Many economists have observed that failing to extend the payroll tax cut and federal emergency unemployment insurance would slow economic growth this year and cost the economy jobs. This report highlights how continuing the payroll tax cut and UI benefits will boost consumer demand and strengthen the economy.
WASHINGTON, D.C. – As the Payroll Tax Cut Conference Committee meets for the first time today, the U.S. Congress Joint Economic Committee (JEC), Chaired by Senator Bob Casey (D-PA), released a new report highlighting the critical role the payroll tax cut and unemployment insurance benefits play in sustaining the economic recovery.
The report entitled, “How Continuing the Payroll Tax Cut and Federal UI Benefits Will Help American Families and Support the Recovery,” shows that failure to extend the payroll tax cut and unemployment benefits through the end of 2012 would hinder the nation’s economic recovery in wake of the recession.
The report includes a JEC staff estimate showing that failure to reauthorize federal unemployment benefits and the payroll tax cut for the final 10 months of 2012 would reduce GDP growth by 1.7 percentage points in 2012.
“As the conference committee meets this afternoon, I hope this report conveys the urgency of reaching an agreement to cut payroll taxes for the remainder of 2012,” said Chairman Casey. “Letting these policies expire would harm families and slow economic growth.”
The report includes a state-by-state breakdown of the additional take-home pay households will receive if the payroll tax is extended through the end of 2012, and it shows that the average Pennsylvanian family would keep an additional $856 dollars. Additionally, the report provides state-by-state numbers on how many Americans will lose their unemployment benefits by June 2nd if federal UI benefits are not reauthorized through the end of 2012.
“While the economy has made progress – adding more than 100,000 jobs in each of the last six months – we still have a long way to go to dig out from the Great Recession and the weak job growth that preceded it in the 2000s,” continued Casey. “By extending the payroll tax cut and UI benefits for millions, we can help Americans regain their economic footing and bolster the recovery.”
Federal emergency UI benefits have benefitted millions of displaced workers in the aftermath of the Great Recession. Over 3.3 million Americans, the report notes, are at risk to lose this lifeline if UI benefits are left to expire. Heavily populated states with high rates of long-term unemployment would absorb the biggest hits.