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Extend the payroll tax cut

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Kai Ryssdal:  It looks like the payroll tax cut is maybe, probably, possibly going to be extended past the end of the year. Assuming Democrats and Republicans can find a way to pay for it.

And we all know what happens when you assume, though. So get ready the umpteenth round of the budget fight.

Commentator Robert Reich has a suggestion.


Robert Reich: The basic bargain at the heart of the American economy used to be that employers paid their workers enough to buy what employers were selling. That bargain created a virtuous cycle of higher living standards, more jobs, and better wages.

Back in 1914 Henry Ford decided to pay his workers three times the average factory wage because they'd use the money to buy Model-Ts. His profits doubled in two years.

But now that bargain has come apart. New data from the Commerce Department shows employee pay down to the smallest share of the economy since the government began collecting the data in 1929. And corporate profits, the largest share of the economy since then.

Yet incredibly, some politicians think the best way to restart the nation's job engine is to make corporations even more profitable. That means reducing corporate taxes and cutting back on regulations.

These same politicians want average workers to have even less money. They're against extending the payroll tax cut or unemployment benefits. And they want to make it harder for workers to form unions.

These politicians have it upside down.

The reason companies aren't creating more jobs is because consumers don't have money. And their spending accounts for 70 percent of the economy.

You see, without the basic bargain we're in a vicious cycle. The only way out is to put more money into the pockets of average Americans. At the very least, extend the payroll tax cut and unemployment benefits.

Beyond this, we need a new WPA to get the long-term unemployed back to work. And a Civilian Conservation Corp to create jobs for young people. More teachers for overcrowded classrooms. More construction workers rebuilding highways and bridges.

Pay for all this by hiking taxes on millionaires. Get it? There's really only way to revive the American economy. That's by restoring the basic bargain.


Ryssdal: Robert Reich teaches public policy at the University of California, Berkeley. His most recent book is called "Aftershock: The Next Economy and America's Future." We hope your comments are in our future. Send us your thoughts.

About the author

Robert Reich is chancellor's professor of public policy at the University of California, Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton.
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When is comes to payroll issues. This must be done in extreme ethical matter's of importance. In no way should one infuse any facade when dealing with payroll. Ethical principles must be strictly enforced & monitored. In the same respect when dealing with the client at large. One must never compromise their position of interest. A resounding respectable moral backing should be administered with the specific issue at hand. Freedom that many as of late of taken advantage of. Yet we must never harbor resentment but work together with others to initiate a positive cause.

To extend or not to extend the payroll tax cut is more arguing over peanuts in the face of global financial disaster; however, as with the ’09 health care legislation, I should think Republicans would be ardent supporters of this half-heartedly progressive proposal. Although it conforms to traditional Keynesian economic prescriptions, after examining the political benefits closely, what I see is 1) a reinforcing of the falsehood that S.S. is part of the general tax fund, to be used as a fiscal policy tool rather protected as a separate trust, and 2) even though—yes, you’re giving people more disposable income—the reduction in contribution levels helps to “starve the beast,” which is like, more fuel for the momentum to privatize all public institutions.

I think this man is absolutely right about extending the payroll tax and paying for it by raising taxes on the rich...and then where to invest public funds. I am willing to bear my share of the economic pain, but I want to know the rich are bearing their share too. They can afford it. It is unjust that there is such an income difference between them and the rest of us. Getting money into the hands of working people, creating jobs to rebuild our infrastructure, and investing in our education system will stimulate the economy.

There is one serious flaw in Dr. Reich's argument. It is that corporate profits are up due to income generated in the U. S. Actually, they are up mainly due to income generated overseas. Therefore, the "basic bargain" for U. S. workers is probably still in effect. However, if it has not happened already, the "basic bargain" ought to be extended to corporate employees outside of the U. S. who purchase goods their employer produces.

There is one serious flaw in Dr. Reich's argument. It is that corporate profits are up due to income generated in the U. S. Actually, they are up mainly due to income generated overseas. Therefore, the "basic bargain" for U. S. workers is probably still in effect. However, if it has not happened already, the "basic bargain" ought to be extended to corporate employees outside of the U. S. who purchase goods their employer produces.

This make so much common sense it's scary. I think even some of our less-than-erudite members of Congress who head up those important subcommittees that control the levers of fiscal policy might even be able to understand the basic bargain...if they're listening.

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