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Payroll tax cuts should be off limits in 'fiscal cliff' dealing

December 17, 2012 - Mike Maneval
The latest reports indicate a deal on the so-called "fiscal cliff" may be slowly inching closer, and the solution may involve many necessary compromises, concessions that can be defended. But with the prospects of a deal is a troubling development, and a development on which President Barack Obama should resist compromise.

Carrie Budoff Brown and Jake Sherman of Politico report Monday that a new proposal from the president to House Speaker and Ohio Republican John Boehner would revert tax rates to their Clinton-era levels for incomes higher than $400,000. Previously, the White House fought for raising the rates for income above $250,000. In the pursuit of a deal before the end of the year, a more moderate, expansive definition of middle class may be understood. A conciliatory outreach - not one that I've seen discussed by punditry yet - in setting the 35-percent rate on the top earned income bracket at the mid-point of 37 percent rather than returning it to 39 percent could also yield a resolution.

Another detail of the deal is greater cuts to spending, a second point of concession made necessary by long-term trend lines of spending more than the U.S. could hope to see in revenues - trend lines that have continued under the Obama administration - and the resulting giant debt. Associated Press reports indicate one aspect of curtailing spending may be in cost of living adjustments in Social Security, a compromise also understand as improving the independent fiscal standing of the program as the general revenues of the U.S. that serve as a backstop are strained by reducing the deficit the country bears. Another preferable compromise could include 10-percent to 20-percent cuts in spending on assistance programs such as food stamps, in the direct subsidy to the Corporation for Public Broadcasting, in grants and public funding to civic projects and urban revitalization.

But the one issue to surface in Politico's Monday story on which the president should not compromise but likely is - the issue on which he should offer any and all of the above to retract any slide toward concession - is failure to renew payroll tax cuts, tax cuts that keep hard-earned money in the pockets of working Americans and in the pockets of the consumers who create jobs.


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