THE fragile state of the recovery and the frustratingly slow growth of the economy have heightened the stakes for the end-of-year negotiations. Irrespective of who wins the Presidential election in November or what conciliations Congress clouts in the lame-duck session to keep the economy from automatic tax increases and spending cuts, 160 million American wage earners will probably see their tax bills jump after Jan 1st 2013.

The Federal Reserve currently estimates that the economy will grow 2.5 to 3 percent next year, and that the unemployment rate will be 7.6 to 7.9 percent, still painfully high.

The payroll tax holiday this year has reduced workers' tax on wages up to $110,100 to 4.2 percent from 6.2 percent. In 2012 that translated into a $700 tax cut for a person making $35,000 a year and a $2,202 tax cut for workers making $110,100 and up. The other provisions at stake in the fiscal cliff negotiations overshadow the payroll tax cut.

The federal deficit would fall by more than half a trillion dollars from the 2012 fiscal year to the 2013 fiscal year. The expiration of the Bush tax cuts and other provisions would reduce the deficit by $221 billion.

That is when the temporary payroll tax holiday ends. Its termination means less income in families pocketbooks, could shave as much as a percentage point off economic output in 2013, and cost the economy as many as one million jobs. That is because the typical American family had $1,000 in additional income from the lower tax.

Its passage last year was opposed by Republicans, as it would divert money from the Social Security program. However, many Democrats fervently supported it last year but show no such enthusiasm now.