As 2011 ticks down, so does a tax break that put more money in working people’s pockets this year.
That’s because the reduction in the Social Security tax that workers pay, which dropped to 4.2 percent in 2011, is scheduled to return to its normal 6.2 percent in 2012 unless Congress acts.
And when it comes to that, Congress these days is more likely to just act up if it acts at all.
Democrats have proposed extending the tax break and increasing it by nearly another percentage point to 3.1 percent while also extending unemployment benefits. They propose to pay for these items by raising income taxes on millionaires.
Republicans countered with their own plan Friday, one that seems tailor made for President Obama’s threatened veto if it included any add-ons.
The GOP plan wouldn’t increase the tax break, but would maintain it at 4.2 percent. It would also reduce the current maximum of 99 weeks of unemployment coverage to 59 weeks by the middle of next year, while also avoiding the pending Medicare cut that would slash physician reimbursement by 27 percent next year.
Republicans propose to pay for their $180 billion bill by tightening rules for tax credits that will help pay premiums for the uninsured, taking money from a fund for preventive care, freezing federal workers’ pay in 2013 and increasing their contributions to their own pensions, raising fees Fannie Mae and Freddie Mac charge to guarantee mortgages, selling portions of the broadcast spectrum and barring millionaires from collecting food stamps and unemployment benefits.
Looking at both sides, there looks like a lot of negotiating room between the two proposals with one exception — an oil pipeline poison pill as far as Obama is concerned. The Republican bill would require the Obama administration in two months to issue a permit allowing work on the proposed Keystone XL pipeline from Canada to Texas.
Now that both sides have their plans on the table, it looks like another long December of uncertainty. While the economy is recovering — Georgia this week reported its 17th consecutive month of increased tax collections, up 7 percent from the previous month and nearly 7 percent ahead of last year — it’s still fragile and no time to take dollars out of workers’ pockets.
Congress and Obama need to work things out so that workers don’t take a hit to the wallet and those who are struggling to find work aren’t hurt worse financially. And the Medicare reimbursement issue is critical since a cut in that likely would lead to many physicians refusing the accept Medicare patients.
There is negotiating room in both bills and each side needs to be willing to make compromises that benefit the nation as a whole and not just its respective party.