Reporter Strategizes With Jay Carney at White House Briefing

    At the White House briefing on Monday, an unidentified reporter (pictured on right) asked Jay Carney about the payroll tax holiday, now "back on the table," and how that might impact the White House's current My2K campaign to pressure Congress into passing President Obama's version of the Bush Tax Cuts extension.  Here is the transcript (the exchange begins on the video around 40:13):

Q    Okay.  Second of all, I saw that the Obama administration has put the payroll tax cut extension back on the table in its proposal.  I know that the White House is doing these “my2K” hashtag tweets to engage the public --
MR. CARNEY:  You say that like it’s just the kids.  (Laughter.)
Q    -- but to engage the public in getting involved in the middle-class tax cut.  So why wouldn’t you change it to “my3K” now that you’re putting the payroll tax cut back in it?
MR. CARNEY:  Well, that's a very good question.  And I appreciate the contribution to our communications thinking.  (Laughter.)  The fact of the matter is we have been very clear that we believe unemployment insurance has to be extended, and we believe that all of the provisions that are expiring at the end of the year need to be part of the conversation here and part of the discussion.  And we are interested in payroll tax cut being very much part of that discussion...
Q    What about the hashtag?
MR. CARNEY:  Well, I’ll bring that up in our next communications meeting.
Roger.

    The partial tongue-in-cheek nature of the exchange obscures the larger issue.  For weeks now, the Obama administration's narrative has been that if Congress would pass President Obama's tax cut extension, "it means that 98 percent of all Americans, and 97 percent of all small businesses won’t see their taxes go up a single dime." As a matter of fact, the White House has forcefully pushed the idea that the average family will save about $2,000 under the president's plan.  All the while, the expiration of the payroll tax holiday, which takes effect the same date (January 1st) as the Bush Tax Cuts expiration, has been largely ignored by the White House, along with its $1,000 tax increase on the same average Americans that the White House has targeted for its misleading My2K campaign.

    The reporter should have called out the White House and President Obama for the deception and suggested that the campaign should have more accurately been called "My1K".  Instead, she coyly suggested now that the White House is considering extending the payroll tax cut too, it should make sure to publicize that fact by switching from "My2K" to "My3K" and tout a $3,000 "savings" instead of $2,000.  The lack of interest in pointing out such a clear contradiction is astounding.  In this case, the "adversarial press" took a back seat to the "advisory press."  If the Republicans are going to hold the president accountable for this hypocrisy, they are on their own.

President Obama: Every [Other] Dollar is Important

    In view of the president's continued yet veiled intentions to allow the payroll tax holiday to expire at the end of 2012, the latest blog post at BarackObama.com is especially audacious.  The looming expiration of this same tax cut last year brought about the What $40 Means campaign from the White House, wringing stories of the destitution and desperation the loss of $40 per paycheck ($1,000/year for the average middle class taxpayer) would bring.  But this year, the Bush tax cuts have taken center stage, and the president appears ready to allow payroll taxes to increase back to the original level while the audience's attention is focused elsewhere.  Even so, it takes a special kind of nerve to frame the middle class tax issue as the president's team has here:

Middle class taxes: “Every dollar is important”Supporters across the country are joining President Obama in urging Congress to keep taxes low for middle-class families. Here's what $2,000 a year would mean to just a few of the folks who have shared their stories.

    Apparently "every dollar" doesn't include those extra payroll tax dollars that will hit every wage earner effective January 1st.  So, let's revise some of the examples the president has elicited from citizens so far at the White House website on what $2,000 means (revisions in italics):

Stephen, Florida - It could be the difference in sustaining our small family business from one month to the next.  Of course, with the payroll tax holiday expiring, that will make our survival that much more difficult.Sheri, Arizona - $2,000 is the January mortgage payment, February mortgage payment, March car payment.  But since my payroll taxes will be going up $1,000, I guess I'll be late on the February mortgage payment.  Hmmm... but what about the car payment...@swellgalmary on Twitter - #My2K goes to prescriptions, mortgage, and other necessities. It's not discretionary income for me. I need it to keep on keeping on.  But if the president thinks I can do without half of that $2,000, maybe I can just take my meds every other day.

    Although I am making light of the situation, for some of these people January's first paycheck is going to bring a nasty shock.

My2K Versus What $40 Means

    Last year, as the payroll tax holiday neared its expiration, the Obama White House invited the American people to let Congress know What $40 Means.  This year, both the president and the GOP Congress agree that the so-called Bush Tax Cuts should be extended for everyone earning $250,000/year or less, but the GOP believes the rates should be extended for all taxpayers.  So this year, the White House has put together a new campaign, My2K, and is urging Americans to "Tell us what $2,000 means to you and your family," to try to bully the Congress into going along with him plan by implying Congress wants to raise taxes on families by $2,000.

    What makes this so remarkable is that the payroll tax holiday is once again expiring, but this time, the Obama administration has no plans to extend it.  So while last year's What $40 Means campaign remains on the White House website even now, the Obama administration has launched a smokescreen My2K campaign to ostensibly protect taxpayers from a $2,000 increase that neither the Democrats or Republicans are planning.  President Obama himself today deceptively declared that with his plan, "That means 98% of Americans and 97% of small businesses wouldn't see their taxes go up by a single dime."  In reality, the passage of the president's plan (or the GOP's plan) would "save" average taxpayers $2,000 by preserving current rates while costing them $1,000 from the payroll tax holiday expiration.  The bottom line is $1,000 less net pay in 2013 for average taxpayers, who will soon discover What $40 Means.

The White House's Latest Tax and Switch

    Today, the National Economic Council and the Council of Economic Advisers weighed in on the Middle Class Tax Cuts with a 14-page campaign pamphlet report complete with color photos, charts and graphs.  As the president himself has done for months now, the report wastes no time in giving a false impression the president's record on taxes and his plan for 2013.  The introduction begins as follows:

President Obama  is committed to  growing our economy from the middle out by ensuring  a strong, secure, and thriving  middle-class.   That’s why his top priority is  promoting jobs and growth while reducing our deficit in a balanced and responsible way.
Since taking office, President Obama has repeatedly cut taxes for middle-class families to make it easier for them to make ends meet.  A typical family making $50,000 a year has received tax cuts totaling $3,600 over the past four years – more if it was putting a child through college.
Now we face a deadline that requires action on jobs, taxes and deficits by the end of the year. If Congress fails to act, every American family’s taxes will automatically go up - including the 98 percent of Americans who make less than $250,000 a year and the 97 percent of small businesses that earn less than $250,000 a year. A typical middle-class family of four would see its taxes rise by $2,200. 

    So if President Obama has saved the average middle class family $3,600 over the past four years, how is that same family facing an increase of $2,200 in 2013?  The answer is that the two amounts are entire unrelated.  The president has repeated cited the $3,600 figure throughout the campaign, sometimes even giving the impression that it was an annual savings.  The details on that $3,600, however, were given rather infrequently.  Interestingly, the clearest explanation I found was in a previous National Economic Council report from July 2012.

A typical family making $50,000 a year has seen their taxes cut by $3,600 over the last four years, $800 in each of 2009 and 2010 due to the Making Work Pay tax credit and $1,000 in each of 2011 and 2012 due to the payroll tax cut.

    The $3,600, therefore, is composed of the Making Work Pay tax credit which expired after 2010, and the payroll tax holiday, set to expire at the end of 2012.  As I have detailed extensively recently, the president has gone out of his way to give the impression that if his plan is passed, middle class families won't see their taxes increase a single dime.  Indeed, the NEC and the CEA in today's report assure us:

President Obama has stood for providing certainty to more than 100 million middle-class families that their taxes will not go up on January 1st.

    But since the payroll tax holiday extension is not currently part of the president's plan, this statement is patently false.  Even if the GOP completely caves and passes the president's plan as presented to preserve the Bush Tax Cuts only for those earning under $250,000, that average middle class family will still see a $1,000 tax increase.

    This hidden tax increase which today's report completely ignores undercuts the entire argument of the report.  The premise of the report is the economic damage that will be caused by a middle class tax increase, and indeed may even be caused by the mere threat of such an increase due to the uncertainty of the "fiscal cliff" negotiations.  But if the threat of a $2,200 tax increase is damaging, certainly a $1,000 payroll tax increase is nothing to sneeze at.  In fact, towards the end of the report, the following is presented:

    Is $2,000 a "substantial hit," but $1,000 is not?  The chart could be revised to read:

WHAT $1,000 MEANS TO THE AVERAGE MIDDLE-CLASS FAMILY
 One month of mortgage payments on their home
 Six weeks of food and groceries.
 Nearly two semesters of college textbooks and supplies.
 Nine months of electric bill payments.
 Two months of car payments.

    Besides all this, the payroll tax increase will hit everyone, even the working poor.  Someone earning only half of the "average middle class family" ($25,000) would be hit with a $500/year increase in payroll taxes.

    In 2011, the payroll tax holiday warranted the What $40 Means campaign from the White House which produced thousands of stories of near destitution that its expiration would cause.  Unless the White House is holding the extension in its back pocket as a trump card to outplay the GOP in the "fiscal cliff" negotiations, it will be interesting to see how the public reacts to suddenly smaller paychecks in January 2013 when everyone was kept under the illusion that "President Obama has stood for providing certainty to more than 100 million middle-class families that their taxes will not go up on January 1st."

    Time is running out for taxpayers, and time is also running out for the GOP to take the initiative on this issue.  At the moment Republicans seem to be going soft on the 20 year old Grover Norquist tax pledge, they have a chance to expose the president's charade and reaffirm that this is not a time to raise anyone's taxes.  John Boehner needs to get in front of every camera in Washington he can find and ask, "Why is President Obama trying to sneak through a tax increase that hits the middle class and working poor the hardest?  Which is worse: Extending current tax rates for everyone?  Or taking $500 from a poor working family or $1,000 from a middle class family?  Is this part of the "fun" Jay Carney was talking about?"

    It's time the tables were turned.  Let's see the White House on the defensive for once.  At the very least, it will provide some catharsis for November 6th.  At best, it will spare Americans a tax increase and show that Republicans really do have all Americans' best interests at heart.

Spot the Differences: The Tax Increase Version

    In activity books for young children, it's not uncommon to find a game called Spot the Differences.  Two pictures appear, almost identical, but with subtle differences, such as this:

    This week, President Obama has presented the American people with a grown-up, higher stakes version of the same game.  Here are his remarks on the "middle class tax cuts" from this past Wednesday's news conference:

The other option is to pass a law right now that would prevent any tax hike whatsoever on the first $250,000 of everybody’s income.  And by the way, that means every American, including the wealthiest Americans, get a tax cut.  It means that 98 percent of all Americans, and 97 percent of all small businesses won’t see their taxes go up a single dime.  The Senate has already passed a law like this.  Democrats in the House are ready to pass a law like this.  And I hope Republicans in the House come on board, too.

    And here's what he said in his Saturday weekly address:

The other path is for Congress to pass a law right away to prevent a tax hike on the first $250,000 of anyone’s income. That means all Americans – including the wealthiest Americans – get a tax cut.  And 98 percent of Americans, and 97 percent of all small business owners, won’t see their income taxes go up a single dime.   The Senate has already passed a bill like this. Democrats in the House are ready to pass one, too. All we need is for Republicans in the House to come on board.

    Yes, there's "option" in the first and "path" in the second.  But that one's about as obvious as the moons in the children's illustration above.  There are several like that.  The difference I am talking about is more subtle, but at the same time enormous.  Give up? (At this point, my youngest daughter would cry out, "No, no, no, no!  Don't tell me!")

    OK, spoiler alert.  Here it is.  That six letter word, "income."  At his press conference, the President said that most Americans "won’t see their taxes go up a single dime."  But in his weekly address, he said "won’t see their income taxes go up a single dime."  Now why did the president add that word?

    If I suffered from delusions of grandeur, I might believe someone at the White House read my blog post on Friday, "'Not a Single Dime' Versus 10,000 Dimes" and developed a guilty conscience.  More likely, the administration has simply realized a need for technical cover for the implicit decision not to extend the payroll tax holiday.  As of January 1st, 2013, millions of Americans will head over their own personal fiscal cliffs as the average middle-class family earning $50,000 sees a net decrease in take-home pay of $1,000.  Last year, the White House presented this scenario as a dire, grocery/heat/gasoline-endangering crisis, but that was before the election, and apparently poor and middle class taxpayers are now well positioned to absorb the blow due to the "recovery," such as it is.

    What continues to amaze me is that six weeks away from this tax increase, it continues to approach virtually unnoticed.  While the Obama administration certainly exploited the issue last time around, the effect on paychecks is real and the primary impact is certainly not on the "rich."  Unless the administration is holding the payroll tax extension as its trump card to outmaneuver the GOP in the fiscal cliff talks, it is difficult to imagine how President Obama will escape the blame for this stealth tax increase.  A Great Depression song is about to be reincarnated as "Brother, Can You Spare 10,000 Dimes," and the answer will undoubtedly be a resounding, "No!"

"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.