Expect ‘yes’ on jobs-deal tax cuts

By ANDREW TAYLOR

Associated Press

WASHINGTON

The real takeaway from President Barack Obama’s jobs agenda?

Workers probably can count on continuing to pay lower Social Security taxes. Employers may not have to pay as much, either. The long-term unemployed probably will keep drawing jobless benefits. Congress can be expected to ratify new trade agreements with South Korea, Colombia and Panama.

But don’t expect Congress to funnel tens of billions of dollars into rebuilding schools and blighted neighborhoods or helping local governments pay teachers and firefighters, or setting up an “infrastructure bank” to leverage federal loans for roads, water systems and other public-works projects.

“Enough of the stimulus,” House Majority Leader Eric Cantor, R-Va., said Friday on CNBC. “We can’t afford to keep spending money we don’t have.”

Republicans who control the House quickly dismissed anything smacking of “stimulus” in Obama’s proposed American Jobs Act after his speech Thursday night. They embraced tax cuts for businesses, changes to unemployment insurance and promises to cut the red tape that delays construction projects.

They appear poised to accept, albeit grudgingly, extending this year’s Social Security payroll-tax cut for workers and including in it the Social Security taxes paid by employers, despite doubts in GOP ranks and among economists that the tax cut has done much to boost the economy.

“Republicans are not for increasing taxes,” Cantor told reporters.

Last December, Congress passed a one-year cut in Social Security taxes, reducing the rate for workers from 6.2 percent to 4.2 percent for 2011. Employers still pay the 6.2 percent rate, which is applied to wages up to $106,800.

Obama proposes to extend the tax cut for a year and make it bigger, reducing the Social Security taxes paid by workers to 3.1 percent for 2012. He’s also now proposing to extend the payroll-tax cut to businesses on the first $5 million of their payroll. About 98 percent of companies have payrolls below the $5 million threshold, according to the White House.

Extending and enlarging the payroll-tax cuts costs $240 billion.

Obama urged lawmakers to “pass this jobs plan right away.” But he left the responsibility for paying for the $447 billion plan to a special bipartisan House-Senate panel created to reduce deficits by at least $1.2 trillion over the coming decade. The panel’s top Republican wasn’t happy about it.

“This proposal would make the already arduous challenge of finding bipartisan agreement on deficit reduction nearly impossible, removing our options for deficit reduction for a plan that won’t reduce the deficit by one penny,” said Rep. Jeb Hensarling, R-Texas.

The White House promises to send up soon a list of ideas on how to pay for it all.

Republicans also have qualms about the almost $50 billion cost of extending for one more year a jobless-benefits program that allows up to 99 weeks of benefits for the long-term unemployed and covers about 5 million laid-off workers.

ut GOP leaders may go along with the idea after Obama embraced reforms, such as expanding to other states a Georgia program that uses unemployment funds for on-the-job training.

Republicans are enthusiastic about ratifying Obama-backed trade deals with South Korea, Colombia and Panama. They say the lowered trade barriers would help businesses and create jobs.