President Obama takes payroll tax cut pitch to Pennsylvania

By Peter Nicholas and Lisa Mascaro, Washington Bureau

Nov. 30, 2011 12 AM PT

Reporting from Scranton, Pa., and Washington — President Obama visited a state he needs to win to spotlight a legislative fight he can’t afford to lose: expanding a payroll tax cut that he called crucial to the nation’s economic recovery.

Obama appealed to the public Wednesday to press Congress to extend the tax cut for workers, set to expire Dec. 31. The stop in Pennsylvania was part of a populist pitch that Obama plans over the next few weeks as he tries to preserve and possibly expand the tax break, which he proposes to pay for through a surtax on those making more than $1 million annually.

“Send your senators a message,” he said in a speech in the Scranton High School gym. “Tell them, ‘Don’t be a Grinch.... Don’t vote to raise taxes on working Americans during the holidays.’ ”

The Senate is expected to vote as soon as Thursday on the first of what Democratic leaders promise will be multiple runs at extending the payroll tax cut before year’s end.

Democrats will offer a plan to make the tax break more generous, increasing the amount the typical American family would save a year from an estimated $1,000 to $1,500. The proposal also would give employers who hire new workers a full holiday from the 6.2% tax for 2012.

Democrats propose to pay for the $240-billon plan with a 3.25% surtax on incomes greater than $1 million for individuals and married couples.

“So let’s just be clear: If they vote no, your taxes go up. Vote yes, you get a tax cut,” the president said. “Which way do you think Congress should vote?”

The crowd, sitting in rows of bleachers, took the cue: “Yes!” they shouted.

Congress has rejected the main planks of Obama’s $447-billion jobs plan, but the president said lawmakers would get another chance to “redeem themselves.”

At this point, it appears that Senate Democrats won’t be able to overcome a Republican-led filibuster. But Republicans have said they are open to proposals to preserve the tax break at its current level.

Speaking on the Senate floor Wednesday, Senate Republican leader Mitch McConnell of Kentucky said the issue was “whether we should help those who are struggling in a bad economy by punishing the private-sector businesses that the American people are counting on to help turn this economy around.”

Senate Republicans unveiled a proposal to extend the tax cut but scrap the surtax on millionaires. But the GOP would force the wealthy to pay more by requiring millionaires to pay the full cost of Medicare premiums, as opposed to the government-subsidized rate.

The GOP plan also would block millionaires from receiving unemployment insurance and food stamps. It would freeze federal salaries and cut the government workforce — proposals recommended by Obama and his bipartisan fiscal commission.

The Republican proposal suggests that Obama may be making headway in his argument that the richest Americans should pay more in a sour economy.

The Scranton trip was an official government event with the feel of a campaign rally. Across the street, supporters passed out “Obama 2012” campaign signs. Cheerleaders greeted guests as they passed through Secret Service metal detectors. Before Obama arrived, the school band played the Jackson Five song “I Want You Back.”

In 2008, Obama carried Pennsylvania — which has supported the Democratic nominee in the last five presidential elections — but his popularity has dropped as the economy has continued to sputter. A Quinnipiac poll showed that Obama’s approval rating in Pennsylvania this month stood at 44%, down more than 20 percentage points since early in his presidency.

“People are just frustrated. They’re hurting; they’re desperate,” said Evie Rafalko-McNulty, the Lackawanna County recorder of deeds.

Scranton sits in a county whose population is older and poorer than the rest of Pennsylvania’s.

The Scranton Times Tribune reported this week that the county was cutting off applications for public housing in an attempt to prune a waiting list of 1,700.

Joseph J. Corcoran, a former county commissioner, said that a family with deep roots in his neighborhood lost its home to foreclosure last year.

“That’s just one example two doors away on my block,” he said. “It’s a house that’s still sitting vacant.”

[email protected]