LaborTalk for December 23, 2011

Republicans Agree to a Two-Month Extension
Of Payroll Tax Cuts and Benefits for the Jobless
Labor Rejoices at Victory, But Tough Struggles Lie Ahead

By Harry Kelber

Facing intense pressure, not only from widespread public opinion, but from many of their own members, the Republican leadership finally agreed late Thursday (Dec. 22) to accept a two-month extension of the payroll tax cut and to continue unemployment insurance (UI) benefits for long-term jobless workers.

Under the agreement, the employees' share of the Social Security tax will stay at the current rate of 4.2 percent of wages through Feb. 29. In the absence of congressional action, it would revert to the usual 6.2 percent next month.

The government will also continue paying unemployment insurance (UI) benefits under current policy through February. Without congressional action, many long-term jobless workers would begin losing benefits next month.

In addition, Medicare will continue paying doctors at current rates for two months, averting a 27 percent cut that would otherwise occur on Jan. 1.

The present outcome seems to be a clear political victory for President Obama and the Democrats. But it is risky to predict what happens after the two-month extension period has expired — when the conflict continues throughout the 2012 election campaign.

What Happens After the Two-Month Extension Period Expires?

For working people, the stakes are financially high. If after two months, the Republicans will renew their opposition to leaving the payroll tax cut at 4.2 percent, workers will suffer a cut in income of $1,000 a year. Likewise, 160 million long-term unemployed workers will lose their UI benefits after Jan. 1

It is difficult to estimate Labor's role in the two-month extension victory. The AFL-CIO's main political weapons are e-mails and phone calls to congressional lawmakers, who normally pay little attention to them, because they come in torrents and contain virtually the same messages.

The "Occupy Wall Street" adherents have actively supported the two extension bills, because they deal with issues of inequality and social justice.

With less than a year to go, the Republican Party is in a sorry state. It is being torn apart by conflicts between Tree Party extremists and the traditional conservative members. It has no presidential candidates that can stand up to Barack Obama.

But the Republicans still control the House of Representatives and they'll be plotting various strategies to deny President Obama another term in the White House. Right now, Wall Street pragmatists appear to favor Obama, but the political landscape can change in the months before the election.

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Our Best Wishes to Working Families
For A Happy, Healthy and Rewarding

From "The Labor Educator"
(www.laboreducator. org)
A Voice for the Rank-and-File

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