While Economy Continues To Stumble, Payroll Tax Break Must Be Extended To Both Employers And Employees
Washington, D.C., August 9, 2011 – As the economy continues to decline amidst a historic downgrade of our AAA credit rating status, Kristie Arslan, President & CEO of the NASE, the leading advocate for our nation’s smallest businesses - the self-employed and micro-businesses - offered the following statement on the impact the downgrade will have on the small business community:
“Congress spent the summer playing debt-limit roulette and the country is struggling to make sense of the 11th hour outcome and what it means for the weak pulse of economic recovery. Credit rating giant Standards & Poor's did not hesitate to pass judgment on our political leaders and cite a lack of confidence in their ability to manage the deficit when it downgraded America's credit rating on Friday. It appears so far that the stock market is inclined to agree with S&P's assessment.
"Americans have good reason to be disgusted with Congress for risking our fragile recovery with political brinksmanship. Not only did the downgrade make our country's long-term debt a less attractive investment, but it will also likely raise interest rates for the 22 million self-employed entrepreneurs who are focused on getting their business - and, as a result, the economy - back on track. Increasing the cost of business and personal loans during difficult economic conditions is not a formula for growth.
"Even the smallest business has to manage its debt and balance its books to succeed. It shouldn't be too much to ask the world's largest economy to demonstrate the same level of fiscal responsibility.”
During a press conference on Monday, President Obama called on the U.S. Congress to extend the payroll tax break to encourage economic activity while our fiscal woes continue:
“Specifically, we should extend the payroll tax cut as soon as possible, so that workers have more money in their paychecks next year and businesses have more customers next year…In fact, if Congress fails to extend the payroll tax cut and the unemployment insurance benefits that I’ve called for, it could mean 1 million fewer jobs and half a percent less growth.”
Moody’s Analytics Chief Economist Mark Zandi signaled his support for extending the payroll tax break to both employees and employers to help boost the economy. On a recent CNN Situation Room, he commented:
“Well, I think there's some things we should do. Yes. For example, we have a payroll tax holiday, 2 percent this year. It expires at the end the year. Probably would make sense, given the context of these job numbers, to extend that [to employees] for another year. There's also some discussion about providing a payroll tax holiday for employers. That may also be something to consider.”
Kristie Arslan has argued that it is essential for the U.S. Congress to extend the payroll tax measure to both employers and employees.