Each time Congress debates a major economic policy vital to the president’s agenda and it seems to be going badly, some member of the Obama administration is nudged to play the role of professor and put the policy in context by giving a short lesson in front of a white board. Austan Goolsbee did it during the debate over the extension of the Bush-era tax cuts in late 2010, Jack Lew did it to defend the president’s budget plan in early 2011 and now Brian Deese, the deputy director of the National Economic Council, is stepping forward to defend the payroll tax cuts.
As Deese explains, a family earning $50,000 saw the taxes they pay on that salary decline from 6.1% in 2010 to 4.2% this year, saving nearly $1,000 thanks to a temporary payroll tax cut approved in late 2010. With President Obama’s plan, that amount would actually be reduced even further to 3.1% in 2012, saving the family an additional $300.
However many lawmakers are now pushing to eliminate the tax savings altogether by arguing that this is lost revenue the government cannot afford, but according to Deese, raising taxes slightly on the wealthy would help pay for keeping taxes low on lower income families. What’s more, he argues these tax cuts would give consumers a little more money to spend, which in turn would potentially boost sales for many businesses, spur more hiring and accelerate the economic recovery.
Part of the problem though, as Deese alludes to in the video, is that many workers don’t even realize they have received a tax cut, but chances are they’ll notice if their taxes go back up given how tight many households are on cash at the moment.