Thursday, February 16, 2012

Why did Republicans cave on the payroll tax cut?

Republicans weren't going to win this latest battle over the payroll tax cut extension. They just needed to figure out how to go about losing.

They could try to convince Americans that it was Democrats who were stubbornly not compromising, a hard sell given that Republicans had previously drawn a line in the sand on increasing taxes to pay for the extension - or anything. Or, Republicans could give in to a solution that included spending cuts and a temporary tax surcharge on the rich.

Instead they chose Option 3: Extend the payroll tax cut without paying for it. It's a move that stunned Democrats, surprised GOP supporters, and prompted the obvious question: Why?

Good morning and welcome to O-pinion. I'm Peter St. Onge, associate editor of the O's editorial pages. I'll be your host today.

The news: Republicans and Democrats announced early this morning that they've agreed to extend the payroll tax cut through the end of the year. Lawmakers also extended jobless benefits and avoided a reduction in federal reimbursements for physicians who treat Medicare patients. The latter two items will be paid for with an array of spending cuts. The first item, the payroll tax cut extension, will simply be another $100 billion added to the nation's debt.

That's not a solution we advocate, and its so out of character for the GOP that Democrats initially thought it was a trap when Republican leaders suggested it earlier this week. Some House Republicans are still grumbling about it.

What does it mean? While it's initially encouraging to see Republicans compromise, their decision shows that when faced with a choice of which tenet to violate, they'll opt for increasing the debt rather than raising taxes. Solving our $15 trillion debt crisis will take solutions that involve dramatic spending cuts and reform that will result in tax increases. We can't choose debt over either.

Politico's Jonathan Allen and Jake Sherman have a more optimistic take on Republicans: They're maturing as politicians.

Say the writers:
The GOP majority is showing signs of growing up. It’s learning how to cut political losses and taking the long view on policy fights that started before the freshman newbies showed up last January.
The authors warn, and we agree, that one compromise-before-you-have-to does not make a cultural shift. But lawmakers tell Politico that the pounding President Barack Obama gave Republicans on the first payroll tax cut fight in December made a lasting impression. We're guessing those historically low polling numbers for Republicans in Congress also may be setting in.

Of course, while some Republicans see the payroll tax solution as a case of choosing your battles, others see it as giving in. There's a fine and elusive line between taking the long view and turning your back on your principles. It's a struggle Republicans are sure to have again - and soon.

Read more here: http://www.charlotteobserver.com/2012/02/15/3015332/house-leaders-praise-emerging.html#storylink=cpy

12 comments:

Redlight said...

Both parties are wrong.SS is going broke and they speed up the process.

The guy was right. Just pick 435 names out of a phone book for congress and we'll be better off.

heavymetal said...

No one in Congress can afford to alienate the huge voting bloc that is directly affected by this particular tax cut.
Any fight over it would have been ugly and voters would have been angry. Not as angry as, say, playing politics with the mortgage interest deduction. But angry, nonetheless.

whitewall said...

Making bad deals with bad people with bad ideas is not a sign of maturing as politicians. It is only a sign that some are willing to join hands as our nation falls off the cliff. No future in this.

bozz man said...

Can't wait for November,It's time to boot the left wing dumbocrats once and for all!!

IDEFI said...

Why is it that repubs are always for tax cuts except for this case where it will be for working people? I really just don't get how they can advocate for Romney's 13.9% rate while a payroll tax cut that puts an extra $1,000 in the average families pocket is something they have to "cave-in" about...

heavymetal said...

I don't see it as they "caved in" about the tax cut itself, they "caved in" on requiring other budgetary cuts to offset it.

Veronica said...

Republicans have learned that it doesn't pay to do the right thing.

The media were poised to hammer them (and praise Obama) if they tried to address the budget deficit.

Just look at how Obama's totally irresponsible current budget proposal is receiving almost no scrutiny.

It's going to be another year of "thrill up my leg" media coverage of this campaign.

The Observer Editorial Board said...

Veronica,

We wrote about that budget earlier this week.

http://obsdailyviews.blogspot.com/2012/02/budget-that-ignores-harsh-bottom-line.html

Thanks...

Archiguy said...

Republicans, at least the modern variety, will virtually never do the right thing for the right reasons. Occasionally however, usually because of some political calculation, they can be persuaded to do the right thing for the wrong reasons. This is a case in point.

If you're wondering why the Republicans, who never met a tax cut they didn't like, oppose the payroll tax cut, all you have to do is follow the money, as always.

Medicare and Social Security benefit elderly retirees, who overwhelmingly vote Republican. Those benefits are paid for by taxes levied on the working or what's left of the middle class - young folks. Any reduction in the taxes they pay would correspondingly reduce Medicare and SS benefits, at least theoretically.

So, Republicans don't want to see anything done that might conceivably cause retirees - who control the vast majority of the nation's wealth - to have any reduction at all in those sweet benefits paid for by their children, they're just fine with demanding those same retirees and their other prime constituents - zillionaires - keep getting tax cuts and reductions in the capital gains tax.

Any break to the middle class, though, well - that's not what funds election campaigns for the GOP.

Europeanexpat said...

@IDEFI
I hope you do not expect to get any SS payments in the future as you are getting them now. This "tax cut" is not a tax cut. It basically cuts contributions into SS Trust Fund.

It's like you cut amount of money you put in your savings acct from $200 a month to $100 a month and still expect to have $2,400 after one year

Archiguy said...

Look, these two entitlement systems are going to have to be reformed at some point, and it needs to be done sooner rather than later. SS is solvent for the foreseeable future and this payroll tax cut won't make an noticable dent in the SS Trust Fund. Medicare is where the real crises is brewing.

The real problem goes to a larger point. The Republicans won't allow the country to have a serious dialog about long-term deficit reduction because any real progress in getting our entitlement programs on sound fiscal footing will involve a combination of revenue increases from their wealthy constituents and benefit reductions to their elderly constituents. They've ruled both off the table.

Until they decide to cooperate with the Democrats on this key issue the problem will only get worse. And my bet is, based on past performance, they won't do so until the system actually begins to collapse. By then, the easiest solutions will no longer be available. But, no worries. They'll just do what they always do: blame the Democrats.

Payroll Solutions said...

Cook & Morehart has been the Town of Benton's CPA for years and has never said anything about the Town violating state overtime law that they have been violating for years. Are they reputable or the with the good ol boys.