The payroll tax increase that went into effect at the beginning of the year stands to offset significantly the President's proposal to raise the federal minimum wage to $9 an hour.
In his State of the Union address, Barack Obama called on lawmakers to increase the federal minimum wage from $7.25. For an employee working a 40 hour work week, the bump would translate to a 24 percent raise to $18,720 a year.
However, because of the payroll tax hike that went into effect on January 1, 10 percent of that raise, or $374, would be lost due to the payroll tax hike, according to a calculator provided by the Wall Street Journal.
The payroll tax increased on January 1, after Congress declined to extend it during fiscal cliff negotiations.
In a state like Connecticut where the minimum wage is currently $8.25, an increase in the minimum wage to $9 an hour would mean an annual raise of $1,560. Roughly 24 percent of that pay increase would be erased by the expiration of the payroll tax cut.
The federal minimum wage of $7.25 is currently in place in 31 states and this is not the first time that Obama has proposed increasing the wage floor nationally. In 2008, the president pledged an increase in the federal minimum wage to $9.50 in order "to make sure that full-time workers can earn a living wage," according to his website. The federal wage floor has not increased since 2009.
Congress's decision to let the payroll tax cut expire in January will do more than decrease your annual income. Chief Economist at Moody's Analytics Mark Zandi has predicted that a higher payroll tax will decrease economic growth by more than half a percentage point this year.
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Regulating Wall Street
Congress did pass the sweeping Dodd-Frank financial reform bill in 2010, <a href="http://www.davispolk.com/files/Publication/7191edca-f4ed-4460-a514-01ca9d3cf8b9/Presentation/PublicationAttachment/63d52126-7e7f-477a-b47c-08e8acfe145e/Jan2013_Dodd.Frank.Progress.Report.pdf"> but two-thirds of the rules have yet to be finalized as Wall Street continues to play by "its own set of rules"</a>.
Implementing Corporate Tax Reform
Congress has been trying to implement a tax overhaul for over a year, but has been unable to reach an agreement due in large part to disagreements over revenue. The president said last month he might back a territorial tax system, <a href="http://www.reuters.com/article/2013/01/31/us-usa-tax-territorial-idUSBRE90U15J20130131">which critics say will only encourage U.S. jobs</a> and businesses to move offshore, Reuters reports.
Training Skilled Workers
The skills gap continues to be a problem plaguing the country. In July 2012, it was reported that <a href="http://www.bloomberg.com/news/2012-07-25/companies-say-3-million-unfilled-positions-in-skill-crisis-jobs.html">more than 3 million job openings have become available every month since February 2011</a>. Even with the unemployment rate remaining high at <a href="http://www.huffingtonpost.com/2013/02/01/january-jobs-report-unemployment-rate_n_2597751.html">7.9 percent</a>, <a href="http://www.forbes.com/sites/bmoharrisbank/2012/12/19/why-the-manufacturing-skills-gap-is-creating-new-opportunities/">thousands of jobs remain unfilled.</a>
Putting money toward rebuilding infrastructure appears to be more difficult than Obama thought during his last State of the Union address. Infrastructure spending was highlighted in Obama's stimulus plan, but only <a href="http://voices.washingtonpost.com/ezra-klein/2010/10/didnt_the_stimulus_take_care_o.html">$100 billion of the Recovery and Reinvestment Act's $787 billion in proposed spending</a> went to overhauling infrastructure, according to Ezra Klein.
Decreasing Partisan Gridlock
The "campaign of mutual destruction" between Republicans and Democrats is far from over. Partisan gridlock continued to plague Obama through 2012 and into 2013. House Minority Leader Nancy Pelosi predicted that if Obama got reelected, conflict across party lines would remain <a href="http://www.huffingtonpost.com/2012/09/16/nancy-pelosi-republicans_n_1888014.html">"more of the same." </a>
Helping Homeowners Hurt By Housing Crisis
Despite efforts to put money back in the hands of homeowners, many Americans have yet to see the benefit of the mortgage deal passed by Obama's administration. As part of the <a href="http://www.huffingtonpost.com/2012/06/12/national-mortgage-settlement-_n_1589499.html">$25 billion deal</a>, banks said they would <a href="http://www.huffingtonpost.com/2012/08/29/debt-relief-mortgage-settlement_n_1839923.html">issue loan forgiveness for homeowners</a>. Unfortunately, banks have been slow to hand out the money, and that means homeowners are still struggling.
Improving Clean Energy Options
When it comes to increasing the country's dependence on clean energy, the president has yet to fully commit to the initiative. In his first term, Obama supported <a href="http://www.huffingtonpost.com/2013/01/17/obama-climate-change_n_2472552.html">an expansion in oil and gas drilling</a>. Obama has also <a href="http://www.huffingtonpost.com/2012/11/18/natural-gas-drilling-obama_n_2154655.html">not fully embraced natural gas options</a>.