This article first appeared in the St. Louis Beacon, Dec. 2, 2011 - WASHINGTON - They back rival baseball clubs, but St. Louis Mayor Francis Slay and Cincinnati Mayor Mark Mallory say they are on the same team when it comes for the need to extend -- and perhaps expand -- the payroll tax cut for working people.
Taking part in a conference call organized by the White House, Slay and Mallory joined Minneapolis Mayor R.T. Rybak in touting the benefits of prolonging and deepening the tax cut, which gave the average family about $1,000 in extra cash this year and that President Obama wants to expand to about $1,500 per family next year.
"About two-thirds of the households in St. Louis make $50,000 or less," said Slay, adding that $1,000 in extra cash represents "a lot of money that people in St. Louis can take advantage of for their families. Costs are rising and salaries generally are not."
If Congress takes no action, the current payroll tax cut would expire at the end of this month. The White House wants to extend and expand that payroll tax cut and pay for it with a surcharge on the wealthy. Republican congressional leaders also want to extend the payroll cut, but they oppose the millionaire surcharge and are suggesting other ways to cover the costs.
[Begin update] - On Thursday evening, the Senate rejected both the initial Democratic and Republican plans to extend the payroll tax cut, likely setting the stage for a later compromise on how to pay for an extension. The White House-based Democratic plan was supported by Sens. Claire McCaskill, D-Mo., and Dick Durbin, D-Ill., and opposed by Sens. Roy Blunt, R-Mo., and Mark Kirk, R-Ill. All four senators from Missouri and Illinois voted against the Republican-sponsored proposal that would have paid for a payroll tax cut by freezing federal pay and cutting federal jobs. Both plans failed to get the 60 votes needed, with the Democratic alternative getting 51 votes and the Republican version backed by only 20 senators.
Shortly after the vote, Obama issued a statement criticizing Republicans who opposed his plan and promising to "continue to urge Congress to stop playing politics with the security of millions of American families and small business owners, and get this done."
In a statement after the votes, Blunt said he opposed extending the payroll tax cut "because it significantly jeopardizes the future of Social Security by further separating the program from its main source of revenue." He said "Congress and the President need to work together to fix Social Security instead of passing short-term fixes and punting on the tough decisions."
Payroll taxes go directly into the Social Security trust fund; Obama and other proponents of a payroll tax cut say that the income from other sources would be used to replenish the payroll-tax amounts that would be diverted from the trust fund. - [End update]
The current payroll tax cut gives a total of about $1.9 billion in tax relief to about 3.1 million Missourians, and $4.6 billion to 6.5 million Illinois residents. If the White House plan is approved -- cutting the payroll tax rate in half (to 3.1 percent, from 6.2 percent of the first $110,100 of taxable wages in 2012) -- the tax relief to Missourians would increase to $3.1 billion and to Illinois residents to $7.6 billion.
"Middle-class families are struggling; they do need this extra income," Slay told reporters. "This is not money they are going to sock away somewhere; this is money that they are going to spend and put back into the economy."
Mayor Mallory of Cincinnati agreed that "when tax cuts happen for the middle class, that money hits the streets. It doesn't get socked away in savings accounts, it doesn't get put into investments. It gets spent on goods and merchandise -- it goes right back out the door."
Mallory, who represents the home city of House Speaker John Boehner, R-Ohio, said that "Congress has got to respond" and extend the payroll tax cut. On Thursday, Boehner told reporters that he expects Congress to find a way to extend the payroll tax cut and also expand unemployment benefits if the cost is paid for.
"There is enough common ground between where the White House and Democrats are and where Republicans are for us to move this legislation and to do so quickly," Boehner said at his weekly news conference.
But the two sides don't agree on how to pay for those extensions. Senate Democrats, including Sen. Dick Durbin, D-Ill., would cover the costs by levying a surtax on million-dollar tax filers. A Senate GOP plan discussed Wednesday would cover the costs by freezing federal workers' pay through 2015 and reducing the government's bureaucracy by about 200,000 jobs.
House Minority Leader Nancy Pelosi, D-Calif., accused congressional Republicans of being "out to get the middle class." She contended Thursday that the Democrats' plan would spur more economic growth and create more jobs.
Asked about the Senate Republican approach, Slay and the other two mayors said they preferred the White House plan that would pay for the payroll tax cut by imposing a surcharge on millionaires.
"I think the president's proposal is the ideal one," Slay said. "We're asking the wealthiest Americans to step up and help pay for this, so it does not impact the deficit."
Rybak predicted that an expanded tax cut would help stimulate the economy. "I'm the mayor of the home town of Target and Best Buy. If these middle-class families spend more in the holiday season, it will create more jobs."