In just a few weeks, a cut in the payroll tax is scheduled to expire, hitting 113 million households with a tax increase in a weak economy. Democrats have been pushing to extend the cut, while Republicans, for weeks, have balked at the plan. Only in the last few days has the GOP come around to the position that extending the tax is possible, though Republicans still refuse to budge on the Democrats’ plan to pay for the extension with a surtax on income above $1 million.
Today, House Speaker John Boehner (R-OH) was asked during a briefing whether he believes that allowing the payroll tax cut to expire would hurt the economy. He simply replied, “I’m not an economist”:
I’m not an economist. I don’t know what kind of an impact it’s going to have on the economy.
Later, Boehner came around to admit that an extension would help boost the economy. To help Boehner out, several actual economists have said that letting the cut expire would, in fact, hurt growth and destroy jobs. According to Macroeconomic Advisers, allowing it to lapse “would reduce GDP growth by 0.5 percent and cost the economy 400,000 jobs.” An analyst at Barclay’s estimated that letting the cut expire would knock 1.5 percent off of first quarter growth next year.
Ameriprise Financial Services, meanwhile, estimated that extending the cut “is likely to add between 750,000 to 1 million jobs.” “Payroll tax cuts are very powerful,” added Allen Sinai, chief economist of Decision Economics. “They provide a boost to direct income and, in turn, spending, which is important to growth.”
Boehner has a habit of only believing in economists who agree with him, so this evidence may not do much good. And, at the end of the day, Boehner says that he doesn’t have to “listen to economists” in order to craft economic policy.