It is truly beginning "to look a lot like Christmas" in the US. President Obama received an early Christmas present when Republicans gave in and a payroll tax extension was agreed. This will give a pay roll tax cut for 160 million American workers. It will last for two months.
John Boehner, the House of Representatives Speaker, announced that he has agreed to pass the payroll tax extension, for two months. President Obama and his Democrat team have been pushing for this for some time.The President was quick to acknowledge the victory for the American working man and woman. In a statement he said,
"This is good news, just in time for the holidays. This is the right thing to do to strengthen our families, grow our economy, and create new job. This is real money that will make a real difference in people's lives"
He summed up, "That's about $40 in every paycheck. Vital unemployment insurance will continue for millions of Americans who are looking for work."
This news will not please all Americans though. Such is life. It may help boost the economy slightly, restore a little confidence and help the Obama 2012 election campaign, but the cost will have to found from somewhere. Governments around the world these days are continually having to "rob Peter to pay Paul."
It would seem there is just not enough money to go round. However we all that in reality is bunkum. In Europe cheap loans have been grabbed by the banks, whilst the little man or woman on the street is finding that even a small loan is either unavailable or costs the earth.
At least offering a helping hand, however tiny, to the ordinary worker is a step in the right direction. Governments seem well able to find money for expensive summits, conflicts, propping up banks and the like. It is about time they looked a little closer to home.
Whether this temporary payroll cut will be sustainable for a longer period or achieve anything positive in the greater scheme of things is doubtful. For now it will help that part of the American population that is living on a shoestring.
The President will sign this bill into law and in the New Year the Democrats will push for an extension into 2012. Today a compromise was reached but it is not the end of the matter. An agreement to extend this tax cut and unemployment insurance for the whole of 2012 is now needed.
With Democrats looking for measures that will impose a new tax on income exceeding $1 million and Republicans wanting to cut the federal work force plus freeze pay for government workers there is still a huge divide between the two parties. They will need to come together on these and other proposals or else face an uncertain 2012. With both sides keeping one eye on the forthcoming election it will be an interesting, and possibly tumultuous 2012 in the US,