Obama Cites Rising Gas Prices As Reason to Extend Payroll Tax Cut

February 14, 2012 - 12:19 PM

Obama-chinese leader

President Barack Obama meets with Chinese Vice President Xi Jinping, Tuesday, Feb., 14, 2012, in the Oval Office of the White House in Washington. (AP Photo/Susan Walsh)

(CNSNews.com) - "The fight is beginning to turn our way," President Obama said on Tuesday, as he urged the American people to keep up the pressure on congressional Republicans to extend the payroll tax cut.

Failure to do so, the White House says, will cost the average American worker $40 a month, or $1,000 a year.

Obama said Americans will need the $40 to fill their tanks as gasoline prices rise:

"And when gas prices are on the rise again -- because as the economy strengthens, global demand for oil increases -- and if we start seeing big increases in gas prices, losing that $40 could not come at a worse time."

According to some reports, gasoline prices could reach $4 or more a gallon by summer -- just months before the presidential election, making prices at the pump an unwelcome campaign issue for the president.

And while global oil demand is a key factor in oil/gasoline prices, some Americans say part of the problem rests with Obama's policies.

House Republicans have blasted President Obama for refusing to back construction of the Keystone XL pipeline, which would bring Canadian crude oil to Gulf Coast refineries.

“President Obama is destroying tens of thousands of American jobs and shipping American energy security to the Chinese," House Speaker John Boehner said last month when Obama refused to let the Keystone project proceed.

And on Monday, the head of the American Petroleum Institute expressed disappointment with Obama's 2013 budget plan, which proposes tax increases on the oil and natural gas industry.

“Increasing our taxes would push oil and natural gas investment overseas and diminish job-creation and economic activity here at home," said Jack Gerard, API president and CEO. "After a handful of years, we would see less domestic energy production – particularly of natural gas – more imports, fewer new jobs, and, eventually, depressed tax, royalty and other revenues."

Last year's payroll tax cut -- which funds Social Security -- will expire at the end of February unless Congress agrees to extend it.

House Republicans have insisted that the tax cut be paid for with spending cuts elsewhere. But Democrats insist it be paid for with tax hikes on the wealthy.

On Monday -- with no resolution in sight -- Republican leaders in the House indicated they would extend the payroll tax cut through 2012 without offsetting the estimated $100-billion cost.

"Democrats' refusal to agree to any spending cuts in the conference committee has made it necessary for us to prepare this fallback option to protect small business job creators and ensure taxes don't go up on middle-class workers," Republican leaders said in a statement.

On Tuesday, President Obama called it "good news" that congressional Republicans are showing signs of going along with the payroll tax cut extension. "Washington shouldn't hike taxes on working Americans right now."

Obama said extending the payroll tax cut is "just a start.” He said it "is going to make our economy stronger, and it is going to put us in a position where we can start really rebuilding on behalf of not just this generation, but future generations."