As part of the fiscal cliff deal, Congress and the White House allowed the payroll tax cut introduced in 2010 and extended in 2012 to expire. By reducing the payroll tax from 6.2% to 4.2%, this tax cut increased the take-home pay of a median worker by roughly $1000 in 2012. Hence, withdrawing the stimulus will significantly reduce consumer spending in an already-weak economy.
Goldman Sachs analysts estimate that this will reduce growth in 2013 by roughly 0.6% of GDP. Bill McBride (of Calculated Risk) believes that this will lead to another year of sluggish employment growth. Ezra Klein (Wash Post) estimates that this will negate all wage gains made in 2013.
The economy is too weak to raise taxes on everyone. Extend this tax cut now!