(Image source: Wikimedia Commons)

 

BY MIKKEL NOEL LANZKY

ANCHOR CHRISTINA HARTMAN

Is the payroll tax holiday helping the economy or undercutting Social Security? That question will be asked a lot in the coming weeks, as Congress debates a Democrat proposal to extend the tax holiday put in place by President Obama. CNN brings us up to speed.

“By reducing withholding for Social Security the tax holiday has meant an extra $934 for the average family at a cost of about $120 billion. It’s set to expire at the end of the year and President Obama took to the stump in New Hampshire last week to urge lawmakers not to let that happen.”

The tax holiday extension will likely pass the Democrat-controlled Senate, but getting anything through the House -- where Republicans hold the majority -- will be harder. A surcharge on income over $1 million will help pay for the tax cut under the Dems’ plan.
But Republicans argue the tax cut extension hasn’t created jobs so far, and that it isn’t fair to pay for it on the backs of the wealthy. As MSNBC explains:

“You have the Medicare ‘Doc Fix’ which delays cuts doctors would get from Medicare, you have the payroll tax extension, and you have unemployment benefits. All those add $300 billion to the deficit, which is really hard for John Boehner to get through his conference. So the question becomes, what is going to be involved in these negotiations, what are Democrats going to have to give up to get the unemployment benefits and payroll tax extension.”

So while extending the tax holiday is very much up in the air, the debate surrounding it might be the most interesting part. As the New York Times notes, the political climate has changed since the Tea Party and deficit hawks dominated the 2010 elections.

“A pollster who advises House Republicans […] acknowledges that hard times heighten concerns about income disparities in the American tug of war between policies that enhance individual opportunity and those that equalize outcomes.”

This change in voter sentiment is likely to be seized upon by Democrats as a cornerstone in the coming election year. A memo from Hart Research to the office of Democratic Senator Chuck Schumer notes the 2012 elections will not be the same as 2010 due to:

“The growing importance of income inequality in defining the debate over the economy, and the public’s strong concerns about the decline of the middle class.”

In its coverage of the memo, The Huffington Post notes the Occupy movement has also influenced the debate, drawing the point from the memo that:

“With the Occupy Wall Street movement highlighting income inequality that has not been this high since the roaring '20s, the side of the rich will not be a good place to be in 2012.”

Senate Majority Leader Harry Reid says he expects the Senate to hold a test vote sometime this week.

Transcript by Newsy.