Obama makes case for extending payroll tax cuts


Last year Congress cut the payroll tax by 2 percent, but that cut is due to expire in 2012.

The president told reporters Monday he is focused on building the economy and strengthening the middle class.

"At this moment that means making sure that nearly 160 million hard-working Americans don't see an increase in their taxes on January 1," Obama said.

The president said for a typical American family, the payroll tax cut means $1,000 over the course of a year.

"There aren't many folks either in the middle class or those trying to get into the middle class who can afford to give up a thousand dollars," he said. "Not right now."

According to the White House, if the tax cuts are extended, Americans making $30,000 a year will keep $930. If Congress doesn't act, those same folks will pay an addition $600 in taxes.

The spread increases along with income. Make $60,000 a year and it's the difference between keeping $1,860 or having to spend $1,200 in taxes. For people making $120,000 a year it's $3,400 in your pocket or $2,200 hundred in taxes.

Republican leaders have praised the tax cut extension, but they want it paid for by cuts in federal spending.

"By freezing federal employees' salaries for three years and reducing the number of federal employees by 10 percent through attrition over several years," said former chair of the San Francisco Republican Party, Howard Epstein.

Epstein says the president's plan to increase taxes on people making more than a million a year is the wrong approach.

"I don't think it's a good idea to go after the job creators," Epstein said. "These are the people [who] create jobs, but more than that, they're the ones who go and spend the money in restaurants and stores and where regular people, the non millionaires work."

The president is obviously playing on that split going into next year's election.

"Now, I know many Republicans have sworn an oath never to raise taxes as long as they live," Obama said. "How can it be that the only time there's a catch is when it comes to raising taxes on middle class families."

ABC7's political analyst in Washington D.C., Bruce Cain, likens it to the debt ceiling debate – it's like a game of chicken. Both sides are willing to push the issue towards the end of the year deadline in hopes of gaining concessions from the other side. Cain also says it appears a deal will be struck before the tax cuts expire.

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