Friday, November 16, 2012

"Not a Single Dime" Versus 10,000 Dimes

    Even as the White House continues to champion the cause of the middle class, the average middle class family will be facing a $1,000 tax increase effective January 1, 2013.  The front page of the White House website urges citizens to contact Congress to "Pass the Middle Class Tax Cuts," but this is doubly deceiving.   President Obama is simply planning to maintain current federal tax rates on those making under $250,000; there is no "tax cut" to be passed.  And on top of this, none of the proposals from the White House currently includes extending the Social Security payroll tax holiday that was instituted for 2011 and 2012.  This means a family making $50,000 a year will see a $1,000 decrease in take home pay beginning January 1st no matter what.  

    The last time I can find a record of the administration being asked about the payroll tax holiday was on October 27, 2012.  Deputy Press Secretary John Earnest was asked the following aboard Air Force One [emphasis added]:
Q    Josh, is the White House crafting an alternative to the payroll tax cut, as The Washington Post reported this morning?
MR. EARNEST:  I saw the -- I read The Washington Post story today.  I can tell you that the report is not correct -- the administration is not contemplating at this time a tax cut as the way that it’s described in the Post.
     What I can tell you is that when the President ran for office in 2008, one of the central planks of his agenda was cutting taxes for middle-class families.  That's a promise he made good on.  Middle-class families over the course of the President’s first year [term] in office have enjoyed a tax cut of about $3,600. [see here for more on this]
     Moving forward, the President does believe that cutting taxes for middle-class families is an important part of his economic agenda.  It’s something he’ll continue to push for.  And if we see Republicans in Congress sharing the same commitment to cutting taxes for middle-class families that the President has, then the House will do what the Senate has done, and that's to extend tax cuts for middle-class families.  In fact, it will actually cut taxes for 98 percent of American families, 97 percent of American small business.
That's something that we should all be able to agree on pretty quickly.  It’s a way that would provide certainty to middle-class families all across the country.  And it’s exactly in line with the President’s -- with the emphasis that the President has placed on reducing the tax burden for middle-class families.
     Q    Given your emphasis on the phrase "as described," is there something new in the works?
     MR. EARNEST:  I’m not trying to be clever.  I’m trying to be as clear as I can, which is to tell you that that Post report today is not correct.
What is accurate is the President does believe that we should have as our priority tax cuts for middle-class families.  There are a variety of ways to do that, and it’s something that the President will continue to push for.  The most important way right now, in the President’s view, is to extend the Bush tax cuts for middle-class families.  That's something the Senate has already done.
And again, if Republicans do share the priority that the President has for cutting taxes for middle-class families, then what they’ll do is they will come back into session, either before Election Day or right after, and move quickly on legislation that the Senate has already passed, to pass tax cuts for middle-class families and 97 percent of small businesses.
    Mr. Earnest, in spite of his protestations to the contrary, indeed does appear to be trying to be clever. He continues to imply that the middle class will receive additional tax cuts rather than just an extension of current rates, and he ignores the clear implication that the payroll tax holiday will expire resulting in higher taxes not only for the middle class, but all wage earners as even the wages of the poor are subject to social security taxes.

    I have written extensively (most recently here) on the White House's What $40 Means campaign that was used to push through the payroll tax holiday last year.  This year, the silence from the White House is deafening on this issue, and despite this week's press conference with the President, the media have been relatively silent as well.  The President at his press conference even briefly mentioned the payroll tax holiday ("payroll tax extension") but only as a reference to what was done in the past.  However, he delivered the following whopper relative to middle class taxes in 2013:
Step number one that we can take in the next couple of weeks, provide certainty to middle-class families -- 98 percent of families who make less than $250,000 a year, 97 percent of small businesses -- that their taxes will not go up a single dime next year.  Give them that certainty right now.  We can get that done. 
     Unless the payroll tax holiday is extended in 2013 or replaced before the end of the year with a comparable cut, the average middle class family certainly will see their taxes go up to the tune of 10,000 dimes.  As I have noted, the Republicans are not excited about extending the payroll tax either, and perhaps this is one reason the GOP is not calling attention to White House hypocrisy on this issue.  But there is no excuse for the press to allow the President to get away with this.  If by some miracle a compromise is achieved before December 31st and the country finds itself able to back away from the dreaded "fiscal cliff," the middle class is going to be rather shocked to find they will still come up $1,000 short in 2013.  Perhaps then we'll all find out what $40 means.

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