'World News' Political Insights: President Obama Picks Tax Fight With GOP

Washington's next tax battle has White House on more favorable ground.

ByABC News
August 21, 2011, 6:26 PM

WASHINGTON, Aug. 21, 2011— -- Get ready for yet another Washington tax fight. But this one will be waged on slightly different terrain.

Far from running from it, President Obama and his political team are actually itching for this battle to play out in the coming months, as the calendar is set to flip into his reelection year.

This time, it's the president who wants lower taxes. Republicans are threatening to line up against him, in a stand that would leave them open to charges of favoring higher taxes on the vast majority of the nation's taxpayers.

At issue is the expiring cut to the obscure but impactful "payroll tax," a tax reduction approved with little fanfare as part of a broader tax deal late last year. Normally, workers pay 6.2 percent of their income into a Social Security fund, with employers paying a matching 6.2 percent.

But this year, workers' share has been cut a full 2 percentage points. That means an extra $1,000 in the pocket of a taxpayer who is earning $50,000 this year, up to a total savings of $2,136 for those who make $106,800 or more -- the threshold beyond which earnings are not taxed for Social Security.

The president wants that tax cut extended by another year, a proposal he mentioned in his weekend radio address and that will be part of the White House's larger job creation package this fall.

Some congressional Republicans, meanwhile, are vowing to oppose another temporary payroll tax cut, even as they pursue other tax cuts that would affect far fewer -- and far wealthier -- Americans.

That situation has leading Democrats sensing an opportunity for the president to turn the tax tables on Republicans. Their calculation: that voters will see Republican tax-cutting efforts as giveaways to special interests, while Democrats fight against them for tax cuts that would actually put dollars in the pockets of families.

"We need to extend the payroll tax cut that's in place right now," senior Obama campaign adviser David Axelrod said today on ABC's "This Week."