[Congressional Record Volume 157, Number 187 (Wednesday, December 7, 2011)]
[Senate]
[Pages S8389-S8390]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            PAYROLL TAX CUT

  Mr. CASEY. Mr. President, I rise to speak about the issue of the 
payroll tax and the tax cuts we are trying to enact, very similar to 
what we did last year when Democrats and Republicans came together at 
the end of the year, right before the holiday season, and said, we have 
to take action now to make sure we are doing everything possible to 
jump-start the economy.
  One of the elements of that agreement last year--and, again, it was 
bipartisan--was a cut in the payroll tax. Just so people understand my 
point about this tax--and I will deal only with the employee side--we 
know that employees in the United States, when they make their payroll 
tax payment, it is 6.2 percent of their earnings. Last year we cut that 
from 6.2 to 4.2. It was the right thing to do and it had a positive 
impact. What I am trying to do now--and, again, I think this is 
bipartisan--is to not just do that again, but we want to cut it even 
more so that we can reduce it in half, so instead of paying 6.2, an 
individual would pay 3.1.
  This is a very basic idea, and what we are trying to do are two basic 
things. No. 1 is to give folks out there more take-home pay--kind of 
dollars in the pocket. Last year, it was roughly $1,000 per worker. The 
impact on a family--the positive impact of that--is very significant. 
This year, we hope it will be greater. We hope we can enact something 
where the take-home pay savings are increased, depending on how one 
argues it, almost $1,500. Instead of being $900 or $1,000, for some 
folks it can be $1,500 or $1,400 or somewhere in that range.
  The second point on this is peace of mind. We ought to take action 
here in a bipartisan way--and every once in a while we get this right--
that will say to people, we are trying to do our best to understand 
what you are up against. We are trying to take actions here that will 
lead to economic growth and job creation.
  One of the actions we can take is making sure we reduce the payroll 
tax so folks out there have more money in their pocket--more take-home 
pay--as they head not just into the holiday season but as they head 
into the new year in 2012. So it is about take-home pay and peace of 
mind.
  We have made some progress in the last couple of months, when we 
consider where we have been and in trying to dig our way out of this 
great recession. Unfortunately, the progress we have made is far too 
modest, and the economic recovery right now is still very vulnerable, 
very fragile--pick your word, there are lots of ways to describe it. We 
need this tax cut to boost consumer spending.
  A lot of the business folks I talk to in Pennsylvania, when I ask 
them if they want to hire, or if they want to increase their payroll, 
say, I want to, but I can't. I say, why can't you? They say, there is 
not enough demand out there. So one of the best ways--maybe the best 
way--to create demand in our economy is to have folks have more take-
home pay.
  As you can see from this chart on my left, when we look at the 
quarters, starting right here, we see minus 6.7 percent. That is the 
first quarter of 2009. Eventually, we have gotten to the point where we 
have started to have some growth. We have had nine straight quarters of 
GDP growth. But that is not enough--not nearly enough. It is movement 
in the right direction, but it has been barely positive, as you can 
see, even if you look at just the last year. This .04 is the first 
quarter of 2011. So even though we had almost 4 percent of good growth 
back in a couple of quarters in 2009 and into 2010, in the last three-
quarters of 2011, we had .4 percent growth, 1.3 percent growth, and 2.0 
percent growth.
  What we have to do now is make sure the fourth quarter is stronger, 
as best we can, and we need to make sure, by the actions we take here, 
that 2012 is much better. We need to ensure we have stronger growth, 
and putting $1,500 of additional earnings into the pockets of 160 
million workers, as I said before, will help substantially. I think 
that number should be repeated. When we talk about cutting the payroll 
tax in half and putting more take-home pay in people's pockets, we are 
talking about affecting 160 million workers in the United States.
  Economists across the board have told us why this is so important. 
They have reported the payroll tax cut will create jobs and increase 
GDP--increase those numbers I referred to on the chart--and that 
failing to extend the tax cut will slow growth and lead to fewer jobs. 
Mark Zandi, of Moody's Analytics--one of the economists both parties 
have quoted over many years--estimates that not extending the current 
payroll tax cut--meaning allowing the payroll tax to go back up to the 
6.2

[[Page S8390]]

percent, not cutting it in half--would reduce gross domestic product 
growth by .5 percent in 2012.
  So instead of having positive growth, he is saying that if we don't 
enact and extend the payroll tax cut from last year, at a minimum we 
would be losing a half point of growth. That would be devastating to 
this economy.
  Goldman Sachs has said similar things. They put the negative impact 
on GDP growth at as much as two-thirds of 1 percent in 2012. Most 
economists are in that range in terms of the adverse impact. RBC 
Capital Markets concludes that the hit to GDP next year of failing to 
act would be a full 1 percent.
  So you have economists saying half a percent adverse consequence, 
two-thirds maybe, but at least among others saying a full percentage 
point. That would be devastating when we need to see growth at above 2 
and hopefully even above 3. But that has been very hard to reach in the 
last couple of months.
  I put this chart up on my left to highlight what Mark Zandi said. 
Here is his warning when discussing what could happen on the current 
payroll tax cut in effect right now, the 4.2 level that we are at right 
now from the cut from last year:

       We'd be in recession right now without it.

  That is what he said about what we did last year in a bipartisan way. 
I would hope we could end this year on a high note, on a bipartisan 
note, and make sure we cut the payroll tax again and put more take-home 
pay in people's pockets.
  Then here is Mark Zandi talking about if we don't extend, what could 
happen into the near future:

       We'll likely go into recession.

  So says Mark Zandi. We can't afford to do that. The payroll tax cut 
has helped sustain the economic recovery this year, and it will 
strengthen the economy in 2012 if we reduce it again.
  My bill not only extends it but increases it so that the per worker 
take-home pay increase, instead of being around $1,000, would be 
approximately $1,500.
  We also know that cutting the tax leads to job growth. We know this 
from our experience, and we know this from recent history. At the end 
of 2010, Congress enacted the current payroll tax, cutting it from 6.2 
to 4.2, and it took effect at the beginning of the year.
  As we look at private sector job growth in 2011, we can see some of 
the impact of the cut. As we can see on the chart, if you look at the 
first couple of bars--even if you can't read the smaller print here--
this depicts starting in January of 2011 what was the monthly change in 
private payrolls, meaning private sector job growth. January was only 
94,000, not that great of a month in January 2011. But look at 
February: 261,000 private sector jobs added. Look at March: 219,000 
private sector jobs added. And then April: 241,000. So you had an 
average of about 240,000 private sector jobs growing in those 3 months. 
When we got to May and June, of course, a lot of things happened which 
took that number way down. It slowed for a lot of reasons. One of them 
was the spike in oil prices, another was the effect on gas prices, and, 
finally, the earthquake in Japan had a terrible effect on our economy.
  I am wrapping up here, but I want to make one more point about this. 
The American people are looking at us right now, watching what we do, 
and they are saying basically two things to us--at least the people in 
Pennsylvania, to me. They ask me one basic question: What are you doing 
to grow the economy and create jobs? What are you doing as an 
individual Member of the Senate? One of the ways I can respond 
affirmatively and positively is to say we have come together to reduce 
the payroll tax even more than we did last year to help you in your 
bottom line, so you have more take-home pay for you and your family.
  The second thing they ask is, what are you doing to try to bring 
people together, to try to reach a bipartisan consensus? We have all 
got to try do that in our own way. This is about take-home pay and 
peace of mind. We need this tax cut in place to boost consumer 
spending, to create jobs, and accelerate economic growth.
  I want to conclude with one thought about Social Security, because I 
know it has been raised by a number of folks the last couple of days.
  I ask unanimous consent to have printed in the Record a letter 
addressed to Secretary of the Treasury Geithner and Director, Office of 
Management and Budget, Jacob Lew, dated December 6, 2011. It is signed 
by Steven C. Gross, Chief Actuary of the Social Security 
Administration.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                   Social Security Administration,


                                  Office of the Chief Actuary,

                                  Baltimore, MD, December 6, 2011.
     Hon. Timothy F. Geithner,
     Secretary of the Treasury, Washington, DC.
     Hon. Jacob J. Lew,
     Director, Office of Management and Budget, Washington, DC.
       Dear Mr. Geithner and Mr. Lew: We have reviewed the 
     language in the ``Middle Class Tax Cut Act of 2011'' (S. 
     1944), introduced yesterday by Senator Casey. We estimate 
     that the enactment of this bill would have a negligible 
     effect on the financial status of the Old Age and Survivors 
     Insurance and Disability Insurance (OASDI) program in both 
     the near term and the long term. We estimate that the 
     projected level of the OASI and DI Trust Funds would be 
     unaffected by enactment of this provision.
       Section 2 of the bill would make the following changes for 
     payroll tax rates and OASDI financing: (1) for wages and 
     salaries paid in calendar year 2012 and self-employment 
     earnings in calendar year 2012, reduce the OASDI payroll tax 
     rate by 3.1 percentage points, (2) transfer revenue from the 
     General Fund of the Treasury to the OASI and DI Trust Funds 
     so that total revenue for trust funds would be unaffected by 
     this provision, and (3) credit earnings to the records of 
     workers for the purpose of determining future benefits 
     payable from the trust funds so that such benefits would be 
     unaffected by this provision. For wage and salary earnings, 
     the 3.1-percent rate reduction would apply to the employee 
     share of the payroll tax rate. For self-employment earnings, 
     the personal income tax deduction for the OASDI payroll tax 
     would be 66.67 percent of the portion of such taxes 
     attributable to self-employment earnings for 2012. Other 
     sections of the bill would have no direct effects on the 
     OASDI program.
           Sincerely,
                                                  Stephen C. Goss,
                                                    Chief Actuary.

  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. CASEY. Mr. President, I ask unanimous consent for 2 more minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CASEY. The point of this letter is very simple. I won't read the 
whole letter, but here is the pertinent part of this letter from the 
Social Security Administration.

       We estimate that the projected level of the OASDI and DI 
     Trust Funds would be unaffected by enactment of this 
     provision.

  What he is talking about there is Social Security would be 
unaffected. The trustee said last year the same thing. I won't add all 
this to the Record, but read the one sentence. This is page 33 of a 
report from last year:

       Therefore, this payroll tax cut is estimated to have no 
     financial impact on these same trust accounts.

  So it is abundantly clear that there is no impact on Social Security 
and, secondly, it is abundantly clear that passing a payroll tax cut 
again will boost job growth, strengthen the economy, grow the economy, 
and give American families some measure of peace of mind as we head 
into the holidays and head into the year 2012.
  Mr. President, I yield the floor.

                          ____________________