Obama to GOP: Blocking payroll tax credit would violate tax pledge

President Obama on Tuesday said congressional Republicans would be breaking their no-new-taxes pledge if they block an extension of a payroll tax cut set to expire at the end of next month.

In making his case, Obama referenced the Taxpayer Protection Pledge administered by Grover Norquist’s Americans for Tax Reform, though he did not cite the anti-tax activist by name. 



“The question they’ll have to answer when they get back from Thanksgiving is this: Are they really willing to break their oath to never raise taxes and raise taxes on the middle class just to play politics,” Obama said in remarks at an event in New Hampshire. “I sure hope not.”

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The president chided Republicans for having already voted en masse against the broader $447 billion jobs package that called for continuing payroll tax relief – especially because, as Obama said, the GOP likes to bill itself as the party of tax cuts.



With unemployment still hovering around 9 percent, the president also continued to suggest that he would run in part against Washington gridlock — and what he sees as GOP obstructionism — when he seeks a second term next year.



“This isn’t about who wins or loses in Washington,” said Obama, who was interrupted by hecklers as he started speaking. “This is about delivering a win to the American people.”



The president’s trip to Manchester, New Hampshire’s largest city, came a day after the supercommittee threw in the towel, with 12 lawmakers on the panel unable to come up with a plan to reduce deficits by $1.2 trillion. 


Officials on both sides of the aisle said taxes played a huge role in the panel’s falling short, with Democrats accusing Republicans of being too married to Norquist’s pledge not to raise taxes. For their part, GOP committee members said Democrats insisted on huge tax hikes. 



The panel’s failure also means that some provisions — including the payroll tax cut, unemployment benefits and the so-called Medicare doc fix — that might have been taken up by the supercommittee will have to be examined by lawmakers before expiring at year’s end.



Officials and lobbyists had hoped some of those policies could be tucked into whatever package that emerged from the supercommittee.



Under the American Jobs Act, the payroll tax for workers would be lowered further, to 3.1 percent. The payroll tax rate for workers in 2011 is 4.2 percent, down the statutory 6.2 percent.

Nonpartisan analysts have found that the current payroll tax rate, set to expire at the end of December, will save the average family close to $1,000 in 2011. The president’s jobs act calls for expanding the payroll tax cut, which the White House says would bump up the savings up to $1,500 next year.



The president’s jobs plan also seeks to bring payroll tax relief to the employer side as well, in a bid to help small businesses.



Earlier this year, the full American Jobs Act, which included other targeted tax cuts and spending for teachers and police officers, failed to clear a procedural vote in the Senate. 



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Every Republican senator, and a couple of Democrats, voted against the measure, in large part because it would have been paid for by a surtax on incomes over $1 million.

 Since then, Democrats have looked to pluck out individual planks of the jobs legislation. 



But the payroll tax cut’s fate remains uncertain, though it could be tacked on to a measure funding the government or packaged with other expiring provisions before the close of December.



House Majority Leader Eric Cantor (R-Va.) included the payroll tax as an area of possible compromise between Democrats and Republicans in a September memo. 



But like other Republicans, Cantor has also said officials need to search for more permanent tax changes. 



“If we are talking about what is most helpful to address the No. 1 issue, which is jobs, I don't know if that is the most generative policy, but certainly that is part of the discussion today,” Cantor said in October.



Some Democrats, meanwhile, have expressed concern about the president’s proposal because the payroll tax funds Social Security.