Payroll tax cut standoff's impact: What $40 a paycheck means to you
December 22nd, 2011
09:53 AM ET

Payroll tax cut standoff's impact: What $40 a paycheck means to you

House Republicans on Tuesday rejected a Senate deal to temporarily extend the payroll tax holiday, leaving the White House and Congress at an impasse and creating a showdown between President Barack Obama and House Speaker John Boehner.

The tax cut is set to expire on December 31. Ending the tax break would cost the typical family about $1,000 a year, or $40 per bi-weekly paycheck for those who earn about $50,000 a year.

With frustration on both sides of the aisle, President Obama and the White House took to social media, hoping to get the public on their side in a public relations showdown with the Republican Party. The White House asked Americans what $40 means to them in an attempt to help put pressure on Republicans to pass the measure.

[tweet https://twitter.com/whitehouse/status/149237000522825729%5D

You responded in force on Twitter using the hashtag #40dollars.  President Obama said that the White House received more than 30,000 responses to their query.

That's perhaps why President Obama is expected to make a statement Thursday on the partisan standoff over how best to extend the expiring payroll tax cut, according to the White House. Obama will be joined by "Americans who would see their taxes go up if the House Republicans fail to act," the White House said. Some of those people have participated in Obama's social media campaign.

There was one surprise user of the hashtag: Speaker Boehner. But he used it to put things in his perspective, trying to explain why Republicans were right to try to work out a longer term deal.

[tweet https://twitter.com/SpeakerBoehner/status/149611555762343936%5D

[tweet https://twitter.com/SpeakerBoehner/status/149612691412107264%5D

So, with all of the bickering and the debating, we wanted to know if you agreed that $40 is a significant amount of money. We asked you if the end of the tax cut affect your family or if it would have little difference in your daily life. Here's what you said:

Selena Campbell is a 21-year-old from Orlando, Florida, who works in Admissions Control at Full Sail University. She said that the money she may be losing each paycheck would help buy new shoes for her husband. He has to walk to work every day because they can't afford a second car. But Campbell said that isn't the only thing it would help out with.

"For me and my family, $40 is $10 less than what we pay for groceries every week," she said. "There have been weeks, where we have only been able to spend $10 on groceries and have lived off of mac 'n' cheese and hot dogs."

Selena Campbell said the lost money would have helped with grocery and medical costs.

That money would also determine whether they could fully pay for their rent or car payments. It would also impact their healthcare, she said.

"$40 is what it costs for my medication so I can be a healthy wife, sister, daughter, mother," Campbell said. "$40 a month, in the economy we are in right now, is everything."

Tiffanie Young, a supervisor at a small rural hospital in Seaside, Oregon, says she saves $50 per paycheck for emergencies. The end to the payroll tax break would mean "I would probably have to stop doing that." She said that for a lot of people $40 could help pay for groceries, gas and other necessary bills.

But not everyone thought the delay would really impact them. And some people said they agreed with Republicans that a two-month extension wouldn't help.

Ryan Stoddard responded on Facebook that he felt just $40 a paycheck would mean "not much" to him and also agreed with House Speaker John Boehner that a short solution wouldn't help.

"Two months is a band-aid, not a solution," he said. "The Speaker is correct in his decision to call for more action."

Joel Jamison Bliss said on Facebook he was tired of seeing the story portrayed as "Republicans doing this to hurt the American people."

"A two-month extension does nothing and you know it ... this is another political ploy by Obama and more campaigning, which is all he has done for four years anyway," he said.

But Denise Mooren, a 36-year-old senior account who lives in Athens, Alabama, said her family would feel the hurt from the loss. Though it may seem like a small amount of money, Mooren said it is a "magical amount" in her household as she tries to make ends meet for her family of eight people.

"I pay $40 every two weeks for all the kids to buy their lunch, and I make them pack it the rest of the time," she said. "I had to purchase a Sam's Club membership just to make lunch items affordable for 15 lunches per week for three 11-year-olds, one 12-year old, and one 15-year-old."

She also said she needs that money for one of her children who has Attention Deficit Hyperactivity Disorder (ADHD)

"I pay $400 per month for insurance," she said. "The co-pays all went up double to $40 per visit. My daughter has to go at least 6 times per year."

One CNN reader, Jaimie, commented at how surprising it was to see people's bad finances and thought they were placing the blame on politicians.

"People need to learn how to budget, if you're seriously hurting for this $40 a month, you need to look at your finances," Jaimie said. "Don't blame the politicians for a lousy $40 a month. I support my wife and 2 kids off of one income and I make $30,000 a year, and we are never hurting. I set a budget and I keep it. Start a savings account for emergencies like these. Wake up people!!

Jennifer Alvich, a 36-year-old high school history teacher in Weehawken, New Jersey, said she is fed up with how politicians have handled many situations regarding her economic situation. The extra money she may not be getting each paycheck could pay for her bills, gas and groceries, Alvich told CNN

“I’m tired of reading about politicians who make decisions about the little money I have,” she said.

She said politicians are too focused on party lines and need to work together and stop hurting the middle class.

“This is about Americans getting through the year,” she said.

Melissa Matthews, a 32-year-old a stay-at-home-mom from Leander, Texas, said she works a job from home at night while her children are sleeping and her husband works two jobs.

Melissa Matthews is frustrated that the House has not passed an extension.

She said her husband just found out from his employer that he will be out $80 in January because of the standstill in Congress.

"They are messing with my family who can barely make ends meet," she said. "I am just very upset at the way the Republicans in the House are trying to manipulate this bill and get their way on other issues by threatening to take the payroll tax cut away. The extension needs to be passed and the other issues need to be worked out later. There is no more time to argue the issue. I appreciate the Senate passing the two-month extension and I want the House to do the same."

One commenter on our story, Gary, echoed a statement that many others made in response to some of the frustrations of possibly losing out on $40 a paycheck. He questioned whether everyone who was complaining was doing enough to live within their means.

"If this is a lot of money for you, cancel your cable bill and ditch your internet service. Get TV through the Air and internet at the library. I just saved you 120 bucks a month," he said. "Stop blaming the government for not helping you and look at what you can do to help yourself."

Frequent iReport contributor Egberto Willies says the payroll tax cut wouldn’t affect him personally because he works for himself as a software developer in Kingwood, Texas.

But he said everyone getting $40 could mean the difference between the “economy surviving or going back into a recession.”

Frequent iReporter Matt Sky, fromNew York, said the money would help in opening up the economy a little by allowing middle class American to pay off debt, car payments or buy groceries.

“The $40 bi-weekly would mean a lot for working class Americans," he said. "Wealthy folks, the tax breaks don’t really mean as much because they basically already have a lot money to meet their expenses."

Cindy Riley is a 54-year-old homemaker living in Center Point, Alabama. She said that $40 a paycheck for her family would help pay for several utilities or bills.

"$40 pays for our car insurance for a month. I can't cut that out, the law requires it. $40 pays for our water and sewer for two weeks. I can't cut that out either unless I want to start hauling water from the creek and build an outhouse," she said. "$40 will buy my vegetable garden seed for next spring. I suppose I could cut that out, but that would cost more in the long run, both in terms of health and just food.

"$40 pays for the Internet access for a month, and I suppose I could cut that out, but we have no other entertainment and I use it to pay all my bills and stay in touch with my family so that I can save the price of stamps. $40 pays for my pay-as-you-go phone for about four months. Can't cut that out, It's the only 'phone we have, we cancelled the landline long ago."

The money would also help with a new prescription she has to take, feeding her cats, health care for her family and the pets, or gas for her husband to get to work.

"We're about at the bottom of the barrel here," Riley said. "No, we've gone through the bottom of the barrel and it's really, really leaking."

We also put the question to our Twitter subscribers online, and you answered in force. Many of you said it could help with several small bills you had. Here's some of the responses you tweeted using the hashtag #40dollars about how much the money would or wouldn't help.

[tweet https://twitter.com/Krohn_DC/status/149857524248608769%5D

[tweet https://twitter.com/CAPRICECLASSIC5/status/149851340372320257%5D

[tweet https://twitter.com/AprilDlicious/status/149650391842304000%5D

[tweet https://twitter.com/SissonsTo/status/149257818250297344%5D

[tweet https://twitter.com/PtBrindley/status/149578268759175169%5D

[tweet https://twitter.com/WhySharksMatter/status/149856928653262849%5D

[tweet https://twitter.com/mattnocella/status/149240064432553984%5D

[tweet https://twitter.com/docstrangedub/status/149690011443412994%5D

What do you think? Would $40 impact you and your family, or would it barely impact you. Let us know by sounding off in a video on CNN iReport here. We'll be adding your thoughts throughout the day.

soundoff (1,741 Responses)
  1. A Reasonable Man

    Here is what I would like to see: Every man, woman, and child take a $10,000 tax increase over the next 5 years. We tough it out for 5 years and then the country is debt free. We balance the budget and never go into debt again and thrive back into prosperity. We live happily ever after and promote peace on earth and good will towards men.

    December 22, 2011 at 4:00 pm | Report abuse |
    • skarphace

      Or, another idea, we merely elect Ron Paul and shrink our Federal Government to a size that we can afford. Problem solved.

      December 22, 2011 at 4:02 pm | Report abuse |
    • PollyP

      We borrow .40 cents of every dollar we spend. If we can't get that under control then there is no hope for us. Giving people back $40.00 per pay isn't going to solve the problem. It only accomplishes what the democrats want to accomplish...class warfare. Divert people's focus from the real spending problems we have.

      Besides why does everyone think the rejected plan was such a great deal? It was only a 2 month extension...blink and its over!

      December 22, 2011 at 4:12 pm | Report abuse |
    • skarphace

      PollyP: while I agree with your post, the reason that the 2 month extension was defeated in the House is not because of the length of the extension, but rather because the bill did not include provisions for the Keystone Pipeline project which the House wants to push through.

      December 22, 2011 at 4:27 pm | Report abuse |
    • Lulwutz

      Cute. Every child in America should slave away for some CEO's private jet tax subsidy? Your comment is absolutely adorable.

      December 22, 2011 at 4:28 pm | Report abuse |
  2. Eve

    I agree with the gentleman in the article. People seriously need to live within their means. I'm sure it can be tough at times, but when are we going to stop looking to our government/politicians to do our jobs and relying on them as our source. They are not our source. If you want to live like you have two incomes, then have two incomes. I find it hard to feel bad for someone who stays-at-home to complain about $80 a month. Perhaps a part-time job will make up the difference????? Let's get creative and handle our own finances in times of surplus and in times of lack. This is not the first time this has happened and will not be the last time.

    December 22, 2011 at 4:03 pm | Report abuse |
    • skarphace

      Exactly. No need to do something drastic like defund Social Security just so we can spend a few extra dollars on our monthly cell phone bill.

      December 22, 2011 at 4:05 pm | Report abuse |
  3. gullibleGil

    $40 a paycheck is my world...forget that the nation is in the tank...just make sure I don't loose that $40 a paycheck.

    December 22, 2011 at 4:04 pm | Report abuse |
    • skarphace

      I know I am repeating myself here, so I apologize.

      First, unless you are making $50k a year, you are not saving $40 a biweekly paycheck. The average American making $30k a year is saving around $24 a biweekly paycheck.

      Second, from the beginning, this was meant to be a temporary tax cut. Therefore, those of you who factored this extra savings into your required budget made a fiscal mistake. The time to correct that mistake is now.

      Third, the last thing we should be doing is defunding Social Security just so we have a little extra spending money in the short term.

      December 22, 2011 at 4:07 pm | Report abuse |
  4. Kathy

    Wouldn't it be nice if we had leaders who could make a decision. $40.00 means a lot to some people. Could be the difference in having food or not having food.

    December 22, 2011 at 4:06 pm | Report abuse |
    • Big Joe

      If you're making $50,000 a year and can't afford $1,000 less, I'd say you're not budgeting too wisely. The $40 level equates to a salary of $50k.

      December 22, 2011 at 4:19 pm | Report abuse |
  5. treblemaker

    $40 each 2 week paycheck equals one grande latte at Starbucks each day. Can you give that up?

    December 22, 2011 at 4:08 pm | Report abuse |
  6. Ordnry1

    5-6 pkgs of Ramen noodles for $1.00 each at Big Lots $5.00
    3 dozens of eggs for $2.00 or less at Trader Joe’s $6.00
    5 lbs of bananas for 80 cents/lb or less $4.00
    2- 1 lb pkg of black or red beans for $1.30 cents or less/lab. $2.60
    1 lb of Canola oil for < $4.00 at Safeway $4.00
    2- 1lb pkg of spaghettis for $1.00 each at Big Lots $2.00
    2 jars of spaghetti sauce at Dollar Store or Big Lots for $1/ each $2.00
    Spend the rest $15 on meat and some vegetables $15.00
    Total $40.00

    This will last for a month for 1 person.

    Well, I can also spend $40.00 easily in one sitting at an average restaurant for dinner and drinks.

    December 22, 2011 at 4:09 pm | Report abuse |
    • skarphace

      If you are spending on Ramen Noodles, I doubt that you are making $50k a year.

      December 22, 2011 at 4:18 pm | Report abuse |
  7. treblemaker

    For those of you who smoke, can you give up you costly habit in order to save money?

    December 22, 2011 at 4:10 pm | Report abuse |
  8. tony vitolo

    The President has not submitted a budget for three years, and run up the deficit by a trillion dollars for each year, and he comes around with a forty dollar price on this tax cut is this how we make tax policy two months at a time, how about deficit policy, that does not exist, were are you on this Wolf, you have kept you mouth shut on this issue I say give the president an Oscar for this performance, it is all bs

    December 22, 2011 at 4:10 pm | Report abuse |
  9. WDinDallas

    I am sending mine to the RNC

    December 22, 2011 at 4:11 pm | Report abuse |
  10. Robert Bartle

    $40 means nothing to me.... I've been out of work (steadily) for one year and two month. I have an MBA and am going for my MS in ISM. Wonder what John Boehner and Barrack Obama are going to have for their Christmas dinner? My wife and I are probably going to have Hamburger Helper or MacNCheese with hot dogs. I doubt my friends in government are going to have such low brow fare. I'm glad they passed the 658 billion budget for the Pentagon; they need more F-29's; of course they look pretty to the Congressmen who have the factories in their districts. Too bad they can't fly – definately money well spent. Hey Boehner and Obama – hire me – I can mismanage funds as well as anyone else in government.

    December 22, 2011 at 4:12 pm | Report abuse |
    • Lisa

      I do feel bad for your situation but at least you still have your sense of humor. My guess is that any one of us could mismanage government spending or any other corporation spending that puts it into BK but makes us too valuable of an employee to let go thus justifying a multi-million dollar bonus.

      I'll flip ya for the job ... LOL

      December 22, 2011 at 4:18 pm | Report abuse |
    • skarphace

      LOL. If you are out of work, then the reason why $40 means nothing to you is because you aren't saving that $40. If you don't have a paycheck, you don't pay Social Security taxes in the first place.

      December 22, 2011 at 4:19 pm | Report abuse |
  11. Big Joe

    The payroll tax cut was enacted last year by the Obama Administration at a time when social security was already in trouble due to lack of money. The public accepted it because it was an extra 2% in their paychecks. This whole "$40" thing only applies to those who make $50,000 a year. If you make less, it's going to cost you less. In any case, let's look at putting that 2% back into social security where it belongs.

    December 22, 2011 at 4:12 pm | Report abuse |
  12. Meg

    Hey, Cindy Riley from Center Point, Alabama: cut out the internet and go to the library where internet access is free. In addition, you can pick up a FREE book or FREE DVD to make up for the lack of entertainment.

    December 22, 2011 at 4:14 pm | Report abuse |
  13. Aradan

    $40 is really $115 Billion dollars.

    That's how much the government borrowed to pay for the social security tax cut in 2011.

    It was supposed to be a tax reduction for one-year. Now everyone wants a vote to make it permanent, but it still needs to be paid for.

    Our democracy can only exist until the voters discover they can vote themselves money (in this case it starts with $40) out of the public treasury. From that moment on the majority always will vote for the candidate promising the most benefits from the treasury with the result that democracy always collpases over a loose fiscal policy.

    December 22, 2011 at 4:14 pm | Report abuse |
    • skarphace

      Exactly. If that money is not coming out of Social Security revenue, then it has to come from somewhere. We should be decreasing government spending, not increasing it.

      December 22, 2011 at 4:22 pm | Report abuse |
  14. Ann

    $40 a paycheck means absolutely nothing to me. Keep it and do something good with it.

    December 22, 2011 at 4:17 pm | Report abuse |
    • skarphace

      Such as continue to fund Social Security?

      December 22, 2011 at 4:23 pm | Report abuse |
  15. Lillian

    If I didn't already pay over $100k in taxes already a year, I wouldn't mind if the government really needed $40 more dollars. I get annoyed every time thinks any answer to the nation's troubles is to mess with taxes. Anyone with good business sense, or who even does a good job managing their personal finances knows that spending is the problem here.

    December 22, 2011 at 4:26 pm | Report abuse |
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