“Any extension would have to be fully paid for and the ‘pay for’ would have to go into the trust fund,” U.S. Sen. Johnny Isakson, R-Ga, said Wednesday. “However, I have concerns with reducing contributions to an already stressed Social Security Trust Fund.”
Extending it and expanding it from the current 2 percent cut in Social Security tax to 3.1 percent would keep billions of dollars in state economies: $5 billion in Georgia and $2.2 billion in South Carolina.
For the average family earning $50,000, the current tax break is putting $1,000 into their take-home pay. Keeping it and boosting it would bring that to $1,500 which the family would have to spend or pay bills.
“It’s common sense,” said Jason Furman, deputy director of the National Economic Council. “if every family in the country has an extra $1,500, they’re going to go out and spend some of that money next year. They’ll probably spend a lot of it, given the way the economy is right now.”
That spending would push businesses to meet that demand with new production, he said.
“I don’t see how anyone can debate that injecting that amount of money into the economy would do anything other than creating hundreds of thousands of jobs,” he said.
The White House estimates it would create 600,000 to 1 million jobs.
The Senate votes on the proposal later this week, and the Obama administration contacted reporters in various regions as a way to pressure Republicans into supporting it.
Republicans aren’t opposed to a tax cut. After all, they’re pushing for an extension of the Bush-era tax cuts that are due to expire in 2013.
However, many in the GOP say they are not happy with the Democrats’ plan to pay for the payroll-tax cut with a 3.25 percent surtax on incomes above $1 million.
“I will not support a payroll tax-cut extension bill that raises taxes on the American people, adds to our national debt and bankrupts Social Security, all of which the Democrats’ proposal does,” said U.S. Sen. Saxby Chambliss, R-Ga.
Republicans prefer accounting for it through a spending reduction, such as a freeze on federal workers’ pay.
Furman would not say if the president would be open to an alternative way of paying into the Social Security trust fund the $179 billion the extended and expanded tax cut would trim from its revenue next year.
“There are potentially ‘pay for its’ that are acceptable, and there are ‘pay for its’ that are not going to be acceptable,” he said. “We’re not going to negotiate an endgame as this point.”