December 20, 2011 03:42 pm at 3:42 pm |
  25. Rudy NYC

    Truth somebody wrote:

    "Tax cuts for the rich" were tax cuts for EVERYBODY THAT PAID TAXES. Many millions of which are NOT "rich". It lead to over 50 months of record economic growth.

    The financial market crash was set up years before Bush ever took office. It was allowed to fester and grow for decades, even though George Bush had warned about the dangers of Fannie Mae and Freddie Mac.
    -------------
    You are just as good at rewriting history as Mr. Gingrich. Glass-Steagall was repealled just before Bill Clinton left office, nothing was "allowed to grow and fester for decades." The S&L Crisis was less than a decade before Bush was sworn in. The Bush Tax Cuts were for the wealthy, which is why he had a second round of them. Not only did the Bush give the middle class a few crumbs, he gave out another massive tax cut to the wealthy.

    Like every "trickle down tax cut" that has ever been enacted on the federal level, Wall Street went into a feeding frenzy for six years. Wall Street saw record economic growth. The middle class saw record economic stagnation as 40% of our manufacturing jobs left the country for good and real middle class incomes declilned.

    December 20, 2011 03:48 pm at 3:48 pm |
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