Joe Weisenthal calls attention to distressing analysis from Goldman Sachs about the expiration of the payroll tax cuts at the end of the year. Yglesias explains why it would be devastating for the economy:
With deficits low and unemployment high, tax increases in general are ill-advised. But raising a broad-based, mildly regressive tax is particularly damaging because it will particularly impact the bottom lines of precisely the kind of credit-constrained households who we have to be targeting with fiscal policy.
What's more, he argues that preserving the payroll tax cut is more critical than reaching a Grand Bargain. Derek Thompson, who provides the above chart, has a theory about why it's not more of a priority:
[W]hy isn't Obama talking about it? Why aren't Republicans fighting for it? Why has Tim Geithner said "I don't see any reason to consider supporting its extension"? Why is there "universal acceptance" that payroll taxes will go back to normal when this would represent a $130 billion hit to the economy — almost as much as the Bush tax cut for lower-income families and more that the impact of budget sequestration and the expiration of unemployment insurance (UI) combined? Well, payroll taxes pay directly into Social Security and lawmakers feel nervous about depleting that coffer.