Members of the House of Representatives, today, voted 293-132 to extend payroll tax cuts till the end of the year. The current rate of 4.2% will continue till end of 2012. If the bill was not passed the payroll tax would go to 6.2% on March 1st. The bill also included extending jobless benefits and prevented pay cuts to Medicare doctors. However, the term that you can claim jobless benefits was reduced from 99 weeks to 73 weeks. The bill will be voted on by the Senate later today.
The other good point about this bill is that is has bi-partisan support as Republicans accepted some of President Obama’s job agenda; making it easy to speculate that the Democrat-controlled Senate will pass this bill quickly so that the President can sign the bill into law later today or early tomorrow.
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Some political analysts credit this unusual bi-partisan support to the coming elections in November. The GOP blocked a two month extension to the payroll tax cuts back in December. Some see this action today as playing damage control for the political gridlock that almost made us default on our debt and the fact that very little has gotten done since this Congress took over.
Members of the GOP in the House argue that this bill will increase the federal deficit and have little effect on improving the economy. To some degree they are right on the deficit issue. At some point the government needs to get serious on the federal deficit and realize that yes, people are keeping more of their paycheck which is good but the government can not be spending more money to stimulate the economy. Eventually our addiction to spending will catch up to us and throw us into a debt bubble. If that happens, I can tell you this much, payroll tax cuts will be worthless.
The government needs to promote growth but without the massive increases to the deficit. I say this not as a Republican or Democrat, but as an American. This is an issue we have had for decades and decades. We can not continue to have debt drag down the US. Ultimately, there will come a point that decisions that will affect our nation’s future have to be made. We will have to decide should we continue to spend and ultimately lose our empire or do we tighten our bootstraps and give up a few luxuries so that the United States lives on with less debt. There is one thing that Americans have proven: we are stubborn and do not like to give up our routine and luxuries, however when our well being is threatened in any way (Great Depression, Great Recession, Pearl Harbor, 9/11, etc) we rally as a nation and come out stronger. This time will be no different.