Expired payroll tax cuts taking economic toll on Americans
Consumers paying more, spending less
- Duration 4:25
- Date Feb 22, 2013
Consumers paying more, spending less
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A similar -- this now there are new science that the expired payroll tax cut.
Is having a serious impact on average Americans -- everybody noticed after January 1.
That little bit of money was missing from their paycheck.
Right so this as President Obama continues to push as we heard again yesterday for the wealthy to pay in more.
Out of their taxes so let's look at exactly how much the so called rich already pay into the federal income tax -- the top 1% which you hear a lot about.
That means those earning more than 369000.
Dollars a year they pay.
Of the total tax slowed in the whole country.
So with that as a backdrop and knowing that everybody is paying more under this scenario that -- -- Former director of the CBO and president of American action form joins me -- dead welcome good to have you here.
Yeah -- had a story this morning by the Wall Street Journal which is very interestingly laid out what everybody started to sense after the first of the year because.
Across the board people were saying wait a minute I I did my taxes were going up I thought it was his rich people is taxes were going up and I got lessen my paycheck.
Now -- Burger King Wal-Mart all of these basic companies across the country.
Are saying look business is bad and people are using less and less of their disposable income and are out.
-- this was characterized as a tax increase on the very wealthy but in fact the vast majority of Americans saw their taxes go up.
If you -- -- back in 2010.
The president himself made the case that in a weak economy we shouldn't raise taxes on anyone.
In 2010 we are growing more -- than we are now and so there's a real risk associated with the sharp tax increases -- what we saw the turn of the year.
Yet you know so that you wonder how the president squares that because he clearly sent that back then.
So now he -- taken the opposite approach because taxes have gone up on everybody across the board.
Who has income okay.
And and we see what's happening when your -- of the deet tails -- no Burger King says the junior whopper.
Wal-Mart says -- they're forced to put out smaller packages that people can buy for less money.
Think this is that each about a new normal.
Is that just talking about that where we are.
-- I think the new normal is important component of this if we were growing at a rate that one would expect this kind of -- recovery if we saw.
Top line -- -- 33 and a half percent.
Then you would be able to get rid of a payroll tax holiday because you do want to fund Social Security.
It doesn't make sense from a -- -- point -- -- was supposed to stimulate hiring just didn't.
-- we could whether these kinds of shots much more easily but.
The fact that we're growing so slowly means that every little thing threatens to tip us into is zero or negative growth and that's the real indictment of where we are we needed better set of policies.
To grow more rapidly on a regular basis so that when bad things happen as they always do we can sustain them.
That was similar to some of the numbers here and pull up this full screen because basically if you make about 65000.
Dollars a year.
You are losing thirteen hundred dollars more.
Of your income that that's a lot of money thirteen hundred -- as a kind of thing that makes people you know as as evidence in this article.
Not go to to polian let's go to Burger King in and that hurts every company I want that along that chain.
-- it's a real impact on consumer spending and that's two thirds of the economy now.
You could survive that if the other parts of spending held up but.
We're not exporting them much in the administration's not shown a big interest in a trade agenda.
Business investments not as strong as it needs to be we need a better business spending environment so we've got weakness across the board which highlights these big impact some -- the average household.
-- the president -- -- used to be that he wants to go back for more tax increases.
On the wealthy what impact do you think that's gonna happen.
That this is not going to solve the problem the fundamental problem is that we have an enormous amount of debt which is a burden on growth.
We need deep entitlement reforms to put us on a sustainable trajectory presence taking those off the table.
If he wants more revenue his own commission led by Erskine Bowles and former congressman Alan Simpson said look we need tax reform and he hasn't pushed that so.
The recipe he's god is not -- -- solve the problems that ails our economy.
-- even Steny Hoyer I've talked about entitlement reforms so may be you know the groundswell comes from outside the White House.
We'll see thank you so much that always an added.