White House Considers Payroll Tax Break for Employers

Obama advisers see payroll tax cut as one way to get a hiring stimulus past the GOP

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The White House is discussing giving employers a break on the taxes they pay on wages as the economic recovery slows, Bloomberg's Mike Dorning and Hans Nichols report. "The idea, which is in preliminary stages of discussion," they report, "is among several being talked about at the White House as the economy holds center stage for the administration and Congress, the people said on condition of anonymity to discuss internal deliberations."

May saw the slowest jobs growth in eight months, according to the Labor Department, with just 54,000 jobs added to the economy (and half of those, analysts said, may be attributable to a one-day hiring spree at McDonalds). On Thursday morning, the Labor Department released figures for new unemployment claims that rose slightly last week to 427,000, Reuters reports, instead of dropping as economists had expected.

President Obama's advisers see the payroll tax break as one of the limited options Obama has to push a hiring stimulus through the Republican-controlled House of Representatives, which is eager to cut spending. Payroll taxes fund Social Security and Medicare. As Firedog Lake noted, Obama floated the idea of a payroll tax cut on Tuesday during his joint press conference with German prime minister Angela Merkel when he spoke about his options for working with Congress on the economy:

Some of the steps that we took during the lame duck session, the payroll tax, the extension of unemployment insurance, the investment in — or the tax breaks for business investment in plants and equipment — all those things have helped. And one of the things that I’m going to be interested in exploring with the members of both parties in Congress is how do we continue some of these policies to make sure that we get this recovery up and running in a robust way.

Some Republicans have also weighed the employer payroll tax cut idea in "semi-serious" discussions, Douglas Holtz-Eakin, former director of the Congressional Budget Office, told Bloomberg.  The New Republic's Jonathan Chait says the plan is a good idea, but doubts the House GOP will pass it. Even so, it would give Obama an issue to campaign on, he says.
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