Payroll Tax Cut

Floor Speech

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 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:

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