The United States Senate rejected bills from Democratic and Republican parties that would extend tax cuts first passed in 2010 on Thursday.
Republican Kansas Sen. Jerry Morgan told The Associated Press the tax cuts were unsuccessful because they “stimulated little and increased the debt a lot.”
The Democrats’ plan included a provision to reduce taxes on those who earned $50,000 by $1,500. Republicans planned to reduce taxes by $1,000.
In the past, Republicans were adamant about not extending tax cuts, citing the cost and arguing they were unhelpful to the economy, though there are some Democrats who agree. One such Democrat is West Virginia Sen. Joe Manchin, who stated: “Most Americans don’t even know they’re getting [them].”
The payroll tax cuts were part of a larger package passed and signed into effect by President Obama in 2010. According to a report by the Joint Committee on Taxation, the cuts were meant to “spare more than 20 million middle-American households from tax increases.”
Speaker of the House John Boehner recently came out in support of the tax cuts, after much time spent arguing for their defeat. In a statement to the press, Boehner said: “I don’t think there’s any question that the payroll tax relief, in fact, helps the economy.”
President Obama championed the tax cuts, and he has given several speeches encouraging Congress to extend them through 2012. One such speech took place in Scranton, Penn., on Wednesday.
“Send your senators a message,” urged Obama. “Tell them ‘don’t be a Grinch. Don’t vote to raise taxes on working Americans during the holidays.”
In response to Speaker Boehner’s changing view, Obama told a crowd in New York: “It’s possible we’ll see some additional progress in the next couple of weeks that can continue to help strengthen the economy.”
“This is a critical time for the economy, and I think it’s a time where the economy can use more medicine to strengthen and sustain the recovery,” said Alan Krueger, chairperson of the White House Council of Economic Advisors, to Reuters.