Tuesday, December 20, 2011

What happens if payroll tax cut NOT extended

What happens if, as is likely, the House and Senate DO NOT reach an agreement to extend the payroll tax cut for even two months as the Senate bill does?  CQ Roll Call says:

And so what once seemed almost impossible — given the bad economic consequences for so many voters and the potential political peril for all the players — has now become the default setting: A snapback on Jan. 1 to the old Social Security payroll tax rate of 6.2 percent for 160 million workers, which would mean about $20 less a week in the paychecks of people making $50,000 annually; a 27 percent cut in  Medicare payments to doctors; and the end of federal benefits for as many as 1.8 million of the long-term unemployed who have run out the clock on their 99 weeks of benefits. The brightest silver lining at this hour is that there’s precedent in all three cases for the status quo being allowed to expire but then being reinstated retroactively — although if the current impasse lasts longer than a month, that would become logistically much more difficult for payroll firms, the Medicare bureaucracy and the states that administer jobless aid to carry out.

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