Is payroll tax extension a win for consumers?

What does the payroll tax extension agreement mean for consumers?

Adriene Hill: Lawmakers have an agreement to extend the payroll tax cut for two months. They're expected to approve it a little later this morning. If all goes as planned, the deal will keep taxes for working folks from jumping up in the new year. And keep unemployment benefits coming for many people without jobs. Jill Schlesinger joins us live now to talk about what the agreement means for consumers. She's an editor-at-large with CBS/MoneyWatch. Good morning, Jill.

Jill Schlesinger: Good morning.

Hill: So can we count this as a win for consumers?

Schlesinger: How about a short-term win, which I'll take. You know, Congress still needs to work on the other 10 months of the year. That said, that payroll tax cut amounts to an extra $1,000 in the average workers' pocket for 2012. We just got a personal income and spending report that confirmed a year-long stagnant trend. So working Americans can really use this extra cash and the economy could use the extra spending.

Hill: And what does it mean for the economy?

Schlesinger: Well, economists estimate that the extension of these two things -- payroll tax cuts and benefits to the long-term unemployed -- should add 1 percent of growth in 2012. Now don't be fooled by some of the better-than-expected data for the fourth quarter, like this morning's stronger-than-expected durable goods report. Economists say that U.S. growth is likely to remain slow next year, 2 to 2.5 percent. That means without these two short-term stimulus, these extensions, the economy could see growth of just about 1 percent and that is not a level that is strong enough to lower unemployment or create new jobs and I think that's why Congress actually came together and said we've got to past this thing.

Hill: Jill Schlesinger is editor-at-large with CBS/MoneyWatch. Thanks so much.

Schlesinger: Great to be with you. Happy holidays.

Hill: Thank you.

About the author

Jill Schlesinger is editor-at-large for CBS/MoneyWatch.

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